FDIC Federal Register Citations

From: J. Kimbrough Davis [mailto:jkd@ccbg.com]

Sent: Tuesday, March 07, 2006 2:34 PM

To: Feldman, Robert

Subject: Proposed Guidance for Commercial Real Estate Lending

J. Kimbrough Davis

217 N. Monroe Street

Tallahassee, FL 32301-7619

March 7, 2006

Bob Feldman

Dear Bob Feldman:

I write because I think it important to comment on the Guidance being

proposed with respect to commercial real estate lending. Commercial real

estate lending is an extremely important part of the economy in Florida

and like wise it is extremely important part of bank lending.

I understand the need for sound lending and sound loan portfolios. I have

concerns, however, that the Guidance as announced will have a negative

overall effect on my institution and the economy as a whole.

My concerns are not so much with the individual practices set out in the

Guidance, but rather with the way the Guidance is imposed. We have had

experience in which examiners impose even existing regulations differently

than they previously had done. The proposed Guidance contains certain

thresholds and a laundry list of practices and requirements. I am

concerned that the rules of the game have suddenly changed.

Specifically there are several points we would like for the Guidance to

make clear. First, that in looking at concentrations there will not be a

one size fits all response. Each of our institutions has a different

history, different controls, different portfolios, and different markets.

When those in the field determine there is a concentration any response

needs to be tailored for the specific circumstances.

Second, we hope the Guidance will make it very clear that if the

concentration thresholds are exceeded it does not automatically require a

capital increase. Any increase should be in the context of the

circumstances of the particular institution.

Third, the Guidance should expressly indicate that its purpose is not to

discourage commercial real estate lending.

If the Guidance is imposed in a mechanical or arbitrary manner or if it is

intended to effect a policy shift discouraging commercial real estate

lending then I fear grave consequences. Secured real estate lending has

been the bread and butter of banks in Florida. If such loans are not

available then will we have to look to other types of credits which

historically have been more risky?

Perhaps most important, if the message is perceived to be that commercial

real estate lending has great regulatory risk, then such loans will

significantly diminish. This will lead to a downturn in our economy that

will create systemic problems for banks far beyond the risk of commercial

real estate loans.

I thank you for your consideration of these concerns and comments and hope

that the final Guidance will address them in a meaningful way

Sincerely,

J. Kimbrough Davis