| FIRST BANK AND TRUST CO From: Stephanie Spruiell [mailto:SSpruiell@1stbanknet.com]
Sent: Friday, September 17, 2004 5:29 PM
To: Comments
Cc: Steve Rahill
Subject: September 15, 2004 Mr. Robert E.
FeldmanExecutiveSecretaryAttention: Comments/Legal ESSFDIC550 1
September 15, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
FDIC
550 17th Street, NW
Washington, DC 20429
Dear Mr. Feldman:
My name is Steve Rahill, President and Chief Operating Officer of
First Bank and Trust Co. in Duncan, Oklahoma. We have banking centers in
Duncan, Healdton, Ardmore, and Norman, Oklahoma. My bank has
approximately $280 million in assets and has received an Outstanding CRA
rating in our previous three examinations. First Bank and Trust Co.
utilizes CRA requirements as a marketing opportunity to help serve the
public, not as a regulatory requirement. I am writing to strongly
support the FDIC’s proposal to raise the threshold for the streamlined
small bank CRA exam 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 under the current regulation. I
understand this is not an exemption from CRA and that my bank would
still have to help meet the credit needs of our entire communities and
be evaluated by regulators. However, I believe that this would lower our
current regulatory burden immensely.
I also support the addition of a community development criterion to
the small bank exam 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 percentage of overall industry assets as
community banks under $250 million did a decade ago when the revised CRA
regulations were adopted. Thus, this adjustment 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 those small, rural communities. Many small banks have had
to make regional or statewide investments that are extremely unlikely to
ever benefit the banks’ own communities. That could not have been the
intent of Congress when it enacted CRA.
One more 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 sometimes as much as two years in advance. 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
exam, 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 exam 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.
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 CRA Act itself. I urge the FDIC to adopt its
proposal with the recommendations above. I will be happy to discuss
these issues further with you if desired.
Sincerely,
Steven W. Rahill
President
First Bank & Trust Co.
923 W. Main
Duncan, OK 73533
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