TheStreet: Can you outline the expense challenges brought about by the regulatory changes?

O'Brien: All of these laws that pass and then implemented, with CRA the Community Reinvestment Act and RESPA the Real Estate Procedures Settlement Act as examples, always end up costing us more and more money as an industry. This one the Dodd Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama last July is hitting the revenue side too, not just the expense side.

Plus, capital levels are going higher, not that I disagree with that, but for smaller banks with smaller revenue opportunities and tighter interest margins it will be harder and harder to pay for the compliance infrastructure you're are going to need to properly run a company.

CRA started as a two-sentence law, and now we have armies of regulators, consultants and advisors. It has become a cottage industry.

Same with RESPA -- it started with good intentions and has turned into an incredibly complicated form that people throw away and don't use.

It's cumbersome for a smaller bank to afford the staff for all these rules and regulations. A community bank tends to do a little bit of everything. It's not like any business line has an enormous business stream.

You layer in all these costs, including the reporting and examination and hiring a consultant to find ways to fine-tune it. You have to look at statistical anomalies and try to conform to the standards.

We lend in our communities and we live in our communities. We don't need a lot of national or super-regional type rules or regulations to tell us how to do what we do. It's in our DNA.

For shareholders, we have to look at an appropriate return, since they capitalized our business. How much should go to compliance expenses?

TheStreet: How was your bank affected by the "opt-in" rule for ATM/Debit card overdraft protection?

O'Brien: To the extent that our customers used overdrafts, they had credit lines so we weren't affected as much.

TheStreet: What about the Durbin Amendment Dodd-Frank's limitation on interchange fees charged by banks with total assets greater than $10 billion on debit card purchases ?

O'Brien: It concerns me as much philosophically as it does financially. It is inappropriate price fixing by the government, and everybody's expenses are different.

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