Federal Deposit
Insurance Corporation

September 16, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street N.W.
Washington, DC 20429

RE: RIN 3064-AC50
Community Reinvestment Act Regulations

Dear Mr. Feldman:

Montecito Bank & Trust submits the following comments on the FDIC Notice of Proposed Rulemaking amending Community Reinvestment Act ("CRA") regulations, published August 20, 2004, at 69 Federal Register 51611 (the "Proposal"). Montecito Bank & Trust is a community bank with $610 million in assets, serving Santa Barbara and Ventura Counties, California. We appreciate the opportunity to comment on the Proposal.

Definition of "Small Bank"
We support the Proposal's new definition of "small bank" as an institution with assets of less than $1 billion. Our principal concern with the proposal regards the expansion of small bank CRA performance standards for banks with assets between $250 million and $1 billion, by inclusion of a new community development criterion or test.

Assessment of Community Development Performance
The inclusion of a community development criterion or test in small bank CRA performance standards has the effect of providing little, if any, relief from regulatory burden for banks with assets between $250 million and $1 billion that currently are examined under large bank procedures. We compared the proposed performance standards for banks between $250 million and. $1; billion with, current large bank performance standards. We found that the only large bank performance standards to be eliminated are delivery and distribution of retail services. A bank's requirement to make community development investments and perform community development services in order to achieve a Satisfactory CRA rating would not change, nor would the practical necessity of maintaining and assembling records of such activities for examiner review.

The Proposal seeks comment on whether a community development performance criterion should be included that offers choices for banks. We are unsure about what is meant by offering choices, in that community development activities are as diverse as the geographic locations they are intended to serve. Absent explicit performance standards and examination procedures regarding community development activities, we are concerned about subjective examiner evaluation of a bank's community development performance and the impact such evaluation might have on a bank's CRA rating. We therefore request that any new performance standards and examination procedures developed in connection with the Proposal be specific, and contain measurable and quantifiable standards by which to evaluate a bank's community development performance.

We appreciate the opportunity to comment on the Proposal and thank you for your consideration of our concerns. Please feel free to contact me at (805) 564-0200 or the bank's Compliance Officer, Carla St. Romain, at (805) 564-0282 with any questions

Sincerely,
Rodney K. Brown.
President and CEO
Montecito Bank & Trust
Santa Barbara, CA

cc: California Bankers Association American Bankers Association