Federal Deposit
Insurance Corporation

From: Jodee Thompson [mailto:thompsonj@armstrongbank.com]
Sent: Monday, October 18, 2004 12:13 PM
To: Comments
Subject: RIN No. 3064-AC50

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

Re: RIN Number 3064-AC50

Dear Mr. Feldman:

I am the Compliance and CRA Officer for Armstrong Bank located in Muskogee,
Oklahoma with locations located throughout rural areas of northeastern
Oklahoma. We are a $320 million bank and in our second year as a large bank
under the CRA standards. I strongly support the FDIC’s proposal to raise
the threshold for the streamlined small bank CRA examination to $1billion
without regard to the size of the bank’s holding company. There are small
banks like ourselves that are required to meet the standards imposed on the
nation’s largest $1 trillion banks. Raising the small bank threshold would
greatly reduce the regulatory burden imposed on banks like ours under the
current regulation. I understand that this is not an exemption from CRA and
that my bank would still have to meet the credit needs of our entire
community and be evaluated accordingly.

I support the addition of a community development criterion to the small
bank examination for larger community banks, but we believe that a threshold
of $500 million should be set for qualification of this requirement. The
new Community Development (CD) requirements should be applied only to banks
with assets greater than $500 million up to $1 billion. Because community
banks up to $500 million now hold close to the same percent of overall
industry assets as community banks up to $250 million did a decade ago when
the revised CRA regulations were adopted, this level is appropriate. It is
extremely difficult for small banks, especially those in rural areas, to
find qualified CRA investments in their communities. Regional or statewide
investments that are unlikely to ever benefit the banks’ own communities are
many times the only alternative. This was certainly not the intention of
Congress when they enacted CRA. In our last CRA evaluation (small bank
exam), examiners noted that there was a shortage of affordable housing and
economic development projects in our area.

The making of the CD requirements a separate test from the bank’s overall
CRA evaluation is strongly opposed and takes away from the intent of the
streamlined exam. The addition of a CD lending category fits into the
concept of serving the entire community, which is what the current small
bank test considers. A separate test would create an additional CD
obligation and regulatory burden.

Our bank and its branches reside in rural communities. Eight of our
thirteen branches are in communities of less than 5000 people. Seven of
these branches are in non-MSA counties. We pride ourselves in meeting the
banking needs of our rural customers. We strongly support the proposed
expansion to the “community development” definition to include rural
residents as well as low- to moderate-income individuals. This will enable
us to continue our focus on the communities we serve and eliminate the
distortion that we need make investments in regional, urban areas not in our
bank’s own community. We do request that we are provided with a clear
definition of “rural” that will reflect the intent of CRA and cannot be
misused to favor wealthy residents of rural areas.

I believe that the FDIC’s proposal will not only reduce the regulatory
burden imposed on banks, but it will also more closely align the regulation
with the true intent of the Community Reinvestment Act. In doing so, banks
will still be required and very much willing to meet the credit and
investment needs of the communities they serve. This requirement will also
be monitored accordingly through a streamlined examination. We urge the
FDIC to adopt its proposal and appreciate the opportunity to comment on it.
I will be happy to discuss any of these issues with you that would be
helpful.

Sincerely,

Jodee Thompson
AVP Compliance Officer
Armstrong Bank