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FDIC Federal Register Citations Community
Bank 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 CEO of Community Bank, Ellisville, Mississippi with various locations in a 60,000 population county. My bank is $360 million in size and is owned by a $1.6 billion holding company. We are subject to a large bank CRA exam because of the holding company size. 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 t; evaluated by my regulator. However, I believe that this would lower my current regulatory burden by numerous man hours. 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. 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. Many of our loans that currently do not qualify as a community development loan are made to small business that are vital to providing jobs and services to our local economy. We are not even given CRA credit for making church loans. These type of loans are essential to our small, close community. 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.
Sincerely,
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| Last Updated 10/29/2004 | regs@fdic.gov | |