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

Redding Bank of Commerce

October 18, 2004

Robert E. Feldman, Executive Secretary
ATTN: Comments
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429

RE: CRA proposal to increase threshold for small bank eligibility
FDIC ID Reference – RIN number 3064 – AC50

Dear Sir:

As a community banker, I strongly support the FDIC's proposal to increase the asset size limit of banks eligible for the streamlined small-bank CRA examination. The proposal will greatly reduce unnecessary paperwork freeing-up time and resources to be used for investment in our communities. Helping communities is something we do everyday as a matter of good business. My community bank will not survive if it is not responsive to our communities’ needs; which include promoting and supporting community and economic development.

Making it less burdensome to undergo a CRA exam by expanding eligibility for the streamlined exam will improve our ability to help our communities. In fact, it will free up human and financial resources that can be redirected to the community and used to make loans and provide other services.

It is important to remember that the streamlined CRA exam is not an exemption from CRA. It is a more cost effective and efficient CRA exam. Banks subject to the simplified CRA exam are still fully obligated to comply with CRA. Just as now, community banks would continue to be examined to ensure they lend to all segments of their communities, including low- and moderate-income individuals and neighborhoods. It just doesn't make sense and is inequitable to evaluate a $500 million or $1 billion bank using the same exam procedures as for $100 billion or $500 billion bank.

One of the problems with the current large bank CRA exam is that the definition of "qualified investments" is too limited, and qualified investments can be difficult to find. As a result, many community banks (especially those in rural areas) have to invest in regional or statewide mortgage bonds or housing bonds and the like to meet CRA requirements. These investments may benefit other areas of the state or region, but they actually take resources away from the bank's local community. Community banks and communities would be better off if the banks could truly reinvest those dollars locally to support their own local economies and residents.

For this reason, I find that the FDIC's proposed community development requirement for banks between $250 million and $1 billion is more flexible and more appropriate than the large bank investment test. The advantage to this proposal is that it continues to focus on community development, but considers investments, lending and services. It would let community banks pursue community development activities that both meet the local community's needs and make sense in light of the bank's strategic strengths.

Similarly, the proposal will help rural banks meet the special needs of their communities by expanding the definition of "community development" so that it includes activities that benefit rural residents in addition to low and moderate-income individuals. Banks are frequently called upon to support needed economic or infrastructure development. We also make loans that help create needed or better-paying jobs. These activities should not be ineligible for CRA credit because they do not benefit only low or moderate-income individuals and should include activities that help rural areas.

The FDIC's proposed changes to CRA are needed to help alleviate regulatory burden. Without changes such as this, more and more community banks like mine will find they cannot sustain independent existence because of the crushing regulatory burden, and will opt to sell out. For many small towns and rural communities, the loss of the local bank is a major blow to the local community. By easing regulatory burden, it will make it easier for community banks like mine to continue to provide committed service to local communities that few other financial service providers are willing to do.

Thank you for considering my views.

Sincerely,

Larry Sterk
Vice President
Redding Bank of Commerce

 

 


Last Updated 11/12/2004 regs@fdic.gov

Skip Footer back to content