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

FARMERS & MERCHANTS BANK & TRUST

From: Kent Gaudian [mailto:kmg@fmbanktrust.com
Sent: Wednesday, March 31, 2004 7:14 PM 
To: Comments
Subject: Comments on CRA Revisions

Kent Gaudian
221 Jefferson Street
Burlington, Iowa 52601

March 31, 2004

Dear FDIC:

I am writing on behalf of Farmers & Merchants Bank & Trust, a state-chartered bank located in Burlington, Iowa. Our customer base is primarily agricluture and moderate income households with lending activities that include real estate, consumer and commercial lending. Our current asset size is $234,000,000 with a loan portfolio of $83,000,000. We applaud and appreciate the proposed amendments to the Community Reinvestment Act being made by the Office of Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corporation and Office of Thrift Supervision, “the Agencies.” We also appreciate the Agencies’ recognition and understanding of the challenges faced by community banks in meeting the requirements of the ever-growing number of compliance regulations.

Increasing the asset size of banks eligible for the small bank CRA exam from $250 million to $500 million and eliminating the holding company size limitations will go along way in reducing the regulatory burden of many small banks, including my institution. It is ridiculous to 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. Small banks simply do not have the resources (money, manpower, technology) to compete with these large institutions under the large bank test. To many times a community bank, that has served its local community well, is not afforded the recognition it deserves simply because it is compared with huge multi-million dollar organizations. Just as the community investment abilities of small and large banks differ, so do the needs of the small and large communities they serve. The ripple affect of smaller dollar projects in a rural community may far outweigh a multi-million dollar investments’ impact a metropolitan area, yet the small community bank’s CRA rating often does not reflect this.

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, could still be subject to the large bank CRA test and data collection due solely to having assets in excess of $250 million. While community banks still must comply with the general requirements of CRA, this asset-size increase will eliminate some of the most problematic and burdensome elements of the current CRA regulation.

I also support 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 “inherit” the regulatory requirements of the holding company but do not always benefit from the holding company’s resources for complying with these requirements.

Increasing the size of banks eligible for the small-bank streamlined CRA exam does not relieve banks from CRA responsibilities. The growth and survival of the bank is intertwined with the growth and survival of the community. 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 the bank is located.

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.

Sincerely,

Kent M. Gaudian
Farmers & Merchants Bank & Trust
Burlington, IA

Last Updated 04/05/2004 regs@fdic.gov

Skip Footer back to content