BankIowa
From: Rod Liss
[mailto:Rod.Liss@bankiowa.com]
Sent: Monday, April 05, 2004 1:55 PM
To: Comments
Subject: Comments on proposed amendments to the Community Reinvestment
Act Regulations
Attention: Robert E. Feldman, Executive Secretary
Subject: Comments on proposed amendments to the Community Reinvestment
Act Regulations
One of the significant proposed amendments would change the
definition of "small institution" to those with total assets of less
than $500 million without regard to holding company assets. While a move
in the right direction, I feel this proposed threshold is still much too
low and should be increased to $1 billion at a minimum or higher if the
regulators want to have a realistic threshold that separates "small" and
"large" institutions.
Applying the same system of analysis to a $500 million institution
and to institutions with tens and hundreds of billions in assets does
not appear realistic based on the lack of homogeneity of size, physical
geographies, resources, markets within the geographies, opportunities,
products, diversification and many other factors.
For example, as referenced in a April 18, 2002, FDIC publication New
Reporting Offers Insight Into Bank Activities, there are significant
differences in the composition of earnings between larger banks
(referred to as those with more than $1 billion in assets) and smaller
banks. The statistics identified that larger banks obtained a much
larger share of their revenues from noninterest sources and from a
different composition of noninterest income. If the data is precise
enough to identify that operations of large and small banks are already
distinctly different enough to generate measurable quantitative
differences in the composition of revenue, it would seem logical to use
something close to these thresholds to divide the banks into more
homogenous groups when trying to analyze and compare the component
activities of their operations.
Finally, an increase in the threshold to $1 billion does not appear
to significantly reduce the portion of the nation's banking assets
subject to evaluation under the "large" institution performance
standards. Additionally, if the trend in market share continues it will
be a diminishing portion as the larger institutions continue to gain
control of an increasing percentage of the banking market share.
Rod Liss
BankIowa
Senior Vice President
Independence
319-334-7181
Rod.Liss@bankiowa.com
