From: James W Everson [mailto:citizens@isp01.net]
Sent: Thursday, September 16, 2004 10:20 PM
To: Comments
Subject: FDIC Comment Letter from ceo@thecitizensbank.com
Importance: High
We support the
addition of a community development criterion to the small bank
examination
for larger community banks, but we believe
the new community development (CD) criterion should be applied only
to banks greater than $500 million up to $1 billion. Community banks
up to $500 million now hold about the same percent of overall industry
assets as community banks up to $250 million did a decade ago when
the revised CRA regulations were adopted, so this adjustment in the
CRA threshold is appropriate. As bankers and FDIC examiners know,
it has proven extremely difficult for small banks, especially those
in rural areas, to find appropriate CRA qualified investments in
their communities. Many small banks have had to make regional or
statewide investments that are extremely unlikely to ever benefit
the banks’ own communities. This result certainly was not intended
by Congress when it enacted CRA.
We strongly oppose making the CD criterion a separate test from
the bank’s
overall CRA evaluation. Such differentiation creates the impression that CD
lending is different from the provision of credit to the entire community.
The current small bank test considers the institution’s overall lending
in its community. A separate test would create an additional CD obligation
and regulatory burden, eroding the intent of the streamlined exam.
We strongly support the FDIC’s proposal to change the definition of “community
development” from only focusing on low- and moderate-income area residents
to including rural residents. This change will go a long way toward eliminating
the current distortions in the regulations that result in a small rural bank
being told to invest in regional affordable housing bonds for an urban area
not in the bank’s community.