2019 Journal of Community Bank Case Studies

2019 COMMUNITY BANK CASE STUDY COMPETITION

explained, “For work duties falling within a reasonable definition of compliance, the bank dedicates the equivalent of twelve-and-a-half full-time employees (FTEs) to compliance work duties eight-and-a-half full-time compliance employees in various departments and roughly the equivalent of four additional FTEs from a number of other employees who perform significant compliance duties in the course of their work. Additionally, there are four full-time members of our internal audit team” (Messina). The total compliance cost of $1,184,606 primarily contributes to wages and salaries of the full-time employees. These employees advise, oversee, and train the banking staff on these compliance procedures. Additionally, these employees research, implement, and manage regulations as they interface with regulators. While the compliance department is responsible for the completion of these activities, bank management and employees from other departments often assist in compliance-related tasks. This makes it difficult to fully quantify regulatory and compliance costs. In regard to the change in compliance costs relating to EGRRCPA’s regulatory relief, Messina explained, “The passage of EGRRCPA, and the subsequent accompanying changes in regulation, have not decreased the number of employees the bank dedicates to compliance. Furthermore, there is no noticeable or measurable decrease in the workload of personnel working in compliance as a result of EGRRCPA” (Messina).

People’s Intermountain Bank has employees designated solely to compliance.

the exam. This process include months of preparation, weeks of answering questions and proving statements to regulators, and reviewing earnings performance. The monetary costs consist of wages and benefits paid to full-time employees responsible for overseeing the exam cycle process (Messina). Total regulatory compliance costs equaled $1,184,606 in 2018. Unlike the study done by CSBS which reported compliance costs falling 13% in 2018 for community banks (2018 Community Bank Survey), People’s Intermountain Bank did not see any changes in their compliance costs from the previous year (Allen). Specifically regarding costs relating to EGRRCPA, Mathew Messina, AVP and compliance officer at People’s Intermountain Bank, said, “We have seen no measurable or demonstrable change in compliance costs since the passage of EGRRCPA” (Messina). People’s Intermountain Bank has employees designated solely to compliance. Messina

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