Regulation stalls bank's growth

Monty Weigel wants to grow his bank. In fact, Northstar Bank, for which Weigel is CEO, has the capital to buy new branches and is in acquisition talks with other banks. The problem isn't money or the bank's portfolio, which just received four out of five stars from rating firm Echo Partners. The problem is regulation.

Weigel says the uncertainty about regulation of the banking industry has the lender reticent to grow further. “I would say that the regulatory environment is almost hostile,” he says.

The Federal Reserve put a cap on fees banks could charge on debit purchases earlier this year. Weigel points this out as another example of the hypocrisy in Washington.

The current administration is bent on helping small businesses, but community banks are the ones affected by such regulation. “Big banks can just shift business in response to regulatory changes,” Weigel says. “We practice basic blocking and tackling so we aren't as flexible.”

Weigel says that regulatory uncertainty is a major factor in growth decisions, but spreading too quickly is something the bank hopes to avoid.
“The reason a lot of these other banks went under was over-branching,” he says. “But we think the time is right for expansion.”

Northstar Bank serves as a warning to politicians picking their way into banks' operations. Instead of branching into new locations — and bringing new jobs in tow — it waits. Regulation may not be a job killer in this instance, but it doesn't make job creation any easier.