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FDIC Federal Register Citations

CITYBANK

From: Dan Coppin [mailto:dcoppin@citybank.com]
Sent: Tuesday, August 24, 2004 6:23 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50

Thank you for the opportunity to comment on the FDIC's proposal to increase the "small institution" test for banks under the Community Reinvestment Act from the current $250 million to $1 billion, without regard to holding company affiliation. As an employee of a community bank with assets of about $630 million, I strongly applaud the FDIC's consideration of this change and encourage the Board to promptly implement this proposal. I support this proposal for the following reasons:

* Since 1995 when the small institution test was created, the gap in assets between the smallest and largest institutions has grown substantially. The 578 FDIC-insured institutions with assets greater than $1 billion account for nearly 85% of all bank assets. The 385 institutions in our size category -$500 million to $1 billion - hold only about 4% of all bank assets. This disparity supports raising the threshold for the large bank examination to make most efficient use of examiner resources without a detrimental impact on the goals of the CRA.

* The cost of complying with new and existing regulations is overly burdensome for banks with assets under $1 billion. New regulations under HMDA, the USA Patriot Act, and the Gramm-Leach-Bliley Act are adding enormous costs to community banks' overhead and are drawing critical resources away from serving the credit needs of our customers.

* Streamlining CRA examination procedures for banks with assets under $1 billion would be consistent with recent changes to the FDIC's safety and soundness examination procedures under the MERIT (Maximum Efficiency, Risk-Focused, Institution Targeted) examination program.

* Community banks like CityBank are already at a competitive disadvantage to credit unions and other financial entities that do not have the same regulatory burden as commercial banks, especially in areas like Community Reinvestment. Enlarging the "small institution" definition will help restore competitive balance in our industry.

I also approve of the Board's consideration of changing the definition of "community development" to benefit not just low- and moderate-income residents but also residents of rural areas. However, I encourage the Board to retain the small bank examination standard in its current form, without the addition of new community development criteria. Recognizing that banks with assets under $1 billion are truly "small" is not a justification for making the small bank examination procedure more complex. Adding an examination requirement to consider the bank's community development, services and investments would simply negate the benefits of being examined under the small bank examination standard, both for banks and for examiners. These tests have little to do with the original intentions of the Community Reinvestment Act, which was to "assess an institution's record of helping to meet the credit needs of the local communities".

Again, thank you for this opportunity to comment. We hope the Board will act promptly to make this long-awaited change a reality.

Sincerely,

Dan Coppin
Senior Vice President
CityBank, Lynnwood, Washington
 

Last Updated 08/26/2004 regs@fdic.gov

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