SpiritBank
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:
I am a Senior Vice President of SpiritBank, located in
Tulsa, Oklahoma. My bank is $575 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
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 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. 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. 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 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. 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, if that would be helpful.
Sincerely,
Brent T Carroll
SVP SpiritBank
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