From: Barb Colehour [mailto:bcolehour@citizensbankia.com]
Sent: Thursday, September 16, 2004 10:46 AM
To: Comments
Subject: FDIC CRA Small Bank Proposal
Barb Colehour
215 E Main Street
Anamosa, IA 52205
September 16, 2004
Comment Site FDIC
Dear Comment Site FDIC:
Robert E. Feldman, Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Re: RIN 3064-AC50
Dear Mr. Feldman,
Citizens Savings Bank in Anamosa, Iowa with total assets of $90 million.
Our assessment areas are all of Jones County and BNA's 9501-9503, 9505
in Cedar County, Iowa. Our previous CRA rating was "Satisfactory". We
appreciate this opportunity to comment on the notice of proposed
rulemaking regarding the Community Reinvestment Act (CRA).
We support the Federal Deposit Insurance Corporation’s (FDIC)
proposal to change the definition of “small bank” from the current asset
threshold of $250 to the proposed total assets of $1 billion, without
regard to holding company affiliation. The overall impact of this change
for Iowa would result in only 32 additional supervised financial
institutions being treated as small banks for CRA examination purposes.
This change would significantly decreased the regulatory compliance
burden for these institutions, affording these institutions to allocate
resources previously dedicated to regulatory compliance to delivery of
products and services within their communities.
However, we cannot support the proposed changes to the small bank
performance standards, which would include a “community development
criterion” for institutions with assets greater than $250 million and up
to $1 billion. This additional performance standard would defeat an
original intent of the February 6, 2004 interagency Notice of Proposed
Rulemaking (NPR), that being to “reduce unwarranted burden consistent
with ongoing efforts to identify and reduce regulatory burden where
appropriate and feasible…” Banks hoping to take advantage of channeling
new-found resources into lending, investment and services available to
their local communities would instead channel those resources back into
regulatory compliance efforts to evidence the banks’ participation in
community development loans, investments and services.
Under existing examination practices, small institutions are
evaluated on their records of lending to borrowers of different income
levels and businesses and farms of different sizes, focusing primarily
on lending activity within the institutions’ delineated assessment area.
The FDIC’s own discussion in this proposal admits its concern that
smaller institutions presently covered by the large bank tests have
noted difficulties with making qualified investments, including the
difficulty in competing with larger banks for limited investment
opportunities and maintaining staff and resources to do so. The addition
of the “community development criterion” for small banks would place
these institutions right back into the difficult position they have
historically found themselves when being evaluated previously under the
large bank tests.
In addition, under existing interagency CRA Q&A’s, examiners can
consider “lending-related activities,” including community development
loans and lending-related qualified investments, when evaluating the
first four performance criteria of the small institution test.” Q&A
26(a)-1, 66 FR at 36637. Another Q&A states that examiners will consider
these types of lending-related activities “when it is necessary to
determine whether an institution meets or exceeds the standards for a
satisfactory rating” or “at an institution’s request.” Q&A 26(a)-2, 66
FR at 36637. Yet another describes that the “small institution
performance standards focus on lending and other lending-related
activities. Therefore, examiners will consider only lending-related
qualified investment for the purposes of determining whether the small
institution receives a satisfactory CRA rating.” Q&A 26(a)-5, 66 FR at
36637. So the “community development criterion” already exists under
existing interagency examination guidance, allowing small institutions’
performance in making community development loans and qualified
investments to positively impact their overall CRA ratings. We find
little to be gained by adding express “community development criterion”
to small bank performance standards.
Iowa banks take seriously the spirit and intent of the Community
Reinvestment Act, recognizing that no community bank will survive
without meeting the needs of its customers and communities. We urge you
to allow banks to dedicate as much of their resources as possible to
meeting those needs, affording banks with total assets up to $1 billion
to be considered “small banks” and enjoy the existing streamlined test
for “small bank” CRA performance.
Thank you for the opportunity to comment, and your consideration of
such. Feel free to contact me should you have questions related to these
comments.
Sincerely,
Barb Colehour
319-462-3561
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