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SOUTHERN MISSOURI BANK
March 15, 2004
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Feldman:
As a community banker, I strongly endorse the federal bank
regulators' proposal to increase the asset size of banks eligible for
the small bank streamlined Community Reinvestment Act (CRA) examination
from $250 million to $500 million and elimination of the holding company
size limit (currently $1 billion). This proposal will greatly reduce
regulatory burden. I am a Senior Vice President of Southern Missouri
Bank & Trust, a $296 million institution as of 12/31/03, located in
Poplar Bluff, MO.
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 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. The resources devoted to CRA compliance are resources not
available for meeting the credit demands of the community. For
example, even though Southern Missouri Bank is presently just above the
regulatory limit of $250 million, an enormous amount of time and expense
is taken to gather required government filing data and maintain
documentation in order to comply with the large bank rule, even though
we are extremely small in asset size compared to many regional banks.
In addition, our bank presently has a loan-to-deposit ratio of
approximately 120%, clearly demonstrating that the bank is reinvesting
back into the community above and beyond that in which it receives in
deposits.
Adjusting the asset size limit also more accurately reflects
significant changes and consolidation within the banking industry in the
last 10 years. To be fair, banks should be evaluated against their
peers, not banks hundreds of time their size. The proposed change
recognizes that it's not right to assess the CRA performance of a $500
million bank or a $1 billion bank with the same exam procedures used for
$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 hank using the same CRA examination. And, while the proposed
increase is a good first step, the size of banks eligible for the
small-bank streamlined CRA examination should be increased to $2
billion, or at a minimum, $1 billion.
Ironically, community activists seem oblivious to the costs and
burdens. And yet, they object to bank mergers that remove the local bank
from the community. This is contradictory. If community groups want to
keep the locals banks in the community where they have better access to
decision makers, they must recognize that regulatory burdens are
strangling smaller institutions and forcing them to consider selling 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 visibility of their communities, the increase will merely
eliminate some of the most burdensome requirements.
In summary, I believe that increasing the asset-size of banks
eligible for the small bank streamlined CRA examination process is an
important first step to reducing regulatory burden. I also support
eliminating the separate holding company qualification for the
streamlined examination, since it places small community banks that are
part of a larger holding company at a disadvantage to their peers. While
community banks still must comply with the general requirements of CRA,
this change will eliminate some of the most problematic and burdensome
elements of the current CRA regulation from community banks that are
drowning in regulatory red-tape. I also urge the agencies to seriously
consider raising the size of banks eligible for the streamlined
examination to $2 billion or, at least, $l billion in assets to better
reflect the current demographics of the banking industry.
Sincerely,
Adrian Rushing
Senior Vice President
Southern Missouri Bank
Poplar Bluff, MO
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