FDIC Federal Register Citations

September 13, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429

Dear Mr. Feldman:

Reference: Notice of Proposed Rulemaking Community Reinvestment Act RIN-AC50

Thank you very much for the opportunity to respond to the proposed rulemaking regarding revisions to 12 CFR 345 which implements the,Community Reinvestment Act.

We are an OCC-chartered community bank located iri the state of Hawaii with total, , footings of approximately $450 million and our principal office is in Honolulu. We have eleven branches on the island of Oahu, two branches on the island of Maui, and two branches on the big island of Hawaii. Inasmuch as our total assets are in excess of $250 million, we are examined under the large bank test of loans, investments, and service. We are in support of the proposed rule to, change, the definition of "small bank" by raising the asset size threshold to $1 billion from $250 million without regard to the.holding company affiliation. Our bank has been subjected to the large institution examination with the associated costs and burden, and the use of human' resources.. Keeping-the focus of small banks on lending would be consistent with the purpose ,of CRA, which is to ensure that the agencies evaluate how banks help to meet the credit needs of the communities that they serve. If adopted, this amendment will bring substantial regulatory relief.

We prefer that the current criteria under the Small Bank Performance Standards (12 CFR 345.26(a)(1)) remain unchanged instead of your proposal to include a mandatory
community development criterion for banks with assets between $250 million and $1 billion through a combination of community development lending, qualified investments, or community development services. Generally, a community bank is non-complex; we receive deposits and we make loans. Our business activities are usually focused on small, defined geographic areas where our bank is able to best serve the community, given our resources. We, as do other institutions, believe that our bank will prosper if the community and our State prospers, and we are always looking for opportunities in community development consistent with safe and sound and prudent banking practices.

We 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 examination.

We support the amending of community development to include activities that includes rural areas as well, or that serves to revitalize or stabilize rural areas. This will broaden the scope of this definition, and increase the possibilities of either an investment or service in rural communities.

Sincerely,
Roland M. Watanabe, Jr.
Vice-President, & CRA Officer