From: Jason Heisler [mailto:jheisler@bankfidelity.com]
Sent: Friday, September 17, 2004 9:59 AM
To: Comments
Subject: FDIC CRA Small Bank Proposal
Jason Heisler
P.O. Box 277
Dyersville, IA 52040
September 17, 2004
Comment Site FDIC
Dear Comment Site FDIC:
Robert E. Feldman, Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Re: RIN 3064-AC50
Dear Mr. Feldman,
[Fidelity Bank & Trust, Dyersville, IA around $90 Million in
assets. We
appreciate this opportunity to comment on the notice of proposed
rulemaking regarding the Community Reinvestment Act (CRA).
We support the
Federal Deposit Insurance Corporation’s (FDIC)
proposal to
change the definition of “small bank” from the current
asset threshold of
$250 to the proposed total assets of $1 billion, without regard to
holding
company affiliation. The overall impact of this change for Iowa would
result in only 32 additional supervised financial institutions being
treated as small banks for CRA examination purposes. This change
would
significantly decreased the regulatory compliance burden for these
institutions, affording these institutions to allocate resources
previously dedicated to regulatory compliance to delivery of products
and
services within their communities.
However, we cannot support the proposed changes to the small bank
performance standards, which would include a “community development
criterion” for institutions with assets greater than $250 million
and up
to $1 billion. This additional performance standard would defeat
an
original intent of the February 6, 2004 interagency Notice of Proposed
Rulemaking (NPR), that being to “reduce unwarranted burden
consistent with
ongoing efforts to identify and reduce regulatory burden where appropriate
and feasible…” Banks hoping to take advantage of channeling
new-found
resources into lending, investment and services available to their
local
communities would instead channel those resources back into regulatory
compliance efforts to evidence the banks’ participation in
community
development loans, investments and services. [Provide specific costs
related to regualtory compliance burden.]
Under existing examination practices, small institutions are evaluated
on
their records of lending to borrowers of different income levels
and
businesses and farms of different sizes, focusing primarily on lending
activity within the institutions’ delineated assessment area.
The FDIC’s
own discussion in this proposal admits its concern that smaller
institutions presently covered by the large bank tests have noted
difficulties with making qualified investments, including the difficulty
in competing with larger banks for limited investment opportunities
and
maintaining staff and resources to do so. The addition of the “community
development criterion” for small banks would place these institutions
right back into the difficult position they have historically found
themselves when being evaluated previously under the large bank tests.
In addition,
under existing interagency CRA Q&A’s, examiners
can consider
“
lending-related activities,” including community development
loans and
lending-related qualified investments, when evaluating the first
four
performance criteria of the small institution test.” Q&A
26(a)-1, 66 FR at
36637. Another Q&A states that examiners will consider these
types of
lending-related activities “when it is necessary to determine
whether an
institution meets or exceeds the standards for a satisfactory rating” or
“
at an institution’s request.” Q&A 26(a)-2, 66 FR
at 36637. Yet another
describes that the “small institution performance standards
focus on
lending and other lending-related activities. Therefore, examiners
will
consider only lending-related qualified investment for the purposes
of
determining whether the small institution receives a satisfactory
CRA
rating.” Q&A 26(a)-5, 66 FR at 36637. So the “community
development
criterion” already exists under existing interagency examination
guidance,
allowing small institutions’ performance in making community
development
loans and qualified investments to positively impact their overall
CRA
ratings. We find little to be gained by adding express “community
development criterion” to small bank performance standards.
Iowa banks take seriously the spirit and intent of the Community
Reinvestment Act, recognizing that no community bank will survive
without
meeting the needs of its customers and communities. We urge you to
allow
banks to dedicate as much of their resources as possible to meeting
those
needs, affording banks with total assets up to $1 billion to be considered
“
small banks” and enjoy the existing streamlined test for “small
bank” CRA
performance.
Thank you for the opportunity to comment, and your consideration
of such.
Feel free to contact me should you have questions related to these
comments.
Sincerely,
Jason Heisler
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