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:

I am the CRA Officer of Falcon International Bank, located in Laredo, Texas. The bank is $335 million in assets and this is the first year of being subject to the large bank CRA exam. As community bankers, we strongly support the FDIC’s proposal to raise the threshold for the streamlined small bank CRA examination. This would greatly relieve the regulatory burden imposed on many small banks such as my own under the current regulation. The proposal will greatly alleviate unnecessary paperwork and examination burden without weakening the bank’s commitment to reinvest in its community. As a community bank, we have always been, and will continue to be, responsive to our community needs and promote and support community and economic development. Making it less burdensome to undergo a CRA exam by expanding eligibility for the streamlined exam will not change the way our bank does business. In fact, it will free up human and financial resources that can be redirected to the community and used to make loans and provide other services.

We support the addition of the community development criterion to the small bank examination for larger community banks, but we believe that the FDIC should adopt its original $500 million threshold without a Community Development (CD) criterion. The new CD should be applied to banks greater than $500 million up to $1 billion. We support the addition of the CD criterion because it significantly reduces the current regulation requirements that when a small bank goes over $250 million, it must completely reorganize its CRA program and begin a massive new reporting, monitoring and investment program. If the FDIC adopts is proposal, a state nonmember 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 and investment 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 very large banks. This more graduated transition to the large bank examination is a significant improvement over the current regulations.

In conclusion, we believe that the FDIC has proposed a major improvement in the CRA regulations. The FDIC’s proposed changes to CRA are needed to alleviate regulatory burden and we urge the FDIC to adopt its proposal.

Sincerely,
Ana P. Valdez
EVP and CRA Officer

5219 MCPHERSON RD • LAREDO, TEXAS • 78041
PHONE: 956-722-2365 • FAX: 956-794-9777