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FDIC Federal Register Citations Iberville Bank September 15, 2004 Mr. Robert E. Feldman 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 of Iberville Bank, located in Plaquemine, Louisiana, a small town on the bank of the Mississippi river with a population of 8,000 people. My bank currently has assets of $186 million and is currently subject to small bank CRA exam. 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 future regulatory burden imposed on many small banks such as my own as we grow under the current regulation. 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. 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. 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. 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 10/25/2004 | regs@fdic.gov | |