Federal Deposit
Insurance Corporation

Delaware State Housing Authority

October 12, 2004

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

RE: POLICY RULING #: 3064-AC50.

Dear Mr. Feldman:

I am writing on behalf of the Delaware State Housing Authority to comment on the proposed changes to The Federal Deposit Insurance Corporation (FDIC), proposed revisions to 12 CFR 345 implementing the Community Reinvestment Act (CRA) that would: (a) change the definition of ''small bank" to raise the asset size threshold to $1 billion regardless of holding company affiliation; (b) add a community development activity criterion to the streamlined evaluation method for small banks with assets greater than $250 million and up to $1 billion; and (c) expand the definition of community development to encompass a broader range of activities in rural areas.

With respect to definition of "small bank", DSHA would support changing the definition and allow the threshold size of such an institution to $1 billion. We do not favor allowing banks with holding company affiliation(s) to be included in this definition.

We believe the change in definition would assist small independently owned banks that were established by local people to help their local community. In contrast, many banks may show under $1 billion of assets but are associated with holding companies that have assets in the multi billion. T hese banks have the continual availability of the holding company 's. large assets and labor force and should not be defined as a "small bank".

Also, it must be considered that if a "small bank" sells or merges the financial institution with a holding company at anytime, the "small bank" status is withdrawn.

The Notice of New Rulemaking states a concern that smaller institutions that are currently covered by the large bank tests have noted difficulties with making qualified investments including the ability to compete with larger banks for investment opportunities and maintaining staff and resources to do so.

The Notice proposes adding a mandatory community development performance criterion for banks greater than $250 million and up to $1 billion as an addition component of the streamlined bank standards. This criterion would allow the FDIC to assess a bank's record of helping to meet the needs of the assessment area(s) through a combination of its community development lending, investing, qualified investments, or community development services. This will allow the "small" bank to engage in activities that meet credit needs in their assessment areas(s) and balance their community development lending, investing and service activities based on the opportunities in the market and the bank's own strategic strength.

The alternative is to impose a separate community development test in addition to existing streamlined performance criteria applicable to small banks.

DSHA favors adding a mandatory community development performance criterion rather than impose a separate community development test.

Again, a "small bank" is an institution created by local individuals to assist their local community. Such as in Delaware, the needs of the local communities are different. One community may be urban and mature and require revitalization. Their needs may be housing rehabilitation rather than new construction. The redevelopment of commercial amenities could assist in the stabilization of a mature community. Another community may be rural and their needs may be new construction and farm loans to assist in stabilization. Allowing the "small bank" to engage in activities based on the area, the market and the strength is a reasonable avenue.

The alternative to impose a separate community development test would be difficult. Again, each community has different needs based on geography, the types of businesses, education, and culture. It would improbable to establish a standardized test that would address all our diverse communities.

If banks with holding company affiliation(s) are permitted to comply with either the proposed rule or alternative, we would support neither.

With respect to expanding the definition of community development to encompass a broader range of actvities in rural areas as stated previously all communities have various needs and require different types of:products and services. DSHA believes that expanding the definition to include rural communities would be a disadvantage to urban and suburban communities that are just as much in need of these products and services. Keep the definition universal and maintain the focus of low and moderate income individuals.

Delaware is a banking state. It is our major industry. The banking community's commitment to CRA programs has created an economic engine that has improved our market for products and services both direct and indirect. It has created and stabilized jobs especially in the banking community. It has helped people to achieve goals such as homeownership and become viable members of the community. Please consider these facts and consider our views if and when moving forward with the subject proposal.

Sincerely
Saundra Ross Johnson
Director