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HASTINGS CITY BANK
From: Mark Kolanowski [mailto:mark@hastingscitybank.com]
Sent: Friday, October 08, 2004 9:43 AM
To: Comments
Subject: RIN number 3064-AC50
Federal Deposit Insurance Corporation Comments/Legal ESS:
I wish to express my support of 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 small banks under the
current regulation, which are required to meet the standards imposed on
the nation’s largest $1 trillion banks. Community banks would still be
required to help meet the credit needs of their entire communities and
would continue to be so evaluated by their regulator.
I support the addition of a community development criterion to the
small bank examination for larger community banks, but I believe the new
community development (CD) criterion should be applied only to banks
greater than $500 million up to $1 billion. Community banks up to $500
million now hold about the same percent of overall industry assets as
community banks up to $250 million did a decade ago when the revised CRA
regulations were adopted, so this adjustment in the CRA threshold is
appropriate. As bankers and FDIC examiners know, it has proven extremely
difficult for small banks, especially those in rural areas like ours, 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. This
result certainly was not intended by Congress when it enacted CRA.
I am opposed to making the CD criterion a separate test from the
bank’s overall CRA evaluation. Such differentiation creates the
impression that CD lending is different from the provision of credit to
the entire community. The current small bank test considers the
institutions overall lending in its community. A separate test would
create an additional CD obligation and regulatory burden, eroding the
intent of the streamlined exam.
I 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. This change will go a long way
toward eliminating the current distortions in the regulations that
result in a small rural bank being told to invest in regional affordable
housing bonds for an urban area not in the bank’s community.
I ask that you take these comments under consideration as you
consider revisions to 12 CFR 345.
Sincerely,
Mark A. Kolanowski
President and CEO
Hastings City Bank
150 W. Court St.
Hastings, MI 49058
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