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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

CENTRAL BANK OF KANSAS CITY

September 10, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
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 or Madam:

I am President and C.E.O. of Central Bank of Kansas City, located in urban core of Kansas City, Missouri.  My bank is $130 million in assets. I am writing to strongly support the FDIC’s proposal to raise the threshold for the streamlined small bank CRA examination to $1 billion without regard to the size of the bank’s holding company. This would greatly relieve the regulatory burden imposed on many small banks such as my own under the current regulation, which are required to meet the standards imposed on the nation’s largest $1 trillion banks. Even though we would not currently be affected by the proposal, we have a good capital base and plan to grow significantly into the future.  Thus, increasing the threshold levels would definitely be advantageous to our bank as well as being within the spirit of the Economic Growth and Regulatory Paperwork Reduction Act compliance. 

I also support the addition of a community development criterion to the small bank examination for larger community banks. It appears to be a significant improvement over the investment test. However, I urge the FDIC to adopt its original $500 million threshold for small banks without a CD criterion and only apply the new CD criterion to community banks greater than $500 million up to $1 billion. Banks under $500 million now hold about the same percent of overall industry assets as community banks under $250 million did a decade ago when the revised CRA regulations were adopted, so this adjustment in the CRA threshold is appropriate. As FDIC examiners know, it has proven extremely difficult for small banks, especially those in rural areas, to find appropriate CRA qualified investments in their communities. Many small banks have had to make regional or statewide investments that are extremely unlikely to ever benefit the banks’ own communities. That was certainly not intent of Congress when it enacted CRA.

Our bank is a certified Community Development Financial Institution.  We have seven branches, soon to have eight, and four of them are located in and serve a distressed community.  This location and commitment to our LMI population has helped us to earn a rating of Outstanding for the past three CRA examinations.  Even though we are under the streamlined rules, due to our size, our commitment to the community has not lessened.  In fact, we continue to receive accolades regarding our service to the community.

An additional reason to support the FDIC’s CD criterion is that it significantly reduces the current regulation’s “cliff effect.” Today, when a small bank goes over $250 million, it must completely reorganize its CRA program and begin a massive new reporting, monitoring and investment program. If the FDIC adopts its proposal, a state nonmember bank would move from the small bank examination to an expanded but still streamlined small bank examination, with the flexibility to mix Community Development loans, services and investments to meet the new CD criterion. This would be far more appropriate to the size of the bank, and far better than subjecting the community bank to the same large bank examination that applies to $1 trillion banks. This more graduated transition to the large bank examination is a significant improvement over the current regulation.

I strongly oppose making the CD criterion a separate test from the bank’s overall CRA evaluation. For a community bank, CD lending is not significantly different from the provision of credit to the entire community. The current small bank test considers the institution’s overall lending in its community. The addition of a category of CD lending (and services to aid lending and investments as a substitute for lending) fits well within the concept of serving the whole community. A separate test would create an additional CD obligation and regulatory burden that would erode the benefit of the streamlined exam.

In conclusion, I believe that the FDIC has proposed a major improvement in the CRA regulations, one that much more closely aligns the regulations with the Community Reinvestment Act itself, and I urge the FDIC to adopt its proposal, with the recommendations above. I will be happy to discuss these issues further with you, if that would be helpful.

Sincerely,

William M. Dana, Jr.
President & C.E.O.
Central Bank of Kansas City
2301 Independence Blvd
Kansas City, MO 64124

Last Updated 10/15/2004 regs@fdic.gov

Last Updated: August 4, 2024