A new survey of community bankers by audit firm KPMG finds executives lashing out at new regulatory requirements, blaming them for stifling growth and driving mergers and acquisitions.

Nearly one-third of those surveyed, however, admitted that they still haven't taken a hard look at the direct impact of new capital requirements. Also, despite plans for greater investment in IT, mobile technology and cloud-based services, a mere 14 percent are making the threat of cyber-attack a planning priority.

The 2012 KPMG Community Banking Outlook Survey, released this week, found that 47 percent of executives identified regulatory and legislative pressures as the most significant barrier to growth over the next year; 35 percent said regulatory compliance costs were having the greatest negative impact on their institution's financial performance.  

"The new regulatory environment in which community banks now operate is a game changer because the cost of building the necessary compliance systems and processes is high," John Depman, national leader of Regional and Community Banking for KPMG, said in a statement. "As a result, many community banking executives are re-evaluating their business and operating models and growth strategies."

Amid those re-evaluations, according to the survey, "regulatory changes" were cited as the most important driver behind M&A activity.  Fifty-seven percent of the respondents said it was likely their bank would be involved in a merger or acquisition in the next two years as a buyer (42 percent) or seller (15 percent). 

Capital and liquidity requirements from various regulatory initiatives such as the Dodd-Frank Act and Basel III were identified as having the greatest impact on community banks. Thirty-seven percent of respondents said their bank would need to raise more capital to meet these requirements. However, 34 percent said they would not need to do so, and 29 percent had not yet completed an analysis.

Roughly half of those who took part in the survey said IT investment would increase in the coming year, with those expenditures typically focused on mobile banking and cloud technology. Despite these initiatives, and plenty of publicity, cyber-security wasn't presented as a top concern. Fifty-one percent of those surveyed said they were "slightly concerned," or "not concerned at all," that their bank may be vulnerable to a cyber-attack; only 14 percent said they were “extremely concerned."

The survey, conducted in September, culled responses of 105 senior executives in the community banking industry. Based on asset size, 49 percent of respondents work for institutions with $1 billion to $5 billion in assets, 31 percent with $5 billion to $10 billion in assets, and 20 percent with $10 billion to $20 billion in assets.