|
Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations |
|||
|
FDIC Federal Register Citations FirstBank/Community South Mr. Robert E. Feldman
Dear Sir or Madam: I am the CRA Officer of Community South Bank, home office located in Parsons, Tennessee. Our branches are all in rural areas with the exception of one branch on the outskirts of a metropolitan area. Our bank currently has $267 million in total assets only attaining $250 million in 2004. 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. Reinvesting in our communities is something we do everyday as a matter of good business. We must be responsive to community needs. However, I believe that the streamlined exam would lower my future regulatory burden by freeing up human and financial resources that can be redirected to the community and used to make loans and provide other services. My bank is affiliated by common ownership with a $1.2 billion bank that has complied with the large bank CRA for several years. The burden and costs are tremendous, not to mention the difficulty in complying with areas of the regulation. 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. 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 I strongly support the FDIC's proposal to change the definition of "community development" from only focusing on low- and moderate-income area residents to including rural residents. I think that this change in the definition will go a long way toward eliminating the current distortions in the regulation. We caution the FDIC to provide a definition of "rural" that will not be subject to misuse to favor just affluent residents of rural areas. Rural banks are frequently called upon to support needed economic or infrastructure development, or loans that help create needed or better-paying jobs. These activities should not be ineligible for CRA credit because they do not benefit only low- or moderate-income individuals. 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. Our Chairman of the Board and CEO join with me in strongly supporting adoption of this proposal. Thank you. Sincerely, Penny Vise R. Steven White Richard R. Inman FirstBank/Community South
|
||
| Last Updated 11/12/2004 | regs@fdic.gov | |