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CITYBANK
March 1, 2004
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Re: Proposed Amendments to the Community Reinvestment Act Regulation
Dear Mr. Feldman,
We would like to take this opportunity to comment on the FDIC's
proposed amendments to the Community Reinvestment Act, especially the
change in definition of a "small institution."
We applaud the FDIC's proposal to change the definition of "small
institution" to mean an institution with total assets of less than $500
million, without regard to holding company assets. However, we would
encourage the FDIC to consider expanding this definition to include
banks with assets less than $1 billion for a number of reasons:
• Banks with assets from $500 million to $1 billion account for
only about 4% of all assets of FDIC-insured banks.
• There are a total of 581 institutions with assets $1 billion and
greater. These institutions account for about 85% of all assets of
FDIC-insured banks. There are a total of 385 FDIC-insured institutions
with assets from $500 million to $1 billion. Examining these
additional 385 banks under the large bank guidelines will increase the
number of banks examined by 66%, but only increase the assets examined
by less than 6%. This does not appear to be an efficient use of
resources by the regulatory agencies.
• Streamlining CRA examination procedures for banks with assets
under $1 billion would be consistent with recent changes to the FDIC's
safety and soundness examination procedures under the MERIT (Maximum
Efficiency, Risk-Focused, Institution Targeted) examination program.
• Community banks like CityBank are already at a competitive
disadvantage to credit unions and other financial entities that do not
have the same regulatory burden as commercial banks, especially in
areas like Community Reinvestment. Enlarging the "small institution"
definition will help ease this burden without significantly altering
the impact of the Community Reinvestment Act.
We strongly encourage you to reconsider the definition of "small
institution" under the Community Reinvestment Act regulation to include
all institutions with less than $1 billion in assets. Thank you for the
opportunity to comment on these proposed changes.
Sincerely,
Conrad Hanson
President
CityBank
Lynnwood, WA
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