Federal Deposit
Insurance Corporation

Empire Bank

October 20, 2004

Mr. Robert E. Feldman
Executive Secretary
Attn: Comments/Legal ESS
Federal Deposit Insurance Corporation 550 17th Street, NW
Washington, DC 20429

RE: RIN Number 3064-AC50

Dear Sir:

Please accept this letter in support of the FDIC’s proposal to raise the threshold for the streamlined small bank CRA exam to $1 billion.

My name is Nancy Justice, Vice President, Compliance for Central Bancompany in Jefferson City, Missouri. We are a $6.5 billion community bank holding company with thirteen affiliate banks. Six of our banks have assets between $250 million and $1 billion and would be affected by the change in the threshold for the streamlined examination.

I would speak first to the regulatory burden on banks in general. Our company has fifteen full time employees whose job is primarily or entirely related to compliance management and auditing. Many other employees in line roles spend significant amounts of time related to compliance: training, preparation of documents, supervisory review, etc. This regulatory burden, while well intentioned and – in most cases – helpful, increases our costs of providing banking services to the consumer. So the consumer pays the necessarily higher costs through higher fees, higher loan rates, or lower deposit rates. It often seems to me that we have harmed the consumer in this way (higher costs) more than we have helped through better consumer protection.

In our highly competitive market, we compete with branches of large international banks (Bank of America and US Bank) and large regional banks (Commerce Bank, Union Planters Bank, and UMB), whose local branches are not examined for CRA since their charters are not located in this area and their business in the area is a small part of their total market. Additionally, we compete with a large number of local banks that qualify for small bank treatment; as well as a large number of non-bank, non-CRA competitors, such as credit unions, mortgage companies, and consumer credit companies.

The question currently before the FDIC is whether to increase the threshold for a streamlined CRA exam from $250 to $1 billion. I am in strong support of this proposal. So of the reasons for my support are as follows:

• As community bankers, we find that community reinvestment – defined broadly – is what we are all about. Every day we reinvest in our community. It is a part of who we are, both because it is the right thing to do, but also because it is a business necessity. We are judged by the residents of the towns where our banks are located by how much we help, for example, the local YMCA and the local hospital auxiliaries. Our citizens also know whether we are willing to loan money in low-income areas and loan money to low-income residents. We have to in order to survive and thrive. Locally owned, locally managed community banks invest far more in America’s small towns than large multi-state banks. That business necessity negates most of the need for external rules such as the CRA to mandate such investments.

• The specific rules of CRA are designed in such a way that some of our qualifying investments cannot even be made in our local community. So we invest outside our community, which is counter to the intention of the regulations.

• CRA is a significant regulatory burden. We would have a good portion of an FTE in each of the six affected banks if the regulatory threshold were to change. There would be less in training, less time complying, less time documenting compliance, less time auditing, and less examination time. All of these time savings would benefit the bank financially with little or no incremental decrease in the extent to which we are serving our community.

In conclusion, I believe the FDIC recommendation would do meaningful good by making our banks more competitive with no measurable negative consequences. Thank you for the opportunity to have a voice in the decision regarding this regulatory change.

Sincerely,

Nancy Justice, Vice President, Compliance
Central Bancompany