Iowa Bankers
Association
April 6, 2004
Office of the Comptroller of the Currency
Communications Division
250 E Streets, SW.
Public Information Room, Mailstop 1-5
Washington DC 20219
Attn: Docket No. 04-06
Jennifer J. Johnson, Secretary
Board of Governors
Federal Reserve System
20th Street and Constitution Avenue, NW.
Washington, DC 20551
Attn: Docket No. R-1181
Robert E. Feldman, Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW.
Washington, DC 20429
Re: 12 CFR Part 345
Regulations Comments
Chief Counsel’s Office
Office of Thrift Supervision
1700 G. Street, NW
Washington, DC 20552
Attn: No. 2004-04
Re: Proposed Revisions to the Community Reinvestment Act Regulations
Dear Madams and Sirs:
Iowa Bankers Association (“IBA”) is a trade association representing
nearly 95% of 400+ banks and savings and loan associations in the State
of Iowa. We appreciate this opportunity to comment on the joint proposed
revisions to the Community Reinvestment Act regulation. In developing
our comments contained herein, IBA invited its member banks to respond
to questions posed in the proposed revisions.
The IBA supports the federal bank agencies’ proposal to increase the
number of banks and savings associations that will be examined under the
small bank CRA exam from $250 million to $500 million. Currently in
Iowa, approximately 32% of the total assets deposited in IBA member
banks are deposited in eleven (11) institutions with more than $500
million in assets. Raising the deposit limit threshold from $150 to $250
million will affect only five percent of our member banks with
approximately thirteen percent of the total deposits held by IBA member
banks.
It is impossible to fairly compare a bank with a few branch locations
and total assets of $250 million to a bank with hundreds of locations
and billions of dollars in assets under the same exam process. Smaller
banks simply do not have the resources (money, manpower, technology) to
compete with these institutions under the large bank test. Just as
community investment abilities of small and large banks differ, so do
the needs of the small and large communities they serve. Community banks
meet the credit needs of their communities by making loans relative to
the deposits they take in. Smaller community banks business activities
are usually focused on small, defined geographic areas in the community.
The ripple effect of smaller dollar projects in a rural community may
far outweigh much larger dollar investments’ impact a metropolitan area,
yet the small community bank’s CRA rating often does not reflect this.
Increasing the size of banks eligible for the small-bank streamlined CRA
exam does not relieve banks from CRA responsibilities. The change merely
reduces the reporting requirements and costs for small bank, freeing up
more time and money that can be better spent in service to the community
in which the bank is located.
The reporting requirements under the large bank CRA exam process are
staggering for a small bank. Under the current rules, due to our state’s
rural population an institution may not be a HMDA reporter because it is
not located in a MSA, yet could still be subject to the large bank CRA
test and data collection due solely to having assets in excess of $250
million. Approximately one-third of IBA member banks with asset sizes
between $250 and $500 million fall into this category. While these
community banks still must comply with the general requirements of CRA,
the asset-size increase will eliminate some of the most problematic and
burdensome elements of the current CRA regulation for them.
The IBA also supports the elimination of the bank holding company
asset size threshold. Many banks maintain their own charter, management
and operational processes when purchased by a large holding company.
They “inherited” the regulatory requirements of the holding company but
have not always benefited from the holding company’s resources for
complying with these requirements.
Finally, we respectfully request the Agencies’ consideration in
raising the asset limit to $1 billion rather than $500 million. In Iowa
a total of eight (8) banks holding slightly more than 10% of the total
funds on deposit would benefit from this change. Though small in number,
the relief provided these banks would be significant enabling them to
target their time, energy and dollars to do what they do best – fueling
their local economies by making small business loans, home loans,
participating in community development projects, providing financial
education, the list goes on and on.
Today’s community banks are drowning in regulatory red tape,
utilizing valuable resources to meet regulatory compliance mandates that
could be put to much better use for economic and community development
purposes in the communities they serve. Thank you for recognizing this
and proposing the changes to the Community Reinvestment Act. If you have
any questions related to my comments, please feel free to contact me at
(800) 532-1423 or at rschlatter@iowabankers.com.
Sincerely,
Ronette Schlatter
Compliance Coordinator
Iowa Bankers Association
8800 NW 62nd Ave.
Johnston, IA 50131 |
