Small Banks Deregister After JOBS Act

On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the JOBS Act). One objective of the JOBS Act was to improve the regulatory environment for small companies. For example, the JOBS Act liberated some small banks and bank holding companies (BHCs) from the obligation to file with the Securities Exchange Commission (SEC), which was supposed to reduce the compliance burdens for these companies.

In particular, the JOBS Act reduced the number of banks and BHCs that were required to file by amending Sections 12(g) and 15(d) of the Securities Exchange Act of 1934.

Before the amendment, a bank or BHC with total assets of more than $10 million was required to register with the SEC if there were 500 or more holders of record (record shareholders). Once registered, a bank or BHC could not suspend its registration unless its number of record shareholders dropped below 300.

After the enactment of the JOBS Act, the 500 record shareholder requirement (i.e., the threshold for mandatory registration) increased to 2,000, and the floor threshold to subsequently suspend registration increased to 1,200. Therefore, many small banks and BHCs with record shareholders above 300 but below 1200 were now able to deregister.

Since the JOBS Act was enacted on April 5, 2012, banks that utilized the deregistration option would be expected to do so during the second quarter of 2012 or soon thereafter. The graph below shows that many banks responded by deregistering.

Small Bank JOBS Act

The graph quantifies the number of deregistration forms (e.g., Form 15s) filed by banks and BHCs with the SEC since the first quarter of 2007. During the five years prior to 2012, the number of deregistration forms filed per quarter varied between 6 and 27. The second quarter of 2012, however, produced 45 deregistration forms followed by three consecutive quarters of 27 or more. In all, during the four quarters immediately following the enactment of the JOBS Act, a total of 127 banks and BHCs suspended their registration with the SEC.

Note: The banks were indentified using the following combination of NAICS codes (digits starting with) and SIC codes.

NAICS 5221 Depository Credit Intermediation (Banking)
NAICS 522291 Consumer Lending
NAICS 52231 Mortgage and Nonmortgage Loan Brokers
NAICS 52311 Investment Banking and Securities Dealing
NAICS 551111 Offices of Bank Holding Companies
SIC 6021 National Commercial Banks
SIC 6022 State Commercial Banks
SIC 6029 Commercial Banks, NEC
SIC 6035 Savings Institutions, Federally Chartered
SIC 6036 Savings Institutions, Not Federally Chartered
SIC 6162 Mortgage Bankers and Loan Correspondents