Federal Deposit
Insurance Corporation

October 18, 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 (CRA)

Dear Mr. Feldman:

I am writing on behalf of Second Bank & Trust, an affiliate of Virginia Financial Group, to comment on FDIC’s proposed changes to its CRA regulation. We applaud the FDIC’s proposal to raise the definition of “small bank” for purposes of determining those eligible for the streamlined examination standards, from $250 million in assets to $1 billion in assets, regardless of holding company affiliation. We believe that the arguments in support of such a change are compelling and urge the FDIC to finalize its proposal.

It should be noted that CRA compliance costs are disproportionably higher on community banks that currently do not qualify for the streamlined test. Smaller community banks do not have the resources of larger community, super regional or national banks to address CRA compliance. Raising the threshold to $1 billion would relieve smaller banks of this significant burden.

Second Bank & Trust, by the nature of its business, lends to all segments of the communities we serve. CRA loans are an important part of our business. Raising the threshold to $1 billion will not reduce the loans which we make in our communities. It will reduce unnecessary administrative expense, thereby allowing us to provide services to our customer at lower costs.

The proposed increase in the small bank threshold is consistent with FDIC’s stated goal reducing regulatory burden where appropriate and feasible. In addition, the mere passage of time since the original institution of the small bank threshold would justify an increase to keep up with inflation. I appreciate the FDIC’s review of this matter, and we await favorable response.

Yours very truly,
Christopher J. Honenberger
President & CEO