Thank you for the opportunity to comment
on proposed changes to the Community Reinvestment Act, (CRA). We
were recently examined for CRA compliance as a small bank and received
a satisfactory rating using the small bank streamlined method. In
January of 2005, if no changes are made to the definition of small
bank, we will be required to perform under the large bank standards
since this will be the second year that our asset size exceeded $250
million at year-end.
The Peoples Bank Co. is located in a rural area, composed of agriculture
and some small businesses. None of our assessment area is located
within an MSA. We have six offices and several ATMs located throughout
our assessment area.
Your proposal to raise
the small bank asset size to $1 billion will be helpful, but I
question the need to incorporate a community development
criterion for banks with assets between $250 million and $1 billion.
Our assessment has no more than two businesses that employ over 500
persons and most farms and businesses would fall below $1 million
in gross annual revenue. A bank our size ($258,891,605 as of 12/31/03)
in a rural community must serve the needs of the farmers and small
business owners as well as its consumers or it would not continue
to grow and prosper. Qualified community development investments
are non-existent in our assessment area and few community development
services are available. Other than the lending qualification, we
will be hard pressed to meet the other criteria and keep our investment
dollars within our assessment area. Under your proposal we will be
required to take funds we would have loaned in our local area to
make an investment outside our area that would qualify as a community
development investment. The addition of rural to be added with the
low & moderate income for the investment test will not change
the availability of these investments, because we do not have the
population base to support these types of investment activities.
As a community bank we would not survive if we did not have products to meet
the needs of the areas we serve. When our small businesses and farmers have
a tough year because of economic conditions or weather we work with them to
help them survive until they have an opportunity to turn things around. That
is often contrary to the suggestions from our regulators or how a larger holding
company bank treats its customers.
Our management continues the support of raising the small bank definition
to banks of $1 billion or less with no additional criteria. We see
no logical reason or evidence that banks between $250 million and
$1 billion have less of an involvement in their community and often
it is banks of this size that can bring many additional services
to the in which they serve community that a smaller institution does
not have the resources to support. If a community bank meets or exceeds
the loan to deposit threshold the community development criterion
should not be required.
