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Citizens Bank Tri-Cities
March 29, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Re: Community Reinvestment Act Regulations Dear Sir or Madam:
As a community banker, I strongly recommend the federal bank
regulators' consider increasing the asset size of banks eligible for the
small bank streamlined Community Reinvestment Act (CRA) examination to
$2 billion, or at a minimum, $1 billion. This further increase from the
proposed $500 million threshold will greatly reduce regulatory burden. I
am the Chief Financial Officer and Chief Operating Officer of Citizens
Bank, a $550 million asset regional institution based in Elizabethton,
TN.
The small bank CRA examination process was an excellent innovation.
As a community banker, I applaud the agencies for recognizing that it is
time to expand this critical burden reduction benefit to some larger
community banks. At this critical time for the economy, this will allow
more community banks to focus on what they do best-fueling America's
local economies. When a bank must comply with the requirements of the
large bank CRA evaluation process, the costs and burdens increase
dramatically. And the resources devoted to CRA compliance are resources
not available for meeting the credit demands of the community.
Adjusting the asset size limit also more accurately reflects
significant changes and consolidation within the banking industry during
the last 10 years. To be fair, banks should be evaluated against their
peers, not banks hundreds of times their size. The proposed change
recognizes that it's not right to assess the CRA performance of a $500
million bank with the same exam procedures used for a $500 billion bank.
Large banks now stretch from coast-to-coast with assets in the hundreds
of billions of dollars. It is not fair to rate a community bank using
the same CRA examination.
Ironically, community activists seem oblivious to the costs and
burdens. In addition, they object to bank mergers that remove the local
bank from the community. This is contradictory. If community groups want
to keep the local banks in the community where they have better access
to decision-makers, they must recognize that regulatory burdens are a
significant factor in the decisions of smaller institutions to sell to
larger institutions that can better manage the burdens.
Increasing the size of banks eligible for the small-bank streamlined
CRA examination does not relieve banks from CRA responsibilities. Since
the survival of many community banks is closely intertwined with the
success and viability of their communities, the increase will merely
eliminate some of the most burdensome requirements.
In summary, I urge the agencies to seriously consider raising the
size of banks eligible for the streamlined examination to $2 billion or,
at least, $1 billion in assets to better reflect the current
demographics of the banking industry.
Sincerely
C. Scott Greer
CFO & COO
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