TIOGA
STATE BANK
March 17, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Sir:
As a community banker, I strongly endorse the federal bank
regulators' proposal to increase the asset size of banks eligible
for the small bank streamlined Community Reinvestment Act (CRA)
examination from $250 million to $500 million and elimination of the
holding company size limit (currently $1 billion). This proposal will
greatly reduce regulatory burden. I am on the Board of Directors of
Tioga State Bank which has an asset size of $250 million and is
located in Spencer, New York.
The small bank CRA examination process was an excellent innovation.
As a community banker, I applaud the agencies for recognizing that
it is time to expand this critical burden reduction benefit to larger
community banks. At this critical time for the economy, this will allow
more community banks to focus on what they do best-fueling America's
local economies. When a bank must comply with the requirements of the
large bank CRA evaluation process, the costs and burdens increase dramatically.
And the resources devoted to CRA compliance are resources not available
for meeting the credit demands of the community.
Adjusting the asset size limit also more accurately reflects significant
changes and consolidation within the banking industry in the last 10
years. To be fair, banks should be evaluated against their peers, not
banks hundreds of time their size. The proposed change recognizes that
it's not right to assess the CRA performance of a $500 million bank
or a $1 billion bank with the same exam procedures used for a $500
billion bank. Large banks now stretch from coast-to-coast with assets
in the hundreds of billions of dollars. It is not fair to rate a community
bank using the same CRA examination. And, while the proposed increase
is a good first step, the size of banks eligible for the small-bank
streamlined CRA examination should be increased to $2 billion, or at
a minimum, $1 billion.
Ironically, community activists seem oblivious to the costs and burdens.
And yet, they object to bank mergers that remove the local bank from
the community. This is contradictory. If community groups want to keep
the local banks in the community where they have better access to decision-makers,
they must recognize that regulatory burdens are strangling smaller
institutions and forcing them to consider selling to larger institutions
that can better manage the burdens.
Increasing the size of banks eligible for the small-bank streamlined
CRA examination does not relieve banks from CRA responsibilities. Since
the survival of many community banks is closely intertwined with the
success and viability of their communities, the increase will merely
eliminate some of the most burdensome requirements.
In summary, I believe that increasing the asset-size of banks eligible
for the small bank streamlined CRA examination process is an important
first step to reducing regulatory burden. I also support eliminating
the separate holding company qualification for the streamlined examination,
since it places small community banks that are part of a larger holding
company at a disadvantage to their peers. While community banks still
must comply with the general requirements of CRA, this change will
eliminate some of the most problematic and burdensome elements of the
current CRA regulation from community banks that are drowning in regulatory
red-tape. I also urge the agencies to seriously consider raising the
size of banks eligible for the streamlined examination to $2 billion
or, at least, $1 billion in assets to better reflect the current demographics
of the banking industry.
Sincerely,
Mark A. Dixson
Director
Tioga State Bank
Spencer, NY
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