US banks of all sizes are preparing for the growing pains that come with crossing various critical asset thresholds.

Surpassing $10 billion, $100 billion or $250 billion in total assets come with challenges that include increased regulation and expenses and decreased income. While no banks crossed any of those asset thresholds in the second quarter, many are nearing those marks.

$100 billion

Comerica Inc. is the largest bank sitting below the $100 billion threshold, with $90.99 billion in assets as of June 30. In the third and fourth quarters of 2021, the company had climbed above $94 billion in assets, which was a "wake-up call" that it needed to start preparing for making the jump, Chairman, President and CEO Curtis Farmer said at an industry conference on Sept. 12.

"We were surprised by the growth in our asset base and how quickly it sort of evolved over the 24-month period heading up to the banking crisis this past spring," Farmer said. "So we just wanted to make sure that we're doing everything we can to ready for that, if that does happen."

Farmer said it would take "several years" for the company to organically cross the $100 billion mark, but Comerica is open to M&A to "punch through" the threshold, rather than "dribble across the line."

A merger of equals is an attractive way for regional banks to cross the $100 billion asset threshold, First Horizon Corp. Chairman, President and CEO D. Bryan Jordan said at the same industry conference.

"If you're going to be $100 billion, you don't want to be $101 billion and incur that cost," the CEO said. "You're better off, if you're an $85 billion organization, doing something like a merger of equals, that gets you in that [$140 billion plus] area, as opposed to doing a $15 billion or $20 billion acquisition."

First Horizon had $85.07 billion in total assets at June 30. The bank would prefer to leap above $100 billion to between $140 billion and $170 billion, Jordan said.

In addition to Comerica and First Horizon, three other US banks had between $75 billion and $100 billion in assets in the second quarter.

$250 billion

The next critical asset threshold after $100 billion is $250 billion. Once crossing that mark, a bank must comply with the regulatory requirements of a Category III bank.

With $188.50 billion in assets at June 30, Huntington Bancshares Inc. is still a ways away from $250 billion in assets, but the company is preparing to become a Category III institution.

"The requirements for Category III, it's a pretty substantive step from Category IV," CFO Zachary Wasserman said at an industry conference on Sept. 11. "We're on the long-term road map to build those kind of capabilities. When and if we would cross that threshold, we would be ready."

Seven US banks had assets in excess of $200 billion but short of the $250 billion mark at June 30.

$10 billion

The $10 billion asset threshold is critical for community banks because it comes with additional regulatory oversight from the Consumer Financial Protection Bureau and takes a chunk out of their revenue as the Durbin Amendment kicks in and limits interchange fee income.

At June 30, there were nine community banks sitting just below the threshold with more than $9 billion in assets.

"We're not shy about going through $10 billion," Amerant Bancorp Inc. Chairman Gerald Plush said during the company's second-quarter earnings call. "We know there are implications to going through $10 billion. But you can't sit at just in and around the $10 billion [threshold] and avoid growing otherwise ... it's going to be a cost-cutting exercise and that's not what we want to do."

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