FIRST HOPE BANK, NA
From: Quick, Cara [mailto:CQuick@firsthope.com]
Sent: Thursday, September 16, 2004 9:50 AM
To: Comments
Subject: CRA Proposal RIN 3064-AC50
Robert E. Feldman, Executive Secretary
Attn: Comments/Executive Secretary Section
Federal Deposit Insurance Corporation
500 17th Street NW
Washington, DC 20429
Re: CRA Proposal RIN 3064-AC50
Dear Mr. Feldman:
Please accept this as my comment letter in support your proposed
increase to the small bank asset threshold from $250 million to $1
billion under the Community Reinvestment Act (CRA). We are a small
community bank that now must begin complying with the large bank test
next year.
We support the FDIC's proposal to raise the threshold for the 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 small banks under the current regulation,
which are required to meet the standards imposed on the nation's largest
$1
trillion banks. Community banks would still be required to help meet the
credit needs of their entire communities and would continue to be
evaluated by their regulator.
We support the addition of community development criterion to the
small bank examination for larger community banks, but we believe the
new community development (CD) criterion should be applied only to banks
greater than $500 million to $1 billion. Community banks up to $500
million now hold about the same percent of overall industry assts as
community banks up to $250 million did a decade ago when the revised CRA
regulations were adopted, so this adjustment in the CRA threshold is
appropriate. As bankers and examiners know, it has proven extremely
difficult for small banks, especially those in rural areas, to find
appropriate CRA qualified investments in their communities. Many small
banks have had to make regional or statewide investments that are
extremely unlikely to ever benefit the banks' own communities. This
result certainly was not intended by Congress when it was enacted CRA.
We strongly oppose making the CD criterion a separate test from the
bank's overall CRA evaluation. Such differentiation creates the
impression the CD lending is different from the provision of credit to
the entire community. The current small bank test considers the
institution's overall lending in its community. A separate test would
create an additional CD obligation and regulatory burden, eroding the
intent of the streamlined exam.
We strongly support the FDIC's proposal to change the definition of
"community development" from only focusing on low-and moderate-income
area residents to including rural residents. This change will go a long
way toward eliminating the current distortion in the regulations that
result in a small rural bank being told to invest in regional affordable
housing bonds for an urban area not in the bank's community.
We do understand the spirit and intention of the Community
Reinvestment Act and how vital it is to our community. Our survival and
growth is dependent on our community that we serve. With these changes,
we would merely have a reduction in reporting requirements, freeing up
more time and funds that could be better spent in the development of the
community.
Thank you for sharing our comments on this proposal.
Sincerely,
Cara Quick
Vice President for Compliance
First Hope Bank, NA
