Federal Deposit
Insurance Corporation

Highlands Union Bank

October 4, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429

Re: RIN Number 3064-AC50 Community Reinvestment Act (CRA)

Dear Mr. Fieldman:

I am writing on behalf of Highlands Union Bank to comment on the FDIC's proposed changes to its CRA regulations. As the CRA Officer of the bank, I have been dealing with the CRA "large bank" requirements for the past three years. Our bank is currently at $550 million in assets and as such would be affected by the proposed change should it be adopted by all agencies.

I feel that raising the threshold to $1 billion in assets is a positive step and one that should be taken as soon as possible for a number of reasons.

CRA compliance costs are higher on community banks that do not currently qualify for the streamlined "small bank" test. This is true because they do not have the resources that the larger banks have to address CRA compliance. Raising the threshold will relive such banks of this significant burden and will not affect the loans to the communities they serve, including low and moderate income segments of the community.

Our bank, just like all community banks, lends to all segments of the communities we serve. The survival of our bank depends on our lending function and CRA loans are an important part of our business. Raising the threshold to $1 billion will not reduce CRA loans, if fact it will free up resources used in unnecessary red tape. These resources can be employed to enhance lending to our communities.

A major concern for our bank is obtaining the qualified investments which are required under the "large bank test. These qualified investments are extremely hard to find and obtain. We can not compete with much larger banks for these investments and therefore the investment component of the "large bank" test simply does not work for a bank our size.

All banks are under enormous regulatory burden. This is especially true for community banks, as they simply do not have the resources available to address compliance that the larger banks have. In light of this fact and consistent with the FDIC's stated goal of reducing regulatory burden, where feasible, the CRA regulation should be amended as proposed to help banks reduce this significant strain.

In summary, I believe that the FDIC is pursuing the right course on this issue and again urge that this proposal be adopted and implemented as soon as possible. I appreciate the opportunity to comment.

Sincerely,
C. Wayne Perry
Senior Vice President CRA Officer