FLORIDA LEGAL SERVICES, INC.
September 28, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 1'7th Street, NW.
Washington, DC 20429
Re: Notice of Proposed Rulemaking, 12 CFR 345 implementing the
Community Reinvestment Act, RIN number 3064-AC50
Dear Secretary Feldman:
FLORIDA LEGAL SERVICES represents low income Floridians. For nearly
two decades, we and other legal services programs in Florida have
represented low income groups and individuals in using the Community
Reinvestment Act to secure from Florida financial institutions
agreements to give fair consideration to community development financing
requests from low income communities. The CRA is important to our
clients because it has been the primary means of breaking down Florida
financial institutions' pronounced historical reluctance to provide low
income community development financing. We appreciate the opportunity
that the Federal Deposit Insurance Corporation is providing for public
comment on proposed rules that would change the FDIC's evaluation of
Community Reinvestment Act performance of financial institutions between
$250 million and $1 billion in assets, and of those institutions
operating in areas that the FDIC would deem "rural."
The FDIC regulates financial institutions, usually banks, that
receive FDIC deposit insurance, but are not regulated by the Federal
Reserve Board, the Comptroller of the Currency, or the ,Office of Thrift
Supervision. FLORIDA LEGAL SERVICES is disappointed that the FDIC has
not followed the lead of the Federal Reserve and the Comptroller in
rejecting financial institutions' requests for greater exemptions from
CRA evaluation requirements. We request in turn that the FDIC either
withdraw the proposed rule change, or limit its effect to financial
institutions that are not among the market leaders of a community, who
should be expected to help lead private efforts to finance low income
community development activities. "Market leaders" could be defined as
those institutions that have at least a 5% share of the deposits of a
market area, including a county or city, or a poverty-stricken area
therein. Also in response to the FDIC's August 20, 2004 Notice, FLORIDA
LEGAL SERVICES does not think that a definition of a "rural area" would
be wise or helpful. Today's "rural area" often is tomorrow's "urban
area," and there is no clear dividing line. What would be helpful,
instead, is that in areas outside of those in which Home Mortgage
Disclosure Act reporting is possible, FDIC examiners document and
consider characteristics of the particular community development
activity, and the activities' target population in relation to that of
the state as a whole, in their CRA assessment of the activity. In this
way the CRA concerns of financial institutions in these areas could be
addressed, while continuing CRA's protection of low income rural
residents, who often have among the most dire community credit needs.
The FDIC's proposed rule change may be billed as being merely
"streamlining" or reducing paperwork, but in fact it would remove a
significant incentive for many FDIC-regulated banks to participate in
low income community development activities. FDIC-regulated Florida
banks affected by the proposed rule change are among the market-leading
financial institutions that are expected to help lead low income
community development financing activities in many of the state's most
critical low income communities. Under current FDIC regulations, these
institutions have a significant incentive, under the community
development activities criterion of CRA regulatory review, to give fair
consideration to participating in low income community development
investments, and in low income lending programs and consortiums in their
market areas. These activities lead to high CRA ratings, and thus also
to greater attractiveness as acquisition targets of large bank holding
companies. The current high level of financial institution participation
in these activities in Florida is testament to the effectiveness of this
incentive.
The FDIC's proposed rule change would replace the current CRA
community development incentive with a much more murky standard
dependent upon the discretion of individual FDIC regulators to consider
particular community development activities. The proposed amendment, in
a nutshell, would, according to the FDIC's Notice, permit FDIC regulated
financial institutions between $250 million and $1 billion in assets to
"balance their community development lending, investing and service
activities based on the opportunities in the market and the banks' own
strategic strengths. For example, [such] a bank . . . may perform well
under the community development criterion by engaging in one or more as
opposed to all of the activities." Under the proposed regulation
amendment, an affected bank would be able to determine entirely
internally, with FDIC regulator awareness and tacit approval, what
community development activities fit within the bank's "strategic [i.e.,
planned] strengths." These internal decisions would be made without any
opportunity for meaningful community input, defeating one of the primary
purposes of the CRA, and, as the bank's plan was implemented, would
become self-fulfilling prophesies.
In Florida, the effect of the proposed rule change would be profound.
The propos? would relieve market-leading banks of pertinent CRA
responsibilities in many areas of the state that contain low income
community development financing situations that are among the most
important in the state. In the financial market areas of Florida
described on the following pages, the indicated FDIC-regulated Florida
banks have assets between $250 million and $1 billion and are among
their communities' market leaders. They presently would be looked upon
to help lead low income community development financing activities, but
under the FDIC's proposed rule no longer would have to seriously
consider the bulk of requests for community development activity
participation. The affected areas would include some of the state's most
poverty stricken areas; downtown Tampa; many of the centers of farm
worker housing; areas around Florida's military bases; coastal areas
devastated by hurricanes; the areas with the highest housing costs in
Florida; rapidly growing central Florida communities; and nationally
significant historic areas. I used FDIC on-line data for institution
size (as of June 30, 2004) and market share (as of June 30, 2003) for
this compilation.
