NAUGATUCK SAVINGS BANK
Mr. Robert E. Feldman
Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, D. C. 20429
Subject: RIN Number 3064-AC50
Dear Mr. Feldman,
We would like to make the following comments on proposals to change
the regulations governing the Community Reinvestment Act.
Naugatuck Savings Bank is a $600 million mutual savings bank and
has committed to donate 10% of pre-tax income into the Naugatuck
Savings Bank Foundation which the bank formed in 1998. Currently
the foundation has over $5 million in assets and will provide grants
of over $230 thousand in 2004 to community based non-profit organizations.
The Foundation is truly a community asset which will provide funding
to non profit groups in perpetuity.
Comment 1: Should the small bank definition be increased to $1 billion
without adding a community development criterion and subject these
banks to the existing streamlined performance criteria applicable
to banks with assets less then $250 million?
The bank is in favor of increasing this limit to $1 billion and
strongly opposes adding any new community development criterion.
The bank cannot compete in our markets with the large regional and
national banks in meeting the investment criterion of the CRA regulations.
Additionally, we do not have the resources or expertise to evaluate
and manage these investments.
Comment 2: Instead of adding a community development criterion for
small banks between $250 million and $1 billion under the current
proposal, should the FDIC instead apply a separate community development
test in addition to existing streamlined performance criteria applicable
to small banks to evaluate community development activities of such
banks?
As noted in Comment 1, the bank is not in favor of adding new community
investment criterion, however, if the FDIC does develop new criterion
we strongly encourage you to include the value of both the assets
of a foundation and the annual giving of a foundation funded by a
bank in the evaluation. The FDIC currently lacks any direction in
regards to foundations and their value to the community.
In Naugatuck
Savings Bank’s case, given the bank’s current
projections the bank’s foundation will grow to over $11 million
within 5 years and provide the community annually with over $500
thousand in contributions. This has a significant positive impact
on the community and should be favorably and highly rated in the
performance evaluation. Many banks similar in size and capital structure
have created and funded like foundations in their communities.
Comment 3: If a new community test is imposed, how should these
activities be weighted in assigning a performance rating?
The bank feels both the assets of a Foundation and the annual contributions
to the community should be given a significant weight when assigning
a performance rating.
Comment 4: How should the ratings of both the existing streamlined
performance rating and the community development test be weighted
in assigning an overall performance rating?
The bank feels strongly that our commitment to the community in
donating close to $1 million a year into the foundation is commendable
and shows our strong commitment to the communities we serve. It is
unique and exceeds the commitment made by larger banks who receive
outstanding ratings based on achieving higher scores on the current
investment and service tests.
Clearly, committing 10% of pre-tax earnings needs to be given a
significant weight when assigning the overall CRA performance rating.
Please consider these comments when drafting the proposed changes
to the Community Reinvestment Act regulations.
Sincerely,
Nancy D. Carlson
Branch Manager / Bank Officer
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