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SPIRITBANK
October 6, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: MN Number 3064-AC50
Dear Mr. Feldman:
I am Chief Operating Officer of SpiritBank, Tulsa, Oklahoma, with
branches in many rural areas. Our bank is approximately $595 Million in
total assets. 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, with no measurable impact to the communities in which we
provide services. Today, we are required to meet the standards imposed
on the nation's largest banks, some in excess of $1 trillion in size. I
understand that this is not an exemption from CRA and that our 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 our current regulatory burden by a substantial amount with no
negative impact to our markets.
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.
Examiners in our last exam noted that the Bank's level of community
development was satisfactory for our asset size and considering
demographics. But none of the Development loans made benefited the
nonmetropolitan assessment area of the Bank. The Bank received an
Outstanding rating for its' efforts for being a leader in and helping to
meet the credit needs of its entire assessment area which included low
and moderate income neighborhoods and loans made in our rural markets.
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. 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. 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 exam.
I strongly 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. I think that this change in
the definition will go a long way toward eliminating the current
distortions in the regulation. We caution the FDIC to provide a
definition of "rural" that will not be subject to misuse to favor just
affluent residents of rural areas. The Bank is the largest corporate
citizen in most of the towns and surrounding areas that make up our
rural markets. SpiritBank provides products and services, including
consumer, consumer real estate, small business and agriculture loans
that allow residents living and working in these communities to invest
and put money back into their towns and surrounding rural areas. Partly,
because of the Bank's efforts to be an active part of and to serve its'
communities from our largest to our smallest with just 568 residents the
towns or cities in which we have branches including our rural markets
will have maintained or grown in the number of residents as suggested by
the U.S. Census Bureau population estimates as of July 1, 2003. Lending
in our rural markets clearly meets the CRA goal of lending to the entire
community.
In conclusion, I believe that the FDIC has proposed a major
improvement in the CRA regulations, one that much more closely aligns
the regulations with the Community Reinvestment Act itself, and I urge
the FDIC to adopt its proposal, with the recommendations above. I will
be happy to discuss these issues further with you at any time. I can be
reached in my office at 918-367-4164.
Sincerely,
Paul H. Cornell, CPA
Chief Operating Officer
SpiritBank
601 North Main
Bristow, OK |
