|
SHELBY COUNTY STATE BANK
March 23, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: Community Reinvestment Act Regulations
Dear Sir or Madam:
As a community banker, I strongly endorse the federal bank
regulators' proposal to increase the asset size of banks eligible for
the small bank streamlined Community Reinvestment Act (CRA) examination
from $250 million to $500 million and elimination of the holding company
size limit (currently $1 billion). This proposal will greatly reduce
regulatory burden. I am the Executive Vice President of Shelby County
State Bank, a $200 million bank located in Harlan, Iowa.
The small bank CRA examination process was an excellent innovation.
As a community banker I support the agencies for recognizing that it is
time to expand this critical burden reduction benefit to larger
community banks. At this critical time for the economy, this allows more
community banks to focus on what they do best-fueling America's local
economies. When a bank must comply with the requirements of the large
bank CRA evaluation process, the costs and burdens increase
dramatically. And the resources devoted to CRA compliance are resources
not available for meeting the credit demands of the community. For
example, in my bank we estimate the services required in complying with
large bank CRA require 75% of a full time loan administrator.
Eliminating the holding company size limit also more accurately
reflects significant changes and consolidation within the banking
industry in the last 10 years. To be fair, banks should be evaluated
against their peers, not banks hundreds of time their size. The proposed
change recognizes that it's not right to assess the CRA performance of a
$500 million bank or a $1 billion bank with the same exam procedures
used for a $500 billion bank. Large banks now stretch from
coast-to-coast with assets in the hundreds of billions of dollars. It is
not fair to rate a community bank using the same CRA examination. And,
while the proposed increase is a good first step, the size of banks
eligible for the small-bank streamlined CRA examination should be
increased to $2 billion, or at a minimum, $1 billion.
Our bank is part of a !arger holding company and therefore subject to
this burdensome regulation. Nearly two years ago our bank was required
to begin compliance with large bank CRA. Since then, we have spent
thousands of dollars and countless hours complying with the special
rules of large bank CRA. Serving a rural market in Western Iowa, the
vast majority of our loans (over 99%) fall into the same income
category. This being the case, there is no benefit derived from
compiling all this mostly identical data. The purpose of large bank CRA
is lost in small rural markets such as our own.
Increasing the size of banks eligible for the small-bank streamlined
CRA examination does not relieve banks from CRA responsibilities. Since
the survival of many community banks is closely intertwined with the
success and viability of their communities, the increase will merely
eliminate some of the most burdensome requirements.
In summary, I believe that increasing the asset-size of banks
eligible for the small bank streamlined CRA examination process is an
important first step to reducing regulatory burden. I also support
eliminating the separate holding company qualification for the
streamlined examination, since it places small community banks that are
part of a larger holding company at a disadvantage to their peers. While
community banks still must comply with the general requirements of CRA,
this change will eliminate some of the most problematic and burdensome
elements of the current CRA regulation from community banks that are
drowning in regulatory red-tape.
Sincerely,
Dennis H. Huttmann
Executive Vice President
Shelby County State Bank
Harlan, IA
|
