Federal Deposit
Insurance Corporation

September 16, 2004

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

Re: Community Reinvestment, RIN # 3064-AC50, Expansion of Eligibility for the Streamlined CRA Exam

Dear Mr. Feldman:

As a community banker I strongly support the FDIC's proposal to increase the asset size limit of banks eligible for the streamlined small bank CRA examination. I also strongly support the elimination of the separate holding company qualification.

The proposal will greatly alleviate unnecessary paperwork and the examination burden without weakening our commitment to reinvest in our communities. Community banks know they will not survive if the local community doesn't thrive, that we must be responsive to community needs, and must promote and support community and economic development, including low and moderate income individuals and neighborhoods

A streamlined CRA exam will be more cost effective and efficient. It is inequitable to evaluate a $500 million or $1 billion 'bank using the same procedures as a $100 or $500 billion bank. Qualified investments can be difficult to find in rural areas so investments are made regionally or statewide to meet CRA requirements. These investments may benefit other areas but take resources away from the bank's local community. I find the FDIC's proposed community development requirement for banks between $250 million and $1 billion to be more flexible and more appropriate than the large bank investment test. The proposal will help rural banks meet the special needs of their communities by expanding the definition of "community development. 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.

Without the proposed changes more and more community banks will find they cannot sustain independent existence and will opt to sell out. For small towns and rural communities the loss of the local bank is a major blow to the local economy. Easing the regulatory burden will assist community banks like mine to continue to provide committed service to local communities that few other financial service providers are willing to do.

Thank you for consideration of my views.

Sincerely
Julie A. Smith, Vice President
F&M Bank
Springfield, MN