PRAIRIE STATE BANK
From: Joan Stephenson (Main) [mailto:JStephenson@prairiestatebank.com]
Sent: Thursday, September 16, 2004 9:46 AM
To: Comments
Cc: psmith@aba.com
Subject: FDIC CRA Proposal
Prairie State Bank strongly supports the FDIC's proposal to raise the
threshold for the streamlined small bank CRA examinations to $1 billion
without regard to holding company size. This would greatly reduce the
burden imposed on small banks under the current regulations, which are
the same regulations imposed on the nation's largest $1 trillion banks.
Community banks would still be required to help meet the needs of their
entire communities and would continue to be evaluated by regulators.
We support the addition of the community development criterion for
larger community banks of $500 million up to $1 billion. Community banks
under $500 million hold about the same percent of overall industry
assets as those up to $250 million did a decade ago when CRA was
revised. This would justify the adjustment of the threshold. As bankers
and regulators know, it has proven extremely difficult for small banks,
especially those in rural areas, to find qualified CRA investments in
their communities. Many are looking outside their communities for these
investments which was not the intent when CRA was enacted.
We strongly oppose making the CD criterion a separate test from the
bank's overall CRA evaluation. This would create the impression that CD
lending is different from the provision of credit to the entire
community. The current small bank test already considers the
institution's lending in its community. A separate test would create an
additional burden.
We also support the FDIC's proposal to change the definition of
"community development" to include rural residents, as well as low to
moderate income. This will help to eliminate the distortions that result
in a small rural bank being told to invest in regional affordable
housing bonds for an urban area not within the bank's community.
Please take these points under consideration in an effort to
alleviate some of the regulatory burden under which community bank's are
already overwhelmed.
Sincerely,
Joan Stephenson
Vice President
Compliance/CRA Officer
Prairie State Bank
Augusta, KS
