SUMMIT
NATIONAL BANK
September 17, 2004
Summit National Bank
P.O. Box 1087
Greenville, SC 29602
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: RIN Number 3064-AC50: FDIC Proposed Increase in the Threshold
for the Small Bank CRA Streamlined Examination
Dear Sir or Madam:
I would like to take this opportunity to express my comments as
they relate to the cut off size of small bank examination classification
for CRA as well as my support of the proposed changes. We ended our
most recent fiscal year dated December 31, 2003, with $341MM in assets.
Our bank converted to the large bank criteria beginning January of
that year.
Upon making this
transition, we have come under the same regulatory burden as the
much larger
banks in our market area. In addition,
we are expected to perform by the same standards to which they are
held. We still consider ourselves a community bank and our focus
of catering to small-business customers validates this point. Our
deposit market is dominated by several large super-regional and interstate
banking organizations; our bank’s market share within our assessment
area is ~2%. This statistic is in line with the fact that there is
a widening gap as it relates to market share. Asking a bank with
assets in the millions to be evaluated on the same level as banks
with assets in the billions is not fair.
Our bank prides itself in managing more assets per employee than
almost any other bank in our peer group. In order to accomplish that,
we have had to recruit individuals who are capable of handling multiple
tasks and then get the most out of them we can. By being spread thin,
it is difficult to adjust to increased regulatory burden such as
that which has been imposed upon us by the existing CRA rules.
Being a bank
with under $500MM in assets, our profits are much more sensitive
to fluctuations
in interest rates than larger banks. Factoring
in the added cost associated with large bank CRA examination criteria,
our earnings have come under even more pressure in trying to perform
under the Lending, Service, and Investment tests. In addition, the
increased regulatory burden has required that individuals currently
monitoring our bank’s CRA performance have been forced to neglect
some other duties that they presently perform. Furthermore, additional
software purchases will be necessary to facilitate timely and accurate
monitoring of the bank’s performance under the large bank evaluation
criteria.
With respect to the Service and Investment tests, we are at a disadvantage
from the outset. Specifically, every community has a limited number
of investment opportunities so competition plays into the equation.
Larger banks have the resources, both time and financial, to attract
those opportunities better than a bank our size. Also, smaller banks
have only a limited number of investment opportunities, whereas larger
banks that can draw from multiple assessment areas have a much greater
prospect of having an impact.
In summary, we
strongly support the FDIC’s proposal to raise
the threshold 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.
In addition, we support the addition of a community development
criterion to the small bank examination for larger community banks,
but we believe that the FDIC should adopt its original $500 million
threshold without a Community Development (CD) criterion. The new
CD criterion should be applied only to banks greater than $500 million
up to $1 billion. Community banks up to $500 million now hold about
the same percent of overall industry assets 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.
It is our contention that banks should be compared with their peers
when being evaluated under the CRA requirements and that the cutoff
be increased to $1 billion in order to promote a better degree of
reasonable comparison. Understand that we are not attempting to disserve
our community; we are first and foremost a community bank and pride
ourselves in our ability to serve our community. This point is supported
by our previous CRA ratings. Our position is that by limiting regulatory
burden, we can continue to focus on meeting the needs of our assessment
areas as well as running a sound and profitable financial institution.
Sincerely,
Blake M. Goldman
Vice President and CRA Officer
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