FDIC Federal Register Citations

Wright Express Financial Services Corporation

October 8, 2004

Mr. Robert E. Feldman
Executive Secretary
Attn: Comment/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 the Compliance and CRA Officer of Wright Express Financial Services Corporation. My bank became subject to the large bank exam and reporting requirements under CRA this year because our asset size has been greater than $250 million for the last two years ($254 million in 2002 and $325 million in 2003).

Wright Express is an industrial bank (industrial loan corporation) with one office in Salt Lake City, UT. We are a wholly owned subsidiary of our industrial parent company, Wright Express LLC in South Portland, Maine. Our business niche consists of nationwide funding of commercial fleet services for fueling, maintenance, and servicing of commercial vehicles via secured and unsecured credit cards. We also issue a MasterCard credit card used by our commercial customers for purchases of products and services related to their business.

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. Since we are considered a large bank, we are now required to meet the same standards imposed on the nation's largest $1 trillion banks.

My bank is committed to CRA, and we will continue our endeavors to meet the credit needs of our community. Adopting this proposed regulation will lower our regulatory burden significantly without reducing or even impacting our CRA commitments and endeavors. Costs associated with the reporting requirements for large banks have a much more significant impact on banks my size than it does on larger banks. My bank would have to invest in new software and personnel in order to ensure accurate compliance with reporting requirements.

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 community development criterion and only apply the new community development 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. Although my bank is not located in a rural area, because of the nature of our business, only a small percentage of our lending actually comes from our assessment areas. We face the challenge of ensuring our investments are benefiting our community to offset our limited lending in the community.

An additional reason to support the FDIC's community development 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. My bank is experiencing this stress right now! We are discussing changes to systems and reporting capabilities and the need to purchase software and hire personnel to manage the data. Also, since we are now considered a large bank, we must reconsider our overall CRA strategy.

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 community development criterion. This would be far more appropriate for the size of my bank, and far better than subjecting my 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 community development criterion a separate test from the bank's overall CRA evaluation. Doing this would create additional community development obligation and regulatory burden and would counteract the purpose of the streamlined exam. An industrial bank like mine would greatly benefit from the flexibility of mixing community development loans, services, and investments to meet the needs of our community. I support the added community development criterion for small banks between $500 million and $1 billion and adamantly oppose the idea of making community development a separate test.

In conclusion, I believe that the FDIC has proposed a major improvement in the CRA regulations, one that reduces regulatory burden and much more closely aligns the regulations with the Community Reinvestment Act itself. I urge the FDIC to adopt its proposal, with the recommendations above. If you would like to discuss this further, please contact me at (801) 892-5390.

Sincerely,

Judy Przybyla
Compliance & CRA Officer
Wright Express Financial Services Corporation
3995 South 700 East, Suite 450
Salt Lake City, UT