SUN WEST BANK
September 30, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Comments@FDIC.gov
Re: Community Reinvestment, RIN number 3064-AC50;
Proposal to Expand Eligibility for the Streamlined CRA Exam
Dear Mr. Feldman:
My name is Jackie K. DeLaney, President and Chief Executive Officer
of Sun West Bank, a community bank located in Las Vegas, Nevada. As a
community banker, I join my fellow community bankers throughout the
nation in strong support of the FDIC’s proposal to increase the asset
size limit of banks eligible for the streamlined small-bank CRA
examination. I am writing to 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.
Sun West Bank recently went over the $250 million mark. This proposal
will allow Sun West Bank to move from the small bank examination to an
expanded but still streamlined small bank examination, with the
flexibility to mix Community Development loans, services and investments
to meet the new CD criterion. This would be far more appropriate than
subjecting us to the same large bank examination that applies to banks
as large as $1 trillion. This more graduated transition to the large
bank examination is a significant improvement over the current
regulation and means small banks will be more responsive to community
needs and promote and support community and economic development.
The proposal will greatly alleviate unnecessary paperwork and
examination burden without weakening our commitment to reinvest in our
communities. Reinvesting in our communities is something we do everyday
as a matter of good business. Making it less burdensome to undergo a CRA
exam by expanding eligibility for the streamlined exam will not change
the way my bank does business. In fact, it will free up human and
financial resources that can be redirected to the community and used to
make loans and provide other services.
It is important to remember that the streamlined CRA exam is not an
exemption from CRA. It is a more cost effective and efficient CRA exam.
Banks subject to the simplified CRA exam are still fully obligated to
comply with CRA. Just as now, community banks would continue to be
examined to ensure they lend to all segments of their communities,
including low- and moderate-income individuals and neighborhoods. It
just doesn’t make sense and is inequitable to evaluate a $250 million or
even a $1 billion bank using the same exam procedures as for a $10
billion or $1 trillion bank.
One of the problems with the current large bank CRA exam is that the
definition of “qualified investments” is too limited, and qualified
investments can be difficult to find. As a result, many community banks
(especially those in rural areas) have to invest in regional or
statewide mortgage bonds or housing bonds and the like to meet CRA
requirements. These investments may benefit other areas of the state or
region, but they actually may take resources away from the bank’s local
community. Community banks and communities would be better off if the
banks could truly reinvest those dollars locally to support their own
local economies and residents. For this reason, I find the FDIC’s
proposed community development requirement for banks between $250
million and $1 billion more flexible and more appropriate than the large
bank investment test. The advantage to this proposal is that it
continues to focus on community development, but considers investments,
lending and services. It would let community banks pursue community
development activities that both meet the local community’s needs and
make sense in light of the bank’s strategic strengths.
Similarly, the proposal will help rural banks meet the special needs
of their communities by expanding the definition of “community
development” so that it includes activities that benefit rural residents
in addition to low- and moderate-income individuals. Rural banks are
frequently called upon to support needed economic or infrastructure
development such as school construction, revitalizing Main Street, or
loans that help create needed or better-paying jobs. These activities
should not be ineligible for CRA credit because they do not benefit only
low- or moderate-income individuals.
The FDIC’s proposed changes to CRA are needed to help alleviate
regulatory burden and are a major improvement in the CRA regulations
allowing it to more closely align with the intent of the Act. Without
changes such as this, more and more community banks like mine will find
they cannot sustain independent existence because of the crushing
regulatory burden, and will opt to sell out. For many small towns and
rural communities, the loss of the local bank is a major blow to the
local community. By easing regulatory burden, it will make it easier for
community banks like Sun West Bank to continue to provide committed
service to local communities that often few other financial service
providers are willing to do.
Thank you for considering my views.
Sincerely,
Jackie K. DeLaney
President and Chief Executive Officer
Sun West Bank
5830 West Flamingo Road
Las Vegas, NV 89103
