Federal Deposit
Insurance Corporation

September 12, 2005

FDIC
Mr. Robert Feldman, Executive Secretary
Washington, D. C.  20429

Subject:  RIN 3064-AC91

Gentlemen: 

Community Bank and Trust, is a 53 year old, independently owned community bank, located in Waco, Texas with $290 million in assets. I appreciate the opportunity to comment on FDIC’s proposal to raise the threshold for small banks exempt from the large bank annual audit and reporting requirements found in Part 363 of the FDIC regulations. 

I strongly support increasing the threshold of Part 363 from the current $500 million to the proposed $1 billion in assets because it is needed and would be helpful for those banks like ours just under the current limit. In light of other structural changes in the banking industry, a community bank today is considered one of $1 billion or less. Consider that the FDIC has expanded the MERIT examination eligibility to well-rated banks up to $1 billion, and the CRA threshold for small bank streamlined examinations has also recently been raised to that amount by several bank regulatory agencies. The reduction of regulatory burdens is vital for community banks. 

A very important reason to raise the limit is the cost to and time consumed by banks in audits. The burdensome management reports and independent auditor’s attestations are expensive and frequently result in duplication of the bank’s internal audit functions. They are not necessary for the safe and sound operation of banks less than $1 billion in total assets. Our outside audit fees have already increased substantially since Sarbanes-Oxley was enacted, and we aren’t even at the current $500 million mark in assets, nor are we a publicly traded organization. 

While our bank has been fortunate, other community banks find it increasingly difficult to find willing, qualified, and independent directors to serve their banks and their communities. By definition, a director may not have a significant borrowing relationship with the bank. This also makes it difficult because such a requirement excludes most of the businesspeople in the community and could virtually exclude all of the people qualified to be directors.

Our community bank has in the past, and presently, received excellent ratings in all areas.  We send this letter to you as a bank that has indeed complied with all CRA provisions.  To continue efficient cost effective service for our customers and the banking industry, we desire these rules to be loosened and furnish much needed regulatory relief. We understand the spirit of these laws and those of CRA and will continue to in the future.

Thank you for this opportunity to comment and I hope you will give serious consideration to my views and those of other concerned community bankers.

Sincerely,

William David Lacy
President and CEO
Community Bank & Trust
1808 Washington Ave.
Waco, Texas 76701