| SECURITY BANK OF BIBB
COUNTY
via e-mail
September 10, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
RE: RIN number 3064-XXXX, request for comment
Dear Mr. Feldman:
This letter is in response to the FDIC’s request for comment (RIN
number 3064-XXXX) concerning proposed revisions to 12 CFR 345, commonly
and herein referred to as the Community Reinvestment Act (CRA). In your
press release dated August 16, 2004 announcing your request for comment
you stated your agency’s proposal as: “We now propose amending the
‘small bank’ definition to $1 billion. In addition, we are proposing to
add a mandatory community development criterion for those small banks
with assets over $250 million and we are proposing to amend the
community development definition to emphasize the importance of
investments and services in rural communities.”
We are in favor of increasing the ‘small bank’ definition to $1
billion. As a member of one of the most heavily regulated industries in
our economy we enthusiastically support any opportunity to lessen the
record keeping and compliance burden such regulation imposes.
Characterizing a bank as “small” does not lessen its obligation to
provide quality and equitable banking services to its entire community,
nor should it have any effect on its commitment to support its native
community. Any bank that is successful in its community is going to
recognize the primacy of community support and raising the ‘small bank’
definition to $1 billion will not lessen their commitment to these
ideals. The main effect of the proposed change would be to allow the
FDIC to continue to place primary emphasis on loans when assessing a
bank’s attention to its community support responsibilities. It is
through the lending process that banks have had and will continue to
have the most important impact on the communities they serve. Continuing
emphasis on this most important aspect of a bank’s activities would have
the most solicitous effect on communities and their residents.
We do object to the portion of your proposal that says, “…amend the
community development definition to emphasize the importance of
investments….”. There are problems for smaller banks with the investment
aspect of CRA in the first place, and to further emphasize this
criterion will place these banks in a position of being almost certainly
unable to fulfill the act’s expectations. First, such projects are “few
and far between” in all except the largest urban communities so that a
typical bank has little opportunity for participation regardless of its
desire to do so. Second, financing for such projects is almost always
awarded based on the lowest bid price. Smaller banks simply cannot
compete with larger banks based on price and, thus, will nearly always
lose the opportunity to finance the few projects that do exist on this
factor alone. Unless regulations are promulgated requiring such projects
to utilize a smaller bank with its higher pricing, small banks will
continue to be routinely ‘shut out’ of such opportunities by their
larger counterparts. While it is unrealistic to expect regulations
requiring such projects to accept more expensive sources of financing,
it is also unrealistic to expect a small bank to take a loss on a loan
or an investment just to help meet a CRA qualification. Unfortunately,
that is exactly the choice many smaller banks must frequently make when
considering these kinds of opportunities. Therefore, we strenuously
object to any part of a regulation that would make the investment
criteria more prominent than it already is.
We do not object to the part of the recommendation that would place
more emphasis on community service. We do feel that the definition of
service should be broadened as to qualifying activities and expanded to
include employee service activities before and after regular work hours.
Service (products, locations, employee involvement in the community,
etc.) is an area where the small banks can and do effectively compete
with larger institutions. Smaller banks well understand the imperative
to ‘give back’ to the communities they serve, and typically contribute
hundreds of hours of employee time to their communities annually. Being
naturally more involved in their communities, they are also usually more
aware of community needs. And, because they are typically more nimble
than their larger competitors, they can fashion products and services
attuned to community needs more readily.
In summary, we support your initiative to raise the ‘small bank’
definition to $1 billion and are convinced that such a move will not
reduce the affected banks’ commitment to community support or compliance
with CRA. We object to the proposed increased emphasis on community
investment as we believe it is most difficult for most banks to comply
with this test as it currently stands, and to ‘raise the bar’ on this
particular criterion would be to set most banks up for foreordained
failure with regard to this important aspect of the regulation. We do
not object to your recommendation to increase emphasis on community
service as we believe the majority of banks would already qualify under
this criterion whether the change was made or not.
We thank you for this opportunity to respond to the proposed changes,
and applaud your effort to make the regulations more pertinent to
today’s economic climate. If we may be of any further assistance
regarding this matter, please do not hesitate to call on us.
Sincerely,
Richard A. Collinsworth
President
Security Bank of Bibb County
P.O. Box 4748
Macon, GA 31208
478-722-6216 (office)
478-722-6250 (fax)
collinsworth@securitybank.net (e-mail)
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