Hastings City Bank
From: Joan Heffelbower [mailto:joan@hcb.us]
Sent: Saturday, September 25, 2004 11:52 AM
To: Comments
Subject: RIN number 3064-AC50
Federal Deposit Insurance Corporation Comments/Legal ESS:
I wish to express my support of 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 small banks under the current regulation,
which
are required to meet the standards imposed on the nation's largest
$1
trillion banks. Community banks would still be required to help meet
the
credit needs of their entire communities and would continue to be
so
evaluated by their regulator.
I support the addition of a community development criterion to the
small
bank examination for larger community banks, but I believe the new
community
development (CD) criterion should be applied only to banks greater
than $500
million up to $1 billion. Community banks up to $500 million now
hold about
the same percent of overall industry assets as community banks up
to $250
million did a decade ago when the revised CRA regulations were adopted,
so
this adjustment in the CRA threshold is appropriate. As bankers and
FDIC
examiners know, it has proven extremely difficult for small banks,
especially those in rural areas like ours, 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. This result certainly was not intended by
Congress
when it enacted CRA.
I am opposed to making the CD criterion a separate test from the
bank's
overall CRA evaluation. Such differentiation creates the impression
that CD
lending is different from the provision of credit to the entire community.
The current small bank test considers the institutions overall lending
in
its community. A separate test would create an additional CD obligation
and
regulatory burden, eroding the intent of the streamlined exam.
I 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. This change will go a long way toward
eliminating the current distortions in the regulations that result
in a
small rural bank being told to invest in regional affordable housing
bonds
for an urban area not in the bank's community.
I ask that you take these comments under consideration as you consider
revisions to 12 CFR 345.
Sincerely,
Joan M. Heffelbower
Vice President / Compliance Officer
Hastings City Bank
150 W. Court St.
Hastings, MI 49058
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