SHOREBANK PACIFIC
September 29, 2004
Robert E Feldman
Executive Secretary
Attn: Comments/ Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: RIN Number 3064-AC50
Dear Mr. Feldman:
As - one of the few banks operating under a strategic plan for CRA
purposes, and
- as one of four banks in the Pacific Northwest with a outstanding CRA
rating, and
- as a bank primarily focused on rural development,
we write to you to encourage:
- the increased threshold for determination of a small bank without
regard to the size of the holding company, and
- the provision for loans to rural residents as qualification for
community development credit.
The existing regulations do not give proper credit to rural banks
because the very nature of rural communities is that their populations
blend the income within an SMSA so that they are not considered low
income even though there are significant low income groups within any
population classification. Our headquarters is in the second lowest
income per capita county in Washington state, but neither the county nor
the town are considered a low income area for CRA purposes. This is one
reason why we adopted the strategic plan approach to CRA compliance.
That condition just didn’t make sense. Our loans to entrepreneurs in
these areas are at least as oriented to traditional community
development criteria as the same loans that we make in urban low income
SMSAs.
To arrive at the strategic plan was a very intensive process wherein
we dedicated .5 FTE for a year to establish the plan and create the
monitoring and reporting structure. For a bank of less than $100MM in
assets this is a significant commitment. Another reason for this choice
of approach was because we are owned by a holding company with assets in
excess of $1B and thus needed to meet the large bank test. This too
imposed an unnecessary burden since we operate as an independent entity
and therefore were required to assume the same burden as a larger
institution without the resources. This cost has directly impacted our
earnings. That doesn’t seem to be the desired outcome of the regulation.
Smaller community banks do not necessarily have the resources nor the
expertise to make the same investment decisions as larger banks. As a
result granting more flexibility to these banks to meet community
development goals utilizing their individual expertise, which is often
closer proximity to the customer that leads to financial advice, to the
community that provides leadership, and to developing public private
partnerships are ways that the community bank operates to the greater
benefit that cannot is not provided by the larger institutions. Allowing
them credit for doing so not only rewards what is already being done,
but recognizes the unique benefit that these institutions provide to
their communities.
Sincerely,
David C.E. Williams
ShoreBank Pacific
203 Howerton Way
Ilwaco, WA
