Frost CEO: Community banks face uncertain future as reforms progress

New financial regulatory reforms intended to end the kinds of risky practices that resulted in massive taxpayer-funded bailouts to keep large banks in business in 2008 could wind up pushing many small banks out of business.

That was one of messages delivered by Cullen/Frost Bankers Inc. chairman and CEO Richard Evans during an address to about 350 fellow bankers, customers and invited guests Tuesday at the Fort Worth Club during his presentation, “Seeking Clarity in Uncertain Times.”

“The new rules could be painful for community banks,” Evans said. “Many banks could be driven to consolidation to survive; that’s probably going to be the case for a lot of community banks.”

Evans said while the intent of the new legislation is noble, the additional costs of meeting new regulatory requirements will hurt smaller banks that had little to do with the crisis.

“The additional costs will penalize the good banks, even as the legislation seeks to end bad practices,” he said.

In addition to more consolidation, consumers may face the prospect of paying more for services and products that had previously been offered for free or at a discount.

“I think the days of free checking are likely a thing of the past,” he said. “

San Antonio-based Cullen/Frost Bankers is the parent company of Frost Bank, which has $2.4 billion in deposits and 27 locations in Tarrant County. Frost has assets of $15.8 billion and more than 100 branches statewide.

*Rob Robertson - Fort Worth Business Press