From: Curtis Hutchins [mailto:chutchins@fsbnwa.com]
Sent: Tuesday, May 24, 2005 3:09 PM
To: Comments
Cc: Sam Mathias; Lew Thompson; Bob Nickle; Marivel Radcliffe; Dave Seal
Subject: Proposal to change loan classification in the Interagency Proposal on the Classification of Commercial Credit Exposures
Dear FDIC Friends,
Most of the banks you supervise are small community banks. These are banks that have a solid understanding of the present system of loan classification. Most banks have used this knowledge to run the banks under FDIC supervision in a safe and sound manner.
There is nothing wrong with the present method of risk rating loans.
To change would mean:
• a more complex and burdensome system for smaller institutions
• that the vocabulary developed by examiners and bankers would become unclear to many causing confusion, conflict, and frustration
• no greater measure of asset quality or capital adequacy
Admittedly, I do not know if the present system is adequate for the largest banks. I do know that the present system works well for banks under $1 billion in assets. We strongly recommend that you not modify the present system that is working well. If the larger banks need additional scrutiny, focus on them alone and not create additional problems for the majority of your banks.
Sincerely,
Curtis Hutchins
President & CEO
First State Bank Northwest Arkansas