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Banks’ $10 Billion Sweet Spot Sets Off Buying Spree for Lenders

Early last year Prosperity Bancshares Inc. surpassed $10 billion in assets after almost 30 years in business. For Chief Executive Officer David Zalman, it wasn’t yet time to celebrate.

The $10 billion threshold subjected the Houston-based bank to a variety of regulatory hurdles under the Dodd-Frank Act, including a cap on fees it can charge retailers for debit-card transactions. That alone would cost the bank $9 million in revenue. So to help absorb the regulatory burden, Zalman went on a shopping spree. He has spent $1.37 billion on six banks since the start of 2012, making Prosperity the most acquisitive U.S. bank. Now its assets total $16.3 billion.