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ST. JOSEPH CAPITAL BANK
September 2, 2004
Robert E. Feldman, Exec. Secretary
Attention: Comments/Legal ESS
Federal
Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429 Re: Community Reinvestment Act Regulations – RIN
# 3064-A
Dear Mr. Feldman:
St: Joseph Capital Bank (SJCB) strongly supports the proposed
increase in the asset size limit for banks eligible for the small bank
streamlined Community Reinvestment Act (CRA) examination process. We
agree with the American Banker's Association (ABA) and the Independent
Community Banker's of America (ICBA) that an increased threshold to at
least $1 billion in assets would be a significant improvement toward
reducing regulatory burden for larger community banks, while maintaining
the overall integrity of promoting community reinvestment.
St. Joseph Capital Corporation is a bank holding company whose
headquarters are located in Mishawaka, Indiana. Our primary
operating subsidiary, St Joseph Capital Bank, provides a broad-array of
banking services to-businesses and individuals in. the Michiana area.
With total assets of $313.7 million at the end of June 2004, we are now
classified as a "large" bank for CRA examination purposes. However, our
size is misleading, as we currently operate out of a single location,
with less than 100 full time employees. Our primary service area is
defined as a 12-mile- radius around our office. We are
expanding in 2005 by opening a branch in the adjacent Elkhart area to
further support the Michiana market.
We believe the bulk of CRA examination resources should
be focused on truly large banks with hundreds or thousands of
offices and branches across diverse markets. Most of those offices and
branches never see a CRA examiner. Those institutions have a much
greater potential for diverting resources from smaller "less-profitable"
communities into larger. metropolitan markets.
Small local institutions like SJCB could not survive unless we are truly
serving our local client base. We provide the traditional bank deposit
and lending products, concentrating our activities within the local
community. However; our size puts us at a competitive disadvantage under
the large-bank investment test. It is much more difficult for SJCB to
compete for qualified investments with the larger multi-billion dollar
banks located in our market. SJCB agrees with your' proposal' to
balance, the evaluation between community development lending, investing
and 'service activities based on the opportunities in the market and
SJCB's own-strategic strengths. This more flexible approach provides a
more effective measure of a bank's activities.
Our service to the community is much more involved. As a corporation,
we donate financial and directorial support to several local charitable,
religious-and civic organizations. Our employees donate countless
personal hours to these same organizations. The Bank takes pride in
supporting our employees' efforts, offering financial support on
occasion, and allowing use of Bank time for some activities.
Most of these activities currently receive no CRA credit for the Bank.
Therefore, we would also propose that these types of service activities
be given consideration under the Community Development criterion.
The proposed regulatory relief would also significantly reduce the
compliance costs for institutions like SJCB by reducing unnecessary
paperwork, improving productivity and reallocating resources to further
serve our client base. The examination costs per employee are unduly
burdensome on larger community banks like SJCB in comparison to the same
testing being done on a trillion dollar mega-bank. The streamlined CRA
exam for small banks does not relieve us of our CRA responsibilities.
However, the current loan data collection and reporting, as well as the
investment test, are more suited to larger financial institutions.
St. Joseph Capital Bank is dedicated to serving the financial needs
of our local community. However, the existing CRA regulations place
community banks like us at a competitive disadvantage. We urge the FDIC
to act promptly to raise the examination threshold and applaud the
agency's efforts to reduce the regulatory burden placed on community
banks.
Thank you for the opportunity to comment.
John W. Rosenthal
Chairman, President & Chief Executive Officer
Katharine J.J. Ryan
Vice President
Compliance Officer
St. Joseph Capital Bank
Mishawaka, IN
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