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FIRST FEDERAL SAVINGS BANK
From: Janelle Poppe [mailto:JPoppe@ffsbky.com]
Sent: Thursday, September 16, 2004 3:13 PM
To: Comments
Subject: CRA Proposal
September 16, 2004
To Whom It May Concern:
We 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 small banks under the current
regulation, which are required to met the standards imposed on the
nation's largest $1 trillion banks. As a community bank, we would still
be required to help meet the credit needs of our community and would
continue to be so evaluated by regulators.
We also support the addition of a community development criterion to
the small bank examination for larger community banks, however it is our
belief that 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. It is for this reason that we feel the adjustment in CRA
threshold is appropriate. Many small banks have to look outside their
communities to find appropriate CRA qualified investments. Surely this
result was not intended by Congress when it enacted the CRA.
We strongly oppose 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
institution's overall lending in its community. A separate test would
create an additional CD obligation and regulatory burden, eroding the
intent of the streamlined exam.
In conclusion, we 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. This change
will go a long way toward eliminating the current distortions in the
regulations that result in a small bank being told to invest in regional
affordable housing bonds for an urban area not in the bank's community.
Sincerely,
B. Keith Johnson
President / CEO
First Federal Savings Bank
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