PEOPLES STATE BANK
From: Tami Janowicz [mailto:tamij@bankpeoples.com] On Behalf Of
Janowicz, Tami
Sent: Thursday, September 16, 2004 3:00 PM
To: Comments
Subject: RIN number 3064-AC50
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
550 17th Street, NW
Washington, DC 20429
Re: RIN Number 3064-AC50: FDIC Proposed Increase in the Threshold for
the Small Bank CRA Streamlined Examination
Dear Sir:
I am the Director of Compliance and CRA for Peoples State Bank which
is headquartered in Hamtramck, Michigan. Peoples State Bank is a
community bank with approximate assets of $430 million. We have 10
branch offices distributed throughout three metropolitan counties in SE
Michigan and include portions of each of these large counties in our
assessment area.
I strongly support the FDIC proposal to raise the threshold for the
small bank streamlined examination to $1 billion without regard to the
size of the bank’s holding company.
I have been in charge of our CRA compliance for a number of years,
and I have personal experience with both the small bank streamlined
examination as well as the large bank examination, and can state with
confidence that this change will greatly reduce the regulatory burden on
our small bank while having no adverse impact on how we serve the needs
of the community.
Use of the “small institution” examination standards does not
materially change an institution’s obligations to serve the needs of its
local community. Loan to deposit ratios coupled with an analysis of the
geographic distribution of loans are good measures of how well a bank is
meeting the needs of its communities within the confines of its ability
to do so while maintaining core safety and soundness standards.
The streamlined examination does, however, allow smaller banks to
minimize the costs associated with the CRA examination process itself.
For example, at our institution as we have moved from a “small” bank to
a “large” bank we have spent money on acquiring tools and skills to cope
with the examination procedure itself. We spent money on software to
accomplish the required CRA Data Reporting. We increased spending on
developing skills to use the software. We developed new internal
processes to assure we are capturing the data for loans properly. All of
these costs are associated with the examination process, not with the
requirement to serve the needs of our community.
We are a “community bank” and have always done our very best to
support the credit needs of our local communities including the needs of
low-and-moderate- income residents. While making various types of credit
readily available to individuals and small businesses within our
community is the most important part of our “Community Reinvestment”
program, we have also always attempted to impact our communities by
delivering services such as financial literacy training, financial
expertise to groups serving the community, and hands on participation in
programs that benefit the communities and the individuals who live here.
We have also over the years made investments to the extent feasible in
our local communities.
As our bank grew and became subject the large bank CRA examination,
the main difference in our CRA Program is the increased time and costs
spent in gathering, documenting, and reporting the data required under
the large bank examination process. This increased burden of additional
“paperwork” certainly does not contribute to our ability to meet the
credit and financial service needs of our communities.
The FDIC proposal recognizes that there is a difference between
“community banks” and large banks and will enhance the ability of
community banks to serve their communities by reducing the time and cost
of compliance without reducing the requirement of these banks to serve
the credit needs of the local community. Banks of all sizes are subject
to a host of regulations that require a high level of expertise to
assure compliance. Large regional and super regional institutions
generally employ a number of individuals who specialize in various
regulatory issues and additional staff devoted to CRA. Small banks do
not have the same resources.
The method of examination employed does not adversely impact the
intent or requirements of the CRA. Small community banks only thrive
when they serve the financial needs of their communities and the
individuals who live there. Any reduction in the unnecessary regulatory
burden created by the large bank examination, will allow small banks to
allocate limited resources to better serve their communities.
Thank you for tackling the issues of unnecessary regulatory burden
and for the careful consideration you are giving to all the comments you
receive.
Sincerely,
Tami Janowicz
Vice President
Director of Compliance and CRA
Peoples State Bank
248-548-2900 ext 1148
tamij@bankpeoples.com
