Federal Deposit
Insurance Corporation

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 Small Bank CRA Streamlined Examination

Dear Sir:

I am the Compliance and CRA Officer of Passumpsic Savings Bank, with its main office located in St. Johnsbury, Vermont. Passumpsic Savings Bank is a state-chartered, non-member bank owned by Passumpsic Bancorp, a Vermont-based mutual holding company. My bank serves northern Vermont and New Hampshire through a network of nine branches. Our asset size is approximately $379 million, and the bank is currently subject to the large bank CRA examination. 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 the size of the bank’s holding company. This would greatly relieve the regulatory burden imposed on many small community 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. I understand that this is not an exemption from CRA and that my bank would still have to meet the credit needs of its entire community and be evaluated by our regulator. However, I believe that this would significantly reduce our current regulatory burden by decreasing or eliminating the man-hours and costs associated with loan geocoding and annual CRA data reporting. I am particularly concerned with the “cliff effect” my bank has experienced from the additional CRA compliance burden imposed since the bank qualified as a large bank under the current regulation.

I strongly oppose making the Community Development criterion a separate test for the bank’s overall CRA evaluation. For a community bank, community development 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 record in its community. A separate test would create an additional community development obligation and regulatory burden that would erode the benefit of the streamlined exam.

Another reason I oppose a separate community development test relates to the limited opportunities a small bank located in a rural area may have for making qualified community development investments. As FDIC examiners know, it has proven extremely difficult for small banks in predominantly rural areas to find appropriate CRA-qualified investments that benefit their own communities. In these circumstances, small community banks may have to make regional or statewide investments that are extremely unlikely to ever benefit the bank’s own communities. That was certainly not the intent of Congress when it enacted the Community Reinvestment Act.

In conclusion, I believe that the FDIC has proposed a major improvement in the CRA regulations by increasing the large bank threshold to $1 billion. This change would more closely align the regulations with the basic intent of the Community Reinvestment Act and the realities of a small community bank’s ability to effectively compete and efficiently operate in today’s economic environment. I urge the FDIC to adopt the proposed $1 billion threshold without a separate community development test. I will be happy to discuss these issues with you further, if that would be helpful.

Sincerely,
David J. Gonyaw
Vice President
Compliance and CRA Officer
Passumpsic Savings Bank
St. Johnsbury, Vermont