Federal Deposit
Insurance Corporation

September 20, 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: FDIC Proposed Increase in the Threshold for the Small Bank CRA Streamlined Examination

Dear Mr. Feldman:

I am the President and CEO of Northfield Savings Bank, located in Northfield, VT, a community of approximately 5,000 residents. My bank is a $480 million dollar institution subject to large bank CRA criteria. I am writing to strongly support the FDIC’s proposal to raise the threshold for the streamlined small bank CRA examination to $1 billion without regard to the size of the bank’s holding company. This would greatly relieve the regulatory burden imposed on banks such as Northfield, which are required to meet the same standards imposed on the nation’s largest banks. I understand the FDIC proposal is not an exemption from CRA and that my bank would still have to help meet the credit needs of its entire community and be subject to regulatory oversight. However, I believe that this would lower my current regulatory burden in terms of both human resources and expense.

I support the addition of a community development criterion to the small bank examination for larger community banks, but believe the FDIC should adopt its original $500 million threshold without a Community Development (CD) criterion. The new CD criterion should be applied only to banks greater than $500 million up to $1 billion. It has been extremely difficult for Northfield Savings Bank to find appropriate CRA qualified investments in our service area. We have had to make regional or statewide investments that are unlikely to ever benefit the Banks’ own communities. This result certainly was not intended by Congress when it enacted CRA.

I 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. The addition of a category of CD lending (and services to aid lending and investments as a substitute for lending) fits well within the concept of serving the whole community. A separate test would create an additional CD obligation and regulatory burden, eroding the intent of the streamlined exam.

In conclusion, I believe that the FDIC has proposed a major improvement in the CRA regulations, one that much more closely aligns the regulations with the Community Reinvestment Act itself, and I urge the FDIC to adopt its proposal, with the recommendations above.

Sincerely,
Thomas N. Pelletier
President and Chief Executive Officer
Northfield Savings Bank
Northfield, VT