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Continuity Control: No Regulatory Relief in Sight for Community Banks


July 17 - The results of the second quarter Banking Compliance Index shows the regulatory burden remains at an extreme high, up 117 percent since Q2 of 2012.

The BCI, compiled and analyzed by Continuity Control,  is one of the only quarterly composite indexes that empirically measures the regulatory burden on financial institutions across key leading and lagging indicators. The index was designed to equip banking professionals, regulators and legislators with detailed data-driven metrics analyzing the impact of new and existing regulations on financial institution resources, specifically budget and employee headcount.

“The industry is in a state of shock,” said Pam Perdue, chief compliance strategist at Continuity Control and former federal examiner. “Many bankers are unsure of how to react to the regulatory environment, which is why we’ve already seen nearly 200 community financial institutions disappear in the last two years. More importantly, the data shows that things aren’t letting up, and it is unlikely that they will anytime soon.”

The Q2 2013 BCI shows a staggering 117 percent growth in regulatory burden during the last 12 months. For the average financial institution, an additional 2.3 full time employee equivalents must be focused on managing the quarter’s aggregate burden from regulatory change. Although there was slight decline from last quarter’s 2.35 score, the regulatory environment remains at an extreme high with issuances and enforcement actions holding steady. In addition, the quarterly cost burden for an average institution actually increased more than 7 percent to nearly $40,000 per quarter as compared to $37,000 for Q1 2013.

A May 30, 2013, Economic Policy Paper by the Federal Reserve Bank of Minneapolis found that profitability reductions resulting from regulatory burden could cause a third of institutions in the smallest asset tiers to become unprofitable. According to the Fed study, adding just two employees results in an average 45 basis point reduction in profitability.
“The time that it takes to comply has increased more than 50 percent in the past 12 months,” said Andy Greenawalt, Continuity Control’s CEO and founder. “Add the increased complexity and velocity of change, along with a heated enforcement climate, and the overall increase in regulatory burden is an ugly reality unlikely to be relieved any time soon.”

About the BCI

The BCI was calculated using a multi-variant analysis that can be weighted across different contexts and is calibrated to determine the impact on financial institutions of varying sizes, product mixes, and regulatory oversight. Using leading and lagging indicators including volume, velocity and complexity of regulatory change; time expended to meet regulatory requirement(s); and supervision and the enforcement climate, the BCI’s sophisticated metrics are unmatched in the industry.
The BCI employs a data-driven approach for unique insights into the depth and breadth of regulatory compliance workload impact.  

The BCI tracks:

Regulatory Changes: A total count of applicable financial regulatory changes throughout the quarter.

Page Volume: The number of pages associated with each of the regulatory changes — indicative of the complexity and workload involved with reviewing and interpreting each change.

Enforcement Action Information: Analysis of the public enforcement actions that have been issued during a quarter.

More than 700 financial institution professionals attended the Continuity Control RegAdvisor Quarterly Briefing webcast July 9. During this session regulatory experts reviewed the Q2 2013 BCI metrics and provided in-depth information on the quarter’s regulatory changes, a workload assessment of these changes and the required actions to avoid penalties. A recording of this session will be available at  

About Continuity Control
Continuity Control is an award-winning regulatory compliance platform that combines advanced software with personalized service to help community financial institutions reduce their regulatory burden. Founded in 2008 by distinguished technology, banking, and compliance specialists, Continuity Control’s platform effectively reduces the resources a bank or credit union must spend on compliance while ensuring that it passes regulatory muster. Built just for community banks and credit unions, Continuity Control is the most comprehensive compliance management platform for community financial institutions on the market today.