North Florida
Escambia County (Pensacola area)
This area has Pensacola, one of Florida's largest cities and its
poorest. The county was devastated by Hurricane Ivan; has a military
base; and has one of Florida's most successful community development
corporations, Community Equity Investments. The Bank of Pensacola is the
second largest financial institution in Pensacola and Escambia County,
with 17% of all deposits.
Okaloosa County (Destin area)
This is a fast growing area with a large service labor force and
Eglin Air Force Base along its beach areas, and a low income rural area
along I-10. Recently the County was hard hit by Hurricane Ivan. Vanguard
Bank & Trust Co. is the largest financial institution in Okaloosa
County, with 16% of all deposits. Destin Bank, the County's fourth
largest financial institution with 9% of all deposits, dominates the
Destin market, with 31% of all deposits there. In the Destin and
Valparaiso market that services Eglin Air Force Base, the two banks
combined account for 48% of all deposits.
Wakulla County (south of Tallahassee)
A fast growing, largely bedroom community on the Gulf of Mexico just
south of Tallahassee. Wakulla Bank is the largest, and one of only two
financial institutions in Wakulla County, with 69% of all deposits.
Jefferson County (east of Tallahassee)
A rural, scenic, and low income area just east of Tallahassee. The
county seat is Monticello. Farmers & Merchant Bank is Jefferson County's
largest,' and one of only two financial institutions, with 75% of all
deposits.
St. John's County (St. Augustine area)
This is a fast-growing coastal area just south of Jacksonville that
contains St. Augustine, North America's oldest city. Prosperity Bank is
the second largest financial institution in St. Augustine with 20% of
all deposits, and the third largest bank in St. John's county with 15%
of all deposits.
Central Florida Downtown Tampa
In a community with some of the state's most serious poverty
problems, the Bank of Tampa is a mainstay. Overall in Tampa, the Bank of
Tampa is the fourth largest financial institution, with 5% of all
deposits.
Spring Hill (north of Tampa)
A large residential and retirement community in Hernando County,
which is north of the greater Tampa area, and which has the state's
largest rate of annual county population growth. First Kensington Bank
is Spring Hill's fourth largest financial institution, with 9% of all
deposits.
Polk County (Lakeland area)
This is a large, highly populated, rapidly growing area around I-4
between Tampa and Orlando that has many of the state's largest
commercial and agricultural entities. Citrus & Chemical Bank is the
fourth largest financial institution in Polk County, with 11% of all
deposits.
Lake County (greater Orlando area)
A fast growing, largely bedroom community of Orlando with a
significant farm worker population. Citizens First Bank is the fourth
largest financial institution in Lake County, with 11% of all deposits,
and United Southern Bank is the sixth largest financial institution in
Lake County, with 7% of all deposits. The former has 47% of all deposits
in the city of Lady Lake, and the latter has 78% of all deposits in the
city of Umatilla.
Hardee and Highlands Counties (citrus country)
A rural area between I-4 and Lake Okeechobee that is largely
agricultural, with farm workers, and was devastated by Hurricane
Charley. Wauchula State Bank is the largest financial institution in
Hardee County, with 70% of all deposits, and the fifth largest financial
institution in Highlands County, with 11% of all deposits.
Manatee County (Bradenton area)
This area, just south of Tampa, is rapidly growing and has
substantial poverty and farm workers. Gold Bank is the second largest
financial institution in Manatee County, with 9% of all deposits. In the
low income community of Ellenton in the county, Gold Bank has 21% of all
deposits.
South Florida
Englewood (south of Sarasota)
A Gulf Coast city just south of Sarasota County that is largely
elderly and low income, and was leveled by Hurricane Charley. Englewood
Bank is the second largest financial institution in Englewood, with 15%
of all deposits, and Peninsula Bank is the fourth largest financial
institution, with 14% of all deposits.
Immokalee (near Eveglades)
A city in Collier County renowned for its primarily farm worker
population and abject poverty, and recently leveled by Hurricane
Charley. Practically the only financial institution in town is Florida
Community Bank, with 92% of all deposits. The FDIC proposed rule change
perhaps could lead to a return here of entities such as the infamous
Fred's Barn.
Stuart (north of Fort Pierce)
An oceanside community and county seat of Martin County that bore
some of worst damage from Hurricane Frances. Gulfstream Business Bank is
Stuart's fourth largest financial institution, with 9% of all deposits.
Homestead (south of Miami)
A city south of Miami with an air force base and a otherwise largely
low income farm worker population. Community Bank of Florida is the
largest financial institution in Homestead, with 3:3% of all deposits,
and TIB Bank of the Keys is the third largest, with 14% of all deposits.
Monroe County (Florida Keys area)
The Florida Keys have the highest housing costs in Florida, and a
military base. TIB Bank of the Keys and First State Bank of the Florida
Keys, are the two largest financial institutions in the County, with a
combines 47% of all deposits. The former has 44% of all deposits in Key
Largo; the latter has 38% of all deposits in Key West.
Please preserve the current regulatory incentive of FDIC-regulated
institutions such as the above highlighted Florida banks to participate
in low income community development financing activities.
Respectfully submitted,
Benjamin Ochshorn,
Staff Attorney
FLORIDA LEGAL SERVICES
2121 Delta Boulevard
Tallahassee, Florida 32303
(850) 385-7900 FBN #0382566
