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CITYBANK From: Dan Coppin [mailto:dcoppin@citybank.com]
Sent: Tuesday, August 24, 2004 6:23 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50
Thank you for the opportunity to comment on the FDIC's proposal to
increase the "small institution" test for banks under the Community
Reinvestment Act from the current $250 million to $1 billion, without
regard to holding company affiliation. As an employee of a community
bank with assets of about $630 million, I strongly applaud the FDIC's
consideration of this change and encourage the Board to promptly
implement this proposal. I support this proposal for the following
reasons:
* Since 1995 when the small institution test was created, the gap in
assets between the smallest and largest institutions has grown
substantially. The 578 FDIC-insured institutions with assets greater
than $1 billion account for nearly 85% of all bank assets. The 385
institutions in our size category -$500 million to $1 billion - hold
only about 4% of all bank assets. This disparity supports raising the
threshold for the large bank examination to make most efficient use of
examiner resources without a detrimental impact on the goals of the CRA.
* The cost of complying with new and existing regulations is overly
burdensome for banks with assets under $1 billion. New regulations under
HMDA, the USA Patriot Act, and the Gramm-Leach-Bliley Act are adding
enormous costs to community banks' overhead and are drawing critical
resources away from serving the credit needs of our customers.
* Streamlining CRA examination procedures for banks with assets under
$1 billion would be consistent with recent changes to the FDIC's safety
and soundness examination procedures under the MERIT (Maximum
Efficiency, Risk-Focused, Institution Targeted) examination program.
* Community banks like CityBank are already at a competitive
disadvantage to credit unions and other financial entities that do not
have the same regulatory burden as commercial banks, especially in areas
like Community Reinvestment. Enlarging the "small institution"
definition will help restore competitive balance in our industry.
I also approve of the Board's consideration of changing the
definition of "community development" to benefit not just low- and
moderate-income residents but also residents of rural areas. However, I
encourage the Board to retain the small bank examination standard in its
current form, without the addition of new community development
criteria. Recognizing that banks with assets under $1 billion are truly
"small" is not a justification for making the small bank examination
procedure more complex. Adding an examination requirement to consider
the bank's community development, services and investments would simply
negate the benefits of being examined under the small bank examination
standard, both for banks and for examiners. These tests have little to
do with the original intentions of the Community Reinvestment Act, which
was to "assess an institution's record of helping to meet the credit
needs of the local communities".
Again, thank you for this opportunity to comment. We hope the Board
will act promptly to make this long-awaited change a reality.
Sincerely,
Dan Coppin
Senior Vice President
CityBank, Lynnwood, Washington
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