Lake Michigan Financial Corporation
From: Bart Jonker
Sent: Friday, September 10, 2004 9:19 AM
To: Comments
Subject: RIN 3064-AC50 -- CRA proposal comment letter
Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS (RIN 3064-AC50)
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Via email: comments@fdic.gov
Gentlemen,
We wish to comment on the Notice of Proposed Rulemaking for 12 CFR
345, Community Reinvestment, as posted on August 20, 2004 in the
Federal Register.
Lake Michigan Financial Corporation is a two-bank bank holding
company with combined assets at year-end 2003 of approximately
$419 million.
One bank, The Bank of Holland, is located in Holland, Michigan and
it operates two offices – one in downtown Holland and the other
in downtown Grand Rapids. This affiliate ended 2003 with $278 million
in assets, and will qualify for large-bank status under the present
Community Reinvestment Act definition on January 1, 2005.
The other affiliate, The Bank of Northern Michigan, is located in
Petoskey, Michigan, operating from one location and ending 2003 with
$141 million in assets. This bank does not qualify for large-bank
evaluation under the current CRA, based either on the asset size
of the bank itself or on the asset size of the parent holding company.
Therefore, the balance of our comments will reflect the perspective
of The Bank of Holland – the institution that will be most
directly impacted by any changes to the CRA.
We applaud the FDIC for taking a leadership role among the regulatory
agencies in consideration of redefining the large bank definition,
and we appreciate your careful evaluation of the needs of the industry
as well as the desires of the public at large. The proposed change
to the definition of large bank is in line with our original comment
letter dated March 4, 2004, in which we recommended a threshold of
$1 billion to qualify for evaluation as a large bank. We continue
to support this position.
As an institution approaching the current large bank threshold, our
most significant concern is the establishment of procedures (and
associated personnel costs) involved in collecting and accurately
reporting information on small business and small farm loans. In
our view, the proposal goes to appropriate lengths to reduce this
regulatory burden. We are particularly pleased by the proposed elimination
of the $1 billion holding company threshold for large bank status.
The proposal seeks comment on a newly-created community development
criterion, which would apply to FDIC banks between $250 million and
$1 billion. We believe this is a reasonable transition step between
small-bank and large-bank status, and may serve as an effective political
compromise in assuring adoption of the proposal. The ability to achieve
satisfactory or outstanding status by virtue of strength in community
development lending, investments, or services is also reasonable,
and allows the financial institutions a level of flexibility in determining
the most effective way to serve their communities.
The proposal also seeks comment on expansion of the definition of
community development to include rural areas. We do not agree with
this approach, given the present emphasis on low and moderate income
geographies and individuals. We believe the present definition is
sufficient, and the addition of a rural designation would be less
than beneficial. In our market, we currently provide service in metropolitan,
suburban, and rural communities. Rural areas are characterized primarily
by a lower population density – there still exist percentages
of low, moderate, middle and upper income individuals within rural
geographies, but the inhabitants of the rural census tracts are more
spread out. We see no benefit in extending CRA-related credit for
service to this population mix, which – in our markets – tend
to have significant levels of middle and/or upper income individuals.
Stated more simply, in rural areas surrounding our Holland affiliate
those individuals in poverty are less concentrated. A higher concentration
of poverty results in census tract income in the low or moderate
range, and the existing definitions provide appropriate CRA-related
credit in our opinion.
We appreciate the opportunity to comment on this proposal. Should
you have questions or need further information, please don’t
hesitate to contact me at The Bank of Holland – 616-494-9035.
Cordially,
Bart Jonker, CRCM
Corporate Compliance Officer
Lake Michigan Financial Corporation
|
