HERITAGE BANK OF CENTRAL ILLINOIS
September 15, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
FDIC
550 17th St., NW
Washington, DC 20429
Delivered Via E-mail
Re: Community Reinvestment, RIN number 3064-AC50;
Proposal to Expand Eligibility for the Streamlined CRA Exam
Dear Mr. Feldman:
I am writing on behalf of the Board of Directors of Heritage Bank of
Central Illinois, a $275 million, independent community bank based in
rural Peoria County. We currently hold an “Outstanding” CRA rating which
was just issued in May of this year. This is the third “Outstanding”
rating we have received.
Due to our recent growth, we will become a “Large Bank” at the end of
this year if the definition of “Small Bank” is not changed. Therefore,
we are very pleased at the FDIC’s new proposal to increase the asset
threshold to $1 billion and have no problem with the addition of a
“community development” standard for banks $250 million to $1 billion.
When our bank received its “Outstanding” rating under the current rules
in 1998 we were a $75 million bank. Although we have grown to the size
we are today, in no way, shape, or form are we a “Large Bank”, not in
today’s world of muti-state and trillion dollar banks. We have just 5
offices and serve one county. What possible relevance is there in
subjecting a bank like us to the same tests as Bank of America, Bank
One, Wells Fargo, or even National City Bank. If we didn’t reinvest in
our community, and provide outstanding service, these banks would eat
our lunch with their larger array of products and services. I do not
understand the rationale that some groups who oppose this proposal have.
Why in the world would a bank stop serving its local community just
because it is being examined under the “small bank” rules versus the
”large bank” rules? This type of argument is ludicrous and I urge the
FDIC to reject it. In fact, at the last CRA exam, our examiner told us
that it would be virtually impossible for us to achieve an “Outstanding”
rating under the “Large Bank” exam. Talk about a “disincentive” for
continuing our CRA efforts. But, if more banks were eligible for the
“Small Bank” exam, more banks might try for an “Outstanding” since it
might actually be attainable, and wouldn’t that be a good thing?
If the rules are left unchanged, the burden of complying with the
large bank requirements will cost our bank additional time and money
that, quite frankly could be put to better use. Regulatory burden is
already a weight that is getting tougher to carry every year with GLB,
SOX, the PATRIOT ACT, etc. More and more of my staff’s time is being
spent on compliance related issues when it should be focused on
expanding and bettering the products and services we provide to our
community.
Regarding adding “Community Development in Rural Areas” as a
community development activity, we think it is wholly appropriate. Just
drive around the state and look at the state of most of our small towns.
They are drying up and blowing away. They are in dire need of community
reinvestment. But, at our last CRA exam, we were told that the purchase
of $400,000 in revenue bonds for our local rural water district and
purchase of our local school bonds didn’t count in our CRA evaluation.
If we don’t invest in Trivoli Water District Bonds and Farmington School
Bonds, who will, and why shouldn’t we get credit for reinvesting in our
community?
In summary, we strongly urge the FDIC to adopt its proposal as
written.
Respectfully Submitted,
M. Scott Hedden
President
