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Midsize banks excited for prospects of Dodd-Frank reform by August

A broad Dodd-Frank rollback bill, which sets higher thresholds for increased bank regulation and off-ramps for compliant community banks, should see full passage by August, said the U.S. House's second leading Republican in charge of whipping votes.

Rep. Patrick McHenry, R-N.C., said the Senate should be able to whip 70 to 80 total votes for the bill, which was introduced in the Senate in November. He hinted that a large number of Democrats in the House should similarly join House Republicans to push the legislation to President Donald Trump's desk.

"We have enough votes to process that really quickly and very easily," McHenry told reporters at a Mid-Size Bank Coalition of America event Feb. 26. House Republicans would have liked to see more aggressive regulatory changes along the lines of the Financial CHOICE Act, but have realized that the Senate is only capable of legislating more moderate legislation.

Bankers at institutions between $9 billion and $50 billion had previously approached the regulatory relief bill with cautious optimism. On Feb. 26, they said they were encouraged by the brightening prospects of reform. John Asbury, President and CEO of Richmond, Va.-based Union Bankshares Corp., said his $9.32 billion company would no longer have to deal with a $5 million yearly run-rate expense related to filing Dodd-Frank Act stress tests, since the Senate bill raises the asset threshold for required stress tests from $10 billion to $250 billion.

Asbury said the company, which leaped over the $10 billion mark by purchasing Xenith Bankshares Inc., still plans on doing internal stress testing for management purposes but would save money by no longer having the need to pay a third party to provide stress-test results to the Federal Reserve.

At Bridgeport, Conn.-based People's United Financial Inc., President and CEO Jack Barnes said his bank has spent the last two years getting ready to cross the $50 billion threshold. With $44.45 billion in total assets, People's United is hopeful that the Senate bill will become law and raise the "artificial barrier" for the required Comprehensive Capital Analysis and Review from $50 billion to $250 billion. Under CCAR, banks must submit their capital plans to the Federal Reserve before being able to deploy excess cash.

Both companies noted that the bill would make it easier for banks of their size to grow organically. Asbury said that if his company had not moved quickly to breach the $10 billion-asset threshold through an M&A deal, Union would have stagnated and ended up an "excellent target" for a larger bank hungry for assets.

Bob Jones, Chairman and CEO of Evansville, Ind.-based Old National Bancorp, speculated that by dramatically raising the asset thresholds, the Senate bill would spur industry consolidation.

"With a little bit of relief, it may be easier to do transactions," Jones said, adding that he would expect larger banks to "get back" into M&A if the asset caps are lifted.