Federal Deposit
Insurance Corporation

Re: Community Reinvestment, RIN number 3064-AC50
Proposal to Expand Eligibility for the Streamlined CRA Exam

Dear Mr. Feldman:

We are an organization of 16 community banks located in Southern and Central New Hampshire. Our mutual assessment areas cover a full range of census tract income and population demographics. Some of our member banks are in MSAs with low income census tracts. Many of our member’s census tracts are very rural in nature. We strongly support the FDIC’s proposal to increase the asset size limit of banks eligible for the streamlined small-bank CRA examination.

The proposal will greatly alleviate unnecessary paperwork and examination burden without weakening our commitment to reinvest in our communities. Reinvesting in our communities is something we do everyday as a matter of good business. Our bank will not thrive if our local communities don’t thrive, and that means that our banks must be responsive to community needs and promote and support community economic development.

Making it less burdensome to undergo CRA exam by expanding eligibility for the streamlined exam will not change the way our banks do business. In fact, it will free up human and financial resources than can be directed to the community and used to make loans and provide other services.

It is important to remember that streamlined CRA exam is not an exemption from CRA. It is a more cost effective and efficient CRA exam. Banks subject to the simplified CRA exam are still fully obligated to comply with CRA. Just as now, our bank would continue to be examined to ensure it lends to all segments of their communities, including low- and moderate-income individuals and neighborhoods. It just doesn’t make sense and is inequitable to evaluate a $500 million or $1 billion bank using the same exam procedures as for a $100 billion or $500 billion bank.
One of the problems with the current large bank CRA exam is that the definition of “qualified investments” is too limited, and qualified investments in Southern and central New Hampshire can be difficult to find. As a result, many community banks have to invest in regional or statewide mortgage bonds or housing bonds and the like, to meet CRA requirements. These investments may benefit other areas of the state or region, but they actually take resources away from the bank’s local communities. Banks and communities would be better off if the banks could truly reinvest those dollars locally to support their own local economies.

For this reason, we find that the FDIC’s proposed community development requirement for banks between $250 million and $1 billion is more flexible and more appropriate than the large bank investment test. The advantage to this proposal is that it continues to focus on community development, but considers investments, lending and services. It would let community banks pursue community development activities that both meet the local communities’ needs and make sense in light of the bank’s strategic strengths.

The FDIC’s proposed changes to CRA are needed to help alleviate regulatory burden. Without changes such as this, more and more community banks like ours will find they cannot sustain independent existence because of the crushing regulatory burden, and many will opt to sell out. By easing regulatory burden, it will make it easier for banks like ours to continue to provide committed service to local communities that few other financial service providers are willing to do.

Thank you for considering our views.

Sincerely,

Allan D. Virr, President
Lakes Region Compliance Association
c/o Bow Mills Bank and Trust Company
190 North Main Street
Concord, NH 03301