MERRILL BANK
201 Main Street Telephone (207) 942-4800
P.O. Box 925 Fax (207) 945-4712
Bangor, Maine 04402-0925 www.merrillmerchants.com
September 15, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, D. C. 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 Chairman and CEO of Merrill Merchants Bank in Bangor, Maine. Our
bank is $360 million in asset size and part of a one bank financial
holding company. We have eleven offices that serve communities with
population bases ranging from 2,000 to 32,000.
First, let me thank you for proposing to increase to $1 billion the
threshold for the Small Bank CRA streamlined examination and for
offering community bankers the opportunity to comment on your proposal.
We small bankers desperately need regulatory relief and this would
certainly be a beginning.
I have been a community banker for 40 years and, unfortunately, I
have witnessed an alarming rate of increased paperwork and recordkeeping
to comply with today’s regulatory burden. Without a doubt we are the
most regulated industry that I know of in business today. Since 1995
when the Community Reinvestment Act (CRA) was rewritten, we have added
new reporting requirements under HMDA, the USA Patriot Act and the
privacy provisions of the Gramm-Leach Bliley Act and I am sure there are
more that don’t come to mind at this time. The nature of a community
bank has not changed but complying with the requirements of the large
institution CRA examination is going to increase our salary and support
expense by 25% to 30%. Not only will this be costly to our bank from an
overhead point of view, but it will take personnel away from helping to
meet the credit needs of our respective communities as they have to deal
with all of the regulatory issues related to CRA.
Your proposal to increase the threshold for the small bank examination
is in no way an exemption from CRA and I understand that my bank would
still have to help meet the credit needs of our communities and be
evaluated by my regulator. I truly believe that it is now and always has
been in our best interest to reinvest into our respective communities.
I am in support of the addition of a community development CD
criterion to the small bank examination for large community banks. It
appears to be an improvement of the investment test. However, I do urge
you to apply the new CD criterion to community banks with assets of $500
million to $1 billion. It is my understanding that banks under $500
million now hold about the same percentage of overall industry assets as
community banks under $250 million did a decade ago when the revised CRA
regulations were adopted, so this adjustment would seem appropriate.
Even considering the size of our bank and the areas we serve, there have
been very limited opportunities to acquire community development loans.
I could go out of market, but how is that going to benefit my
communities?
Another reason I support your CD criterion is that it allows a bank a
more gradual approach to the large bank examination process. Your
proposal allows a bank to move from the small bank examination to an
expanded, but still streamlined, small bank examination which, I
believe, will be a significant improvement over the current regulation.
I strongly oppose making the CD criterion a separate test from the
overall CRA evaluation. As a community bank, we view CD lending the same
as proving credit to the entire community. The current small bank test
considers our overall lending in our 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 that would erode the benefit of the
streamlined exam.
In closing, I again would like to thank you for this opportunity to
express my support for increasing the threshold to $1 billion in assets
for community banks eligible for the small bank examination and to
encourage you to approve this proposal as quickly as possible. Community
banks need regulatory relief and your proposal is a step in the right
direction.
Sincerely,
Edwin N. Clift
Chairman and CEO
ccs: The Honorable Alan Greenspan
E. Philip A. Simpson, Jr., FRB, Boston, Mass.
