Federal Deposit
Insurance Corporation

October 18, 2004

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 Sir:

In addition to many other roles, I am the CRA and Compliance Officer for South Carolina Bank and Trust of the Piedmont [SCBT Piedmont], located in York County, SC. SCBT Piedmont operates four (4) branch offices within York County, competing with fourteen (14) other financial institutions for business from the area’s population of approximately 182,000. My bank’s total assets as of 6/30/04 are $157 million making us subject to the small bank CRA exam procedures in the past. However, as part of a holding company, which has exceeded the $1 billion mark for the last two year-ends, SCBT Piedmont will now be subject to large bank CRA procedures. Although SCBT Piedmont’s primary regulatory is the OCC, I am writing to strongly support the FDIC’s proposal to raise the threshold for the streamlined small bank CRA examination to $1 billion without regard to bank holding company size in hopes that if passed, the OCC will re-examine this qualifier for nationally chartered institutions. This would greatly relieve the regulatory burden imposed on many small banks such as my own under the current regulation, which are required to meet the standards imposed on the nation’s largest $1 trillion banks. SCBT Piedmont understands this is not an exemption from CRA and that we will continue to work diligently toward meeting the credit needs of our entire community and be evaluated by our primary regulator. As an active community member and “small bank” for CRA purposes, SCBT Piedmont strives to provide credit to all who qualify throughout the county and to ensure a high level of service through our branch network, ATMs, phone and web banking and community development service provided through our employees.

I also support the addition of a community development criterion to the small bank examination for larger community banks; it appears to be a significant improvement over the investment test. However, I urge the FIDC to adopt its original $500 million threshold for small banks without a CD criterion applying the new CD criterion to community banks greater than $500 million up to $1 billion. Banks under $500 million now hold about the same percentage of overall industry assets as community banks under $250 million did a decade ago when the revised CRA regulations were adopted making this adjustment in the CRA threshold appropriate. As regulatory examiners know, it is extremely difficult for small banks to find appropriate CRA qualified investments in their communities. Although SCBT Piedmont has not yet been examined under large bank CRA procedures, efforts to locate affordable investments providing benefit within our community/assessment area have been unsuccessful.

An additional reason to support the FDIC’s CD criterion is that it significantly reduces the current regulation’s “cliff effect.” Today when a small bank such as SCBT Piedmont either goes over $250 million or is part of a $1 billion+ holding company, it must completely reorganize its CRA program to include new reporting, monitoring and investment components. If the FDIC adopts its proposal, perhaps other regulatory agencies would also allow all community banks to move from the small bank examination to an expanded but still streamlined small bank examination, with the flexibility to mix CD loans, services and investments to meet the new CD criterion. This more graduated transition is appropriate to bank size providing a potentially increased level playing field than subjecting community banks to the same large bank examination that applies to $1 trillion banks – a significant improvement over 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 significantly 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 conclusion, I believe that the FDIC has proposed a major improvement in the CRA regulations, more closely aligning the regulation with both the letter and spirit of the Community Reinvestment Act itself and I urge the FDIC to adopt its proposal. I will be happy to discuss these issues further with you, if that would be helpful.

Sincerely,

J. Gary Hood
Executive Vice President/COO