Federal Deposit
Insurance Corporation

September 15, 2004

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: FOIL Proposed Increase in the Threshold for the Small Bank CRA Streamlined Examination

Dear Mr. Feldman:

Our bank's headquarters is located in Edmond, Oklahoma, a town of approximately 74,000 residents on the northern border of Oklahoma City. We also have two branches in Oklahoma City and one in Colorado Springs, Colorado. We have assets of approximately $315,000,000 as of June 30, 2004. Under the current CRA limits for small and large bank examinations we will be subject to the large bank format after the end of 2004. I am writing to 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. We are the only subsidiary of our holding company. This would greatly relieve the regulatory burden imposed on many small banks such as ours. Under the current regulation we will be required to meet the standards imposed on the nation's largest banks. I understand that this is not an exemption from CRA and that this bank would still have to help meet the credit needs of its entire community and be evaluated by our regulator. I would estimate that if the proposed new parameters are adopted, this would lower my current regulatory burden by approximately 800 hours or about $13,000 per year in time and $2,000 per year in office supplies used to document compliance.

I also support the addition of a Community Development (CD) criterion to the small bank examination for larger community banks. It appears to be a significant improvement over the investment test. However, I urge the FDIC to adopt its original $500 million threshold for small banks without a CD criterion and only apply the new CD criterion to community banks greater than $500 million up to $1 billion. Banks under $500 million now hold about the same percentage of overall industry assets as community banks under $250 million did a decade ago when the revised CRA regulations were adopted, so this adjustment in the CRA threshold is appropriate. As FDIC examiners know, it has proven extremely difficult for small banks, especially those in rural areas, to find appropriate CRA qualified investments in their communities. Many small banks have had to make regional or statewide investments that are highly unlikely to ever benefit the banks' own communities. That was certainly not the intent of Congress when it enacted CRA. Our bank will have to compete with much larger banks for investments if the threshold is not changed, which will be very difficult to do with the number of truly large banks located in the Oklahoma City metropolitan area.

An additional reason to support the FDIC's CD criterion is that it significantly reduces the current regulation's "cliff effect." Today, when a small bank goes over $250 million, it must completely reorganize its CRA program and begin a massive new reporting, monitoring and investment program. If the FDIC adopts its proposal, a state nonmember bank would 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 to the size of the bank, and far better than subjecting the community bank to the same large bank examination that applies to $1 trillion banks. This more graduated transition to the large bank examination is a significant improvement over the current regulation.

I strongly oppose making the CD criterion a separate test from the bank's overall CRA evaluation. For a community bank, CD lending is not significantly different from the provision of credit to the entire community. The current small bank test considers the institution's overall lending in its community. The addition of a category of CD lending (and services to aid lending and investments as a substitute for lending) fits well within the concept of serving the whole community. A separate test would create an additional CD obligation and regulatory burden that would erode the benefit of the streamlined exam. We currently provide loans to several borrowers who are buying inner city properties that need rehabilitation. They make improvements to the home and then sell them to people to increase home ownership in low and moderate income areas of Oklahoma City that have seen declines over the past twenty years or so. We also provided financing for complete rehabilitation of an apartment complex located in a moderate income tract in 2004.

In conclusion, I believe that the FDIC has proposed a major improvement in the CRA regulations, one that much more closely aligns the regulations with the Community Reinvestment Act itself, and I urge the FDIC to adopt its proposal, with the recommendations above. I will be happy to discuss these issues further with you, if that would be helpful.

Sincerely,