BANKIOWAFrom:
Shelly Whited [mailto:shelly.whited@bankiowa.com]
Sent: Thursday, September 16, 2004 1:20 PM
To: Comments
Subject: Streamlined CRA Exam; RIN number 3064-AC50
Shelly Whited
1004 Rebecca Court
Independence, IA 50644
September 16, 2004
Comments to FDIC
Dear Comments to FDIC:
September 10, 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 Sir or Madam:
I am the Compliance and CRA Officer for BankIowa, located in rural
Iowa. We have been subject to the large bank CRA exam since January 1,
2002. I would like to start out my comment letter by providing you with
the history of our bank. BankIowa has a total of eight branch offices
all located in Iowa. Following is the location of our offices and the
population of each town:
Independence, Iowa (MSA – NA) 6,007*
Lamont, Iowa (MSA – NA) 503*
Jesup, Iowa (MSA – NA) 2,210*
Norway, Iowa (MSA 16300) 602*
Cedar Falls, Iowa (MSA 47940) 36,164*
Waterloo, Iowa (MSA 47940) 68,641*
Cedar Rapids, Iowa (NE office and SW office) (MSA 16300) 121,522*
* 2000 Census Bureau www.census.gov
Our assessment area consists of Buchanan, Black Hawk, Linn, and
Benton counties, total population of these counties is 366,410*.
We are a $300 million family-owned community bank established in
1921. BankIowa is owned by Fidelity Ban Corporation, a sub-chapter S
single bank holding company. The Rudolph A. Leytze family has
controlling ownership of the holding company.
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 many small banks such
as my own under the current regulation, which are required to meet the
standards imposed on the nation's largest $1 trillion banks. I
understand that this 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
evaluated by my regulator. However, I believe that this would lower my
current regulatory burden of man-hours used for tracking investments,
loans and services. In 2003, those of us at BankIowa that are
responsible for data entry of CRA loans into the government software and
auditing of loan, investment and service tracking, logged our CRA work
hours. This time totaled up to the equivalent of 1,000 man-hours. This
did not even include the time that lenders and loan support spent on
determining if a loan was CRA reportable and compiling the information
on such loans, nor did it include time that senior management and our
CRA committee spent on reviewing donation requests and accumulating the
information needed to document that investments and services met the
definitions of CRA in order for us to earn CRA credit.
I do not support the addition of a separate community development
criterion to the small bank examination for larger community banks
(banks between $250 million and $1 billion in assets). As FDIC examiners
know, it has proven extremely difficult for small banks, especially
those in rural areas such as our bank, to find appropriate CRA qualified
investments in their communities that meet the definition of “community
development.” Many small banks have had to make regional or statewide
investments that are extremely unlikely to ever benefit the banks' own
communities just to meet the definition of “community development.” That
was certainly not the intent of Congress when it enacted CRA. However,
in order for a community bank to survive in rural areas, they have to
donate and focus on their communities. There are numerous donation
opportunities for us that if not made, would hurt our bank, but don’t
qualify for CRA. My point is if you enacted a different criterion for
the larger small banks, you are still not accomplishing anything but
creating more paper work and regulatory burden. What would be the point
of raising the threshold if all you are going to do is create more
documentation responsibility, which is no different from what is
happening now? Additionally, how are examiners going to compare banks if
one bank decides to focus on investments and another comparable bank
focuses on services? There are already way too many subjective judgment
calls being made by examiners on CRA and this will make it even worse.
Instead of creating another criterion for the larger small banks, you
need to apply the same (current regiment for banks < $250 million)
criterion to all banks that are under $1 billion in assets.
I know that there are many banks that are in the same position as we
are. For instance, many local citizens looks to our bank for financial
support, educational training and for volunteer hours, including our
school system and our senior citizens. Because our school is not located
in a low or moderate-income area and because our students are not
“primarily” low income, we get no CRA credit for anything we do to help
them. We have to take money away from this type of donations request in
order to make donations in investments that meet the current definition
of “large bank community development.” How is that helping our
community? Additionally, I don’t think that pulling “rural areas” into
your definition of community development will change what banks are
doing. The small community banks are already serving their communities,
and if
you remove the unnecessary burden of large bank CRA reporting regiment,
we could continue to do more. Community banks have to help their
communities, or perish. Let us continue to do this without having to
spend hours documenting such activities to ”prove” that we are helping
our communities.
I strongly oppose adding a “stream-lined” criterion for banks that
would fall between $250 million and $1 billion. For a community bank,
community development (CD) lending is not significantly 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
regiment and regulatory burden that would erode the benefit of the
streamlined exam.
If the FDIC truly believes that it needs to change the definition of
"community development" from only focusing on low- and moderate-income
area residents to including rural residents, it should do this for all
the levels of the CRA test. I think that this change in the definition
will go a long way toward eliminating the current distortions in the
regulation. We caution the FDIC to provide a definition of "rural" that
will not be subject to misuse to favor just affluent residents of rural
areas. Additionally, being a heavy Ag lending bank in rural Iowa,
including rural areas would clearly help us meet the CRA goal of lending
to the entire community. I would also caution you to relook at the “new
and innovative” requirements, because there aren’t a whole lot of
options that “shake” up Ag lending without posing some risk to our rural
banks.
In conclusion, I believe that the FDIC has proposed a major
improvement in the CRA regulations by raising the threshold to $1
billion. This much more closely aligns the regulations with the
Community Reinvestment Act itself, and I urge the FDIC to adopt its
threshold proposal, and eliminate the “in-between” criterion for larger
small banks as I have outlined in the recommendations above. I will be
happy to discuss these issues further with you, if that would be
helpful.
Sincerely,
Shelly Whited
Compliance and CRA Officer
BankIowa
1-800-433-0285
shelly.whited@bankiowa.com
