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AMERICAN SECURITY BANK
From: David Resha [mailto:dresha@americansecuritybank.com]
Sent: Monday, October 04, 2004 3:14 PM
To: Comments
Subject: RIN #3064-AC50
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 ours. Under the current regulations a de novo bank like ours is
subject to the same 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 be evaluated by my regulator. However, I believe
that this would lower my current regulatory burden which is economically
critical given the inevitability of new requirements that are in the
pipeline.
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.
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.
Conversely, 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. A separate test would
create an additional CD obligation and regulatory burden that would
erode the benefit of the streamlined exam.
I believe that the current FDIC proposal is a major improvement over
the current regulation. It more closely aligns the regulations with the
spirit of the CRA itself, and I urge the FDIC to adopt the proposal with
the above suggestions.
Chief Executive Officer
American Security Bank
100 Springhouse Court
Hendersonville, TN 37075
Phone 615.338.3300 Fax 615.338.3324
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