SpiritBank
From: Bob Wyatt [mailto:bwyatt@SpiritBank.com]
Sent: Friday, September 17, 2004 4:29 PM
To: Comments
Cc: psmith@aba.com; Albert Kelly
Subject: RIN No. 3064-AC50
Dear Sir or Madam:
I am Vice President of SpiritBank, located in Bristow, Oklahoma,
a small
town of around 4000 residents. My bank
has an asset size of $550 million. 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 do believe that this would
greatly 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,
Bob Wyatt
Vice President for Business Development and Community Relations
SpiritBank
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