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FDIC Federal Register Citations

February 11, 2004

From: Ronald G. Gauvin
Compliance Advisor
Subject: 12 CFR Part 345 of FDIC R&R
To: Mr. Robert E. Feldman
Executive Secretary

As an institution that has recently become a "Large Bank" under the definitions of Part 345, we are particularly enthusiastic about the proposed definition of a "small institution."

The examination procedures for a "small bank" are appropriate and efficient way to assess whether or not an institution is complying with the spirit of the Community Reinvestment Act. Consideration should still be given to expand the definition to
institutions of 5750MM or less than I billion in assets.

From a regulatory stand point, the regulators will be saving a substantial number of examination hours that can be redirected to other projects or to a reduction in examination staff. Certainly the FDIC has projected what the hour and cost savings would be if the definition was to be expanded to S750MM or S 1 billion. Does it make sense to develop CRA reports consisting of 30 to 80 pages representing hundreds of hours, when in fact the small bank CRA report is able to provide an effective assessment of a financial institutions CPA posture. Small banks represent such a small percentage of total assets in this country. It is the banks in excess of SI billion that should be evaluated for its commitment to community development loans and investments. It is appropriate that small banks be evaluated to ensure that they are making sufficient loans in their assessment area with a certain concentration in low- and moderate-income areas and to low- and moderate-income borrowers.

I am a retired FDIC examiner of 27 years, with 23 of those years as a Compliance examiner and FOS. It is my estimate that examination hours in the Consumer part of the Division could be reduced by 30 to 40 percent. That would certainly have a positive effect to the budgetary process. It is important that the regulators examine the benefits for the dollars spent by bought the regulators and the financial institutions.

From a small bank should be required to meet the credit needs of its entire community or assessment area, however, it is becoming more and more difficult for the small banks to find community development loans and investments, as all the small banks are after the same assets in trying to satisfy the requirements of the Act.

Increasing the definition to $1 billion will have little adverse effect on the overall focus of the Act, but will have significant benefits to the struggling small Financial institutions. who already have a hefty financial burden in trying to comply with the various consumer and civil rights regulations, but it will also have a significant effect on the budgets of the various regulators.

Thank you for the opportunity to share these thoughts.
Ron Gauvin
Compliane Advisor
Southern New Hampshire Bank & Trust
31 Pelham Rd
Salem, NH 03079-4816

 

Last Updated 02/24/2004 regs@fdic.gov

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