One impediment to regulatory relief for community banks has long been the lack of empirical evidence demonstrating the extent of the problem—particularly for smaller institutions. A new blog post from the Conference of State Bank Supervisors (CSBS), Too Small to Scale: What 10 Years of Data Say About Community Bank Compliance Costs, builds on the white paper they released in July 2025, Do Banking Regulations Disproportionately Impact Smaller Community Banks?
In both the white paper’s summary and the conclusions presented in the blog post, CSBS offers compelling data showing that smaller banks are statistically and disproportionately affected by compliance burdens. This impact is especially pronounced in personnel, data processing, accounting and auditing, and consulting expenses.
“This data supports that the risks and vulnerabilities of community banks differ substantially from those of larger banks, and an explicit tailoring of regulation and the supervision for community banks is necessary to address the disproportional impact of compliance costs on community banks.” said IBAT President and CEO Christopher Williston. “More is needed to ensure community banks don’t just survive but thrive in a regulatory framework that is based on risk.”
