Federal Deposit
Insurance Corporation

The Honorable John D. Hawke, Jr.
Comptroller of the Currency
Independence Square, 250 E Street, S.W.
Washington, DC 20219-0001

The Honorable Alan Greenspan
Chairman
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551

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

Dear Sirs:

I am President of First National Bank with our main office located in Goodland, Kansas. Our Bank has assets of $320 million and we have been examined under the large and small bank procedures. We do not have a credit card division or are we located in an MSA.. I am writing to strongly support the FDIC and OCC proposal to raise the threshold for the streamlined small bank CRA examination to $1 billion. During our last CRA Examination, the OCC examiners stated that since we had 50% of the deposit market and 91% of the small business ..and farm loans, that it was a waste of their time and ours to do the large bank procedures. At best, the large bank examination procedures do not apply to a bank of our size. At worst, it is government-mandated waste that does little for the eight rural communities we serve. The increase in the small bank definition would greatly relieve the regulatory burden imposed on many small banks under the current regulation.

I am Chairman of the Western Kansas Partnership, which is a public-private partnership that coordinates economic development in all of Western Kansas, and past Co-Chair of Kansas Inc, which does strategic planning for the State of Kansas. In my discussions with economic development and community groups, it is apparent that many of these individuals assume that by raising the size of the small bank definition that the regulation will be gutted. I have talked to community developers on the national level and they have the same misconceptions. The sad thing is, that none of the people I spoke with had talked to a community banker working in a bank that is less than $1 billion in assets. One of the individuals I spoke to said that an "insider" at the FDIC was telling them this would "decimate" the entire CRA program. The movement of the small bank designation will be the biggest nonevent in community development ever, and in my opinion, will increase bank participation in local development programs. With the current program in place, community banks have no incentive to do more than is satisfactory. If rural communities are to survive, we must be innovative and self reliant. We cannot expect the Government to save us. The Fed's Center for Rural Development recommends regional programs that are unique. We cannot all play by the same book.

I urge the FDIC, OCC and the Fed to adopt the $1 Billion threshold for small banks. As your examiners know, it has proven extremely difficult for small banks; especially those in rural areas, to find appropriate CRA qualified investments in our communities. Many small banks have had to make statewide investments that are extremely unlikely to ever benefit our own communities. That was certainly not intent of Congress when it enacted CRA.

An additional reason to support the CD criterion is that it significantly reduces the current regulation's "cliff effect." Several years ago when we went over $250 million, we had to completely reorganize our CRA program and begin a massive new reporting, monitoring and investment program. If the FDIC and OCC adopt this proposal, a 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, investments and gifts 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 any 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. In addition, the CD category would not take into account the time money and leadership that bankers give to their communities. We give our communities approximately $100,000 a year in contributions and these gifts have not meet the " investment" criteria in the past. As a former OCC examiner, I believe that any community development program should have the same merits for examination purposes as those outlined in handbooks or procedures.

In conclusion, I believe that the FDIC, OCC and the Fed have 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 that you to adopt the proposal, with the recommendations above. I will be happy to discuss these issues further with you, if that would be helpful.

Sincerely
Lawrence L. McCants
President