2019 Journal of Community Bank Case Studies

2019 COMMUNITY BANK CASE STUDY COMPETITION

Exhibit 8: FirstBank Total Deposits (In Millions)

Regulatory Compliance and Burden Assessment A. Regulations Burdensome to FirstBank In an interview with Tim Johnson, FirstBank’s Chief Risk Officer, he stated, “Regulation is the swinging of a pendulum.” In essence, regulations tighten during times of stress and ease in times of recovery. All the while, regulations are in place to provide

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

Deposits (In Millions)

2014

2015

2016

2017

2018

Year

economies as well as FirstBank’s ability to capture a 58.3% increase in FirstBank’s deposit market share across Tennessee over the past 5 years (“Each Depositor Insured”). The recently announced acquisition of 14 branches of Atlantic Capital Bank will increase FirstBank’s liquidity by adding $381 million in loans and deposits of $602 million to FirstBank. The Atlantic Capital Bank acquisition will contribute to FirstBank’s growth and add locations that complement FirstBank’s footprint in the East Tennessee and the North Georgia area. In the past five years, FirstBank’s total deposits have grown an average of 13.7% year- over-year (Exhibit 8). FirstBank, like most banks, is currently working to increase its liquidity through the use of certificate of deposits promotions, acquisitions, and other deposit campaigns. FirstBank takes pride in being one of the leading banks in the region and plans to continue to grow to new heights, all while remaining profitable and true to its community bank roots.

adequate safety for customers. The cost of compliance is burdensome as well as extremely difficult and costly to allocate. FirstBank does not specifically quantify the cost of compliance because “allocating the full expense [of compliance] is an accounting exercise no institution can really afford” (Johnson). Instead, FirstBank’s Risk Department relies on the industry-quoted norms for a bank of its size and operations to estimate total cost and full-time equivalents devoted to compliance (Johnson). In 1970, Congress passed the Bank Secrecy Act (BSA) to combat money laundering. The BSA requires banks to maintain an extensive record and file of documentation used by law enforcement to “identify, detect and deter money laundering” (“Bank Secrecy Act”). FirstBank estimates the total cost to comply with the requirements of the BSA to be approximately $3.5 million annually (Durham). The Home Mortgage Disclosure Act (HMDA) passed in 1975, requires banks and other

58