Legacy Bank
From: Tony Price [mailto:TonyP@legacybank.com]
Sent: Monday, March 29, 2004 12:38 PM
To: Comments
Subject: Community Reinvestment Act
Re: Community Reinvestment Act Regulations
Dear Sir or Madam:
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 the Senior Compliance Officer of Legacy Bank,
a $320 million bank located in Hinton, Oklahoma.
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. And the resources devoted to CRA compliance are resources
not available for meeting the credit demands of the community.
For example, I personally spent the better part of a month preparing
to submit our CRA LAR. My work hours tallied slightly over 200 hours
for three weeks. Three nights I did not go to bed at all, and there
were a couple of other nights that I only had 2-3 hours to sleep.
This does not include the additional time logged by three other employees
not does it begin to count work efforts put in for the months preceding
this.
Our bank also purchased a new software package, at a cost exceeding
$2,000, to better help us prepare the annual loan application register.
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
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. 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.
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. Additionally,
our bank has consistently maintained a loans-to-deposits ratio of
over 90% - a telling measure of our commitment to boost the communities
we serve.
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, $1 billion in assets to better reflect
the current demographics of the banking industry.
Sincerely,
Tony Price
Senior Compliance Officer
Legacy Bank, Hinton, OK
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