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FIRST NATIONAL BANK OF NORTHERN CALIFORNIA
September 15, 2004
Mr.
Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit
Insurance Corporation
550 17th St. NW
Washington, DC 20429
Re: Community Reinvestment, RIN Number 3064-AC50;
Proposal to Expand Eligibility for the Streamlined CRA Exam
Dear Robert E. Feldman:
As a community banker, I join my fellow community bankers
throughout the nation in strong support of the FDIC's proposal to
increase the asset size limit of banks eligible for the streamlined
small-bank CRA examination. I also strongly support the elimination
of the separate holding company qualification.
The proposal will greatly alleviate unnecessary paperwork and
examination burden without weakening our commitment to reinvest in
our communities. Reinvesting in our communities is something we do
everyday as a matter of good business. My community bank will not
long survive if my local community doesn't thrive, and that means my
bank must be responsive to community needs and promote and support
community and economic development.
Making it less burdensome to undergo a CRA exam by expanding
eligibility for the streamlined exam will not change the way my bank
does business. In fact, it will free up human and financial resources
that can be redirected to the community and used to make loans and
provide other services.
It is important to remember that the streamlined CRA exam is not
an exemption from CRA. It is a more cost effective and efficient CRA
exam. Banks subject to the simplified CRA exam are still fully
obligated to comply with CRA. Just as now, community banks would
continue to be examined to ensure they lend to all segments of their
communities, including low- and moderate-income individuals and
neighborhoods. It just doesn't make sense and is inequitable to
evaluate a $500 million or $1 billion bank using the same exam
procedures as for $100 billion or $500 billion bank.
One of the problems with the current large bank CRA exam is that
the definition of "qualified investments" is too limited, and
qualified investments can be difficult to find. As a result, many
community banks (especially those in rural areas) have to invest in
regional or statewide mortgage bonds or housing bonds and the like
to meet CRA requirements. These investments may benefit other areas
of the state or region, but they actually take resources away from
the bank's local community. Community banks and communities would be
better off if the banks could truly reinvest those dollars locally
to support their own local economies and residents.
The definitions of qualified investments should also be expanded to
include community bank support of local municipalities, schools, and
loans that help create local jobs, etc. Not just loans that benefit low
or moderate income families. In many areas competition for qualified
investments make compliance all but impossible due to the limitations of
these types of loans in many communities.
While many view a $500 MM bank like ours as a big bank, the exact
opposite is the reality. We have singe branches of major banks in our
community (we are in a suburban neighborhood) that are greater than $300
MM - "In A Single Branch!" - We have 10 branches.
The regulatory burdens on companies our size are completely unfair!
The FDIC's proposed changes to CRA are needed to help alleviate
regulatory burden. Without changes such as this, more. and more
community banks like mine will find they cannot sustain independent
existence because of the crushing regulatory burden, and will opt to
sell out. If you wish to examine this first hand, look at San Mateo
County, California. A decade ago, there were 8 or 9 independent banks,
today, there are 3 (including a newly chartered bank opened less than
one year). By easing regulatory burden, it will make it easier for
community banks like mine to continue to provide committed service to
local communities that few other financial service providers are willing
to do.
Thank you for considering my views.
Sincerely,
Jim Black
President
First National Bank of Northern California
San Francisco, CA
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