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TAMALPAIS BANK
October 4, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: RIN Number 3064-AC50: FDIC Proposed Increase in the Threshold for
the Small Bank CRA Streamlined Examination
Dear Sir or Madam:
I am the Senior Vice President, Senior Credit Officer and CRA Officer
of Tamalpais Bank. We are located in the San Francisco Bay Area in Marin
County with our main office in San Rafael, CA. Our asset size was $268
million as of December 31, 2002, $301 as of December 31, 2003 and $405
million as of August 31, 2004.
A Community Reinvestment Act Performance Evaluation was conducted by
the FDIC as of June 7, 2004. We were evaluated using small bank
procedures. Although we were a large bank for 2004, we were not
evaluated as a large bank because we have not collected at least one
year of loan data. Tamalpais Bank’s CRA Rating was Outstanding.
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 my own under the current regulation, which are required to meet the
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
continue to help meet the credit needs of its entire community and be
evaluated by the FDIC.
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 community development criteria and only apply the new
community development 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.
I believe adopting the FDIC’s proposal would significantly lower my
bank’s current regulatory burden. I have reached this conclusion over
the last several years during which time I have explored the
requirements for large bank criteria. I have attended CRA conferences
including the Community Redevelopment Conference in Hollywood in March
of 2004. I also attend the annual CBA Compliance Conferences which
include CRA. Additional understanding was reached during the recent CRA
examination when Nancy Meuret, the Examiner in Charge, was very helpful
in discussing the CRA requirements for a large bank. We are in the
process of completely reorganizing our CRA program and have begun a
massive new reporting and monitoring program. We are seeking investment
opportunities. Implementation has to be accomplished with a total of 47
employees including staff for 5 branches. It would be much more
advantageous to the community and the bank to redirect our efforts into
areas that would further benefit our community.
Under the FDIC’s proposals, we would be able to mix community
development loans, services and investments to meet the new community
development criteria. 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 community development criteria a
separate test from the bank’s overall CRA evaluation. For a community
bank, community development 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 community development 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 community development obligation and regulatory burden
that would erode the benefit of the streamlined exam.
Banks would be required to engage in activities that meet credit
needs in their assessment areas but could balance their community
development lending, investing and service activities based on the
opportunities in the market and the bank’s own strategic strengths. A
community bank could perform well under the community development
criterion by engaging in one or more as opposed to all of the
activities. Tamalpais Bank’s performance in the Public Disclosure states
that the bank is a leader in making community development loans,
particularly in Enterprise Zones. This is an example of performance by a
small bank which utilized the bank’s strategic strengths and which
includes small business loans and community development loans.
Keeping the focus of small institutions on lending, which the small
institution examination does, would be entirely consistent with the
purpose of CRA which is to ensure that the Agencies evaluate how
institutions help to meet the credit needs of the communities they
serve.
The proposals by the FDIC enhance the effectiveness of the CRA
regulations and CRA evaluations. The proposals would not diminish in any
way the obligation of the bank to meet the credit needs of the
community. Rather, the proposal would improve the effectiveness of CRA
evaluations by permitting banks to focus on community development
activities based on the opportunities in the market and the needs of the
community.
In conclusion, I believe that the FDCI has proposed a major
improvement in the CRA regulations, one that much more closely aligns
the regulations with the Community Reinvestment Act itself and which
would result in improved bank performance and greater benefit to the
community. I urge the FDCI to adopt its proposal, with the
recommendations above. I would be pleased to discuss these issues
further with you, if that would be helpful.
Sincerely,
Jean Silveira
Senior Vice President
Senior Credit Officer, Community Reinvestment Officer
Tamalpais Bank
851 Irwin St., San Rafael, CA 94901
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