Skip Header

Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank



Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations




FDIC Federal Register Citations


From: Bart Jonker
Sent: Thursday, March 04, 2004 3:04 PM
To: Comments
Subject: CRA proposal (RIN 3064-AC50)

Robert E. Feldman, Executive Secretary
Attention: Comments (RIN 3064-AC50)
Federal Deposit Insurance Corporation
550 17th Street NW Washington, DC 20429
Via email: comments@fdic.gov

Gentlemen,

We wish to comment on the Proposed Amendments to the Community Reinvestment Act Regulations, as posted in the Federal Register on Feb. 6, 2004 and subsequently forwarded to insured depository institutions through FIL-15-2004 that same date.

Lake Michigan Financial Corporation is a two-bank bank holding company with combined assets at year-end 2003 of approximately $419 million. One bank, The Bank of Holland, is located in Holland, Michigan and it operates two offices – one in downtown Holland and the other in central Grand Rapids. This affiliate ended 2003 with $278 million in assets, and will qualify for large-bank status under the present Community Reinvestment Act on 1-1-2005.

The other bank, The Bank of Northern Michigan, is located in Petoskey, Michigan, operating from one location and ending the year with $141 million in assets. This bank does not qualify for large-bank status under the current CRA, based either on the asset size of the bank itself or on the asset size of the holding company. Therefore, the balance of our comments will come from the perspective of The Bank of Holland – the institution that will be most directly impacted by any changes to the CRA.

The Bank of Holland competes with a number of large banking institutions in our market, including Bank One ($290 billion); National City ($114 billion); Fifth Third Bank ($89 billion); Comerica Bank ($53 billion); Standard Federal Bank ($50 billion); and Huntington Bank ($30 billion). While we are in favor of the proposed increase in the large-bank threshold and eliminating the holding company asset test, we believe that a move from $250 million in assets to $500 million does not adequately address the issues of banks in the small-to-large-bank transition process. These issues have been well-documented in the past – limited resources (budget and personnel) to explore new programs or offer innovative solutions in the market; limited qualified investment opportunities and excessive competition for that which is available; and overly burdensome reporting requirements that are onerous for institutions at the lower end of the large-bank spectrum.

Banks of a size of $1 billion or more in assets would more reasonably be able to compete at the large bank level, and we would challenge the agencies to consider this higher-than-proposed target. This is based on the same rationale for establishing the present holding company asset threshold.

In addition to competition with exceedingly large non-local institutions as described above, our bank also competes with insurance agencies, mortgage brokers, and credit unions – which are not presently subject to the requirements of the Community Reinvestment Act. As these non-traditional entities attempt to look and act more like commercial, regulated banks and dilute commercial bank market share, we feel it appropriate that the definition of financial institution under CRA be broadened to take these entities into account, using the precedent set in the Federal Reserve Board’s Regulation P.

We support the agencies’ position relative to abusive lending practices and encourage expansion of the definition of financial institution on this basis, as well. Traditional banks are closely scrutinized and highly regulated, and we believe the abuses this proposal attempts to discourage are generally found to be more prevalent in non-bank institutions. Applicability of the CRA to these non-traditional entities would expose any abuses to regulatory oversight as well as public scrutiny through the reporting and disclosure sections of the regulation, while at the same time helping to level the playing field among regulated and non-regulated institutions.

We appreciate the opportunity to comment on this proposal. Should you have questions or need further information, please don’t hesitate to contact The Bank of Holland at 616-494-9035.

Cordially,
Bart Jonker, CRCM
Corporate Compliance Officer
Lake Michigan Financial Corporation
 

Last Updated 03/05/2004 regs@fdic.gov

Skip Footer back to content