Federal Deposit
Insurance Corporation

From: McDonald, Mike [mailto:Mike.McDonald@abcbancorp.com]
Sent: Wednesday, October 20, 2004 4:41 PM
To: Comments
Subject: RIN No. 3064-AC50
Importance: High

I am Senior Vice President and CRA Officer of ABC Bancorp, a bank holding company located in Moultrie, Georgia. Our holdings consist of eleven separately chartered community banks with $1.2 billion dollars in assets. These banks are located in South Georgia, Southeast Alabama and North Florida. Each of our eleven banks has less than $250 million in assets. This letter is to inform you that I 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. Since ABC Bancorp reached the $1 billion asset mark all of our eleven subsidiary banks have had to completely reorganize their CRA program and begin a massive new reporting, monitoring and investment program. ABC Bancorp has provided guidance in this process along with training on the new data collection requirements. Also, the holding company has purchased software on behalf of the banks in order to facilitate the reporting required for CRA under the large bank criteria. However, even with the help received from ABC Bancorp, the individual banks are struggling to meet the demands of the large bank criteria for CRA. Furthermore, the cost of the implementation of large bank CRA will ultimately be felt by the individual banks. The annual cost to the holding company is approximately $76,000. This figure includes annual license for CRA reporting and management software, salary for an employee to manage CRA on the holding company level, and also travel and training costs involved in the process.

We believe in the Community Reinvestment Act and support its underlying principles of serving the deposit and credit needs of everyone in our communities especially those of low- and moderate-income. However, under the tremendous requirements of loan coding, paperwork and reporting under the large bank examination criteria our banks are hindered from carrying out the original purpose of CRA. The time involved in data entry and paperwork should be devoted instead to service to all customers and meeting the needs of low- and moderate-income people particularly. The size of our individual banks dictates the number of employees they have and this does not give provision for a full time CRA employee. The job of large bank implementation must be added to other duties of certain employees and can be very burdensome.

Also, I believe that our subsidiary community banks are placed in an unfair position to compete with other local banks of similar size and purpose in their respective communities. These other local banks that are not owned by a holding company can enjoy the streamlined CRA examination requirements while our banks strive to meet the demands of large bank CRA just because they happen to be owned by a holding company with $1 billion in assets. For example, the banks not owned by a holding company do not need to worry about finding CRA investments in their communities while our banks much search for CRA investments that are practically non-existent on a local level just to meet the large bank investment tests. They usually must resort to regional investments which do not truly serve their local assessment area which defeats the purpose of CRA.

Furthermore, I support the proposal to add a community development criterion to the small bank examination for larger community banks. I believe this would be a big improvement over the investment test. However, I would prefer that the FDIC apply the new community development criterion to banks greater than $500 million up to $1billion. The banks under $500 million now hold about the same percent of overall industry assets as community banks under $250 million did ten years ago when the adoption of the revised CRA regulations took place, so this change in the CRA threshold is appropriate. It has proven extremely difficult for our small community banks, especially those in rural areas, to find community development qualified investments in their communities. ABC Bancorp has had to purchase mortgage pool securities for each of its subsidiary banks to help them meet CRA requirements. It is highly unlikely that these regional investments will ever benefit the banks' own communities. This type of procedure is not in keeping with the intent of Congress when it enacted the Community Reinvestment Act. If the FDIC adopts its proposal, a small bank could be under the streamlined examination procedures but they would have the flexibility to choose the mix of Community Development loans, services and investments to meet the new community development criterion. This would be much more appropriate to the size of the bank, and much better than having the large bank examination procedure imposed on the smaller community banks.

I am very much opposed to the idea of making the community development criterion a separate test from the bank's overall CRA evaluation. In our small subsidiary banks, community development lending is not very different from the credit they offer to the entire community. The current small bank test considers the institution's overall lending in its community. Adding a category of community development lending would expand the concept of serving the whole community. A separate test would defeat the purpose of streamlining the examination.

Lastly, I support the FDIC's proposal to change the definition of "community development' from pointing attention to low- and moderate-income people only to include residents of rural areas. However, the new definition should encompass residents that could truly benefit form CRA and not just higher income residents of rural areas. The majority of ABC Bancorp's subsidiary banks make loans to owners of small farms in their assessment areas because the farms are vital to their communities. The banks and the holding company are committed to helping in the development of the rural communities even though the farm loans may sometimes be risky due to the nature of farming.

In conclusion, I believe the FDIC proposal under discussion will be a great improvement in the CRA regulations. This improvement will be more in keeping with the meaning of the Community Reinvestment Act and will relieve the burden to small banks that renders the process meaningless for them. I strongly urge the FDIC to adopt its proposal.

Sincerely,
Mike McDonald
Senior Vice President and
CRA Officer
ABC Bancorp

Wanda G. Ricks
ABC Bancorp
Compliance
229-890-1111 x 350
Fax 229-890-6376
wanda.ricks@abcbancorp.com