Federal Deposit
Insurance Corporation

From: Randy Teegardin [mailto:rteegardin@HastingsCityBank.com]
Sent: Wednesday, September 22, 2004 9:37 AM
To: Comments
Subject: RIN 3064-AC50

Federal Deposit Insurance Corporation Comments/Legal ESS:

I would like to offer my support for 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 holding company. Doing so would go a long way towards relieving the regulatory burden imposed on smaller banks under the current regulations that were established for and imposed on the nation's largest banks. Community banks would still be required to help meet the credit needs of our entire communities and would continue to be evaluated by regulators.

I am in support of the addition of a community development criterion to the small bank examination for larger community banks, but believe that the new community development (CD) criterion should be applied to the greater than $500,000,000.00 to $1 billion banks. Community banks up to $500,000,000.00 now hold about the same percent of overall industry assets as community banks up to $250,000,000.00 did a decade ago when the revised CRA regulations were adopted, so this adjustment in the CRA threshold is appropriate. As both bankers and FDIC examiners know, it has proven to be extremely difficult for small banks, especially those in rural areas such as ours, to find suitable CRA qualified investments in their communities. Many smaller banks have had to make regional or statewide investments that are extremely unlikely to ever benefit the banks own community. This could not have been the intent of Congress when the program was enacted.

I am also opposed to 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 institutions overall lending in its community. A separate test would create an additional CD obligation and regulatory burden which would in effect, erode the intent of the streamlined exam.

I am in support of the FDIC's proposed change in the definition of "Community Development" from focusing only on low to moderate income area residents to including rural residents. This change will go a long way toward eliminating the current distortions in the regulations that result in a small rural bank being told to invest in regional affordable housing bonds for an urban area not in our communities.

I would ask that you please take these comments under consideration as you discuss revisions to 12 CFR 345.

Sincerely,
Randoulph L. Teegardin
Vice President
Hastings City Bank Trust & Investment Group
150 West Court Street
Hastings, MI 49058