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THE SAVINGS BANK
15 September 2004
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
the
Small Bank CRA Streamlined Examination
Dear Sir or Madam:
I am President and Chief Executive Officer of The Savings Bank,
located in Wakefield, Massachusetts. Wakefield is a community of 24,000
people. My bank has almost $400 million in assets and 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 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 help meet the credit needs of its entire community
and be evaluated by
my regulator. However, I believe that this would lower my current
regulatory burden by
several hundred man-hours annually and would reduce my costs as well.
These savings could all be channeled into qualifying loans. Added time
and costs take away valuable resources from our community.
Reinvesting in our local communities is something that this bank as
part of its “normal” course of business. To do otherwise would be
imprudent from a reputation standpoint.
I also support the addition of a community development criterion to
the small bank
examination for larger community banks. It appears to be a significant
improvement over
the investment test. However, I urge the FDIC to adopt its original $500
million threshold
for small banks without a CD criterion and only apply the new CD
criterion to community
banks greater than $500 million up to $1 billion. Banks under $500
million now hold about
the same percent of overall industry assets as community banks under
$250 million did a
decade ago when the revised CRA regulations were adopted, so this
adjustment in the CRA
threshold is appropriate. As FDIC examiners know, it has proven
extremely difficult for
small banks, especially those in rural areas, to find appropriate CRA
qualified investments in
their communities. Many small banks have had to make regional or
statewide investments
that are extremely unlikely to ever benefit the banks’ own communities.
That was certainly
not intent of Congress when it enacted CRA. We’ve had this problem
ourselves and have generally opted to stay “closer to home” than to
reach for investments outside our area of expertise (geographically).
An additional reason to support the FDIC’s CD criterion is that it
significantly reduces the
current regulation’s “cliff effect.” Today, when a small bank goes over
$250 million, it must
completely reorganize its CRA program and begin a massive new reporting,
monitoring and
investment program. If the FDIC adopts its proposal, a state nonmember
bank would move
from the small bank examination to an expanded but still streamlined
small bank
examination, with the flexibility to mix Community Development loans,
services and
investments to meet the new CD criterion. This would be far more
appropriate to the size
of the bank, and far better than subjecting the community bank to the
same large bank
examination that applies to $1 trillion banks. This more graduated
transition to the large
bank examination is a significant improvement over the current
regulation.
I strongly oppose making the CD criterion a separate test from the
bank’s overall CRA
evaluation. For a community bank, CD 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 in its community. The addition of a
category of CD lending (and
services to aid lending and investments as a substitute for lending)
fits well within the
concept of serving the whole community. A separate test would create an
additional CD
obligation and regulatory burden that would erode the benefit of the
streamlined exam.
In conclusion, I believe that the FDIC has proposed a major
improvement in the CRA
regulations, one that much more closely aligns the regulations with the
Community
Reinvestment Act itself, and I urge the FDIC to adopt its proposal, with
the
recommendations above. I will be happy to discuss these issues further
with you, if that
would be helpful. I may be reached by direct telephone at 781-224-5428
or by email to bmccoubrey@tsbawake24.com.
Sincerely,
Brian D. McCoubrey
President and CEO
The Savings Bank
357 Main Street
Wakefield, MA 01880
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