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FDIC Federal Register Citations

MERRILL BANK

201 Main Street Telephone (207) 942-4800
P.O. Box 925 Fax (207) 945-4712
Bangor, Maine 04402-0925 www.merrillmerchants.com

September 15, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, D. C. 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 Chairman and CEO of Merrill Merchants Bank in Bangor, Maine. Our bank is $360 million in asset size and part of a one bank financial holding company. We have eleven offices that serve communities with population bases ranging from 2,000 to 32,000.

First, let me thank you for proposing to increase to $1 billion the threshold for the Small Bank CRA streamlined examination and for offering community bankers the opportunity to comment on your proposal. We small bankers desperately need regulatory relief and this would certainly be a beginning.

I have been a community banker for 40 years and, unfortunately, I have witnessed an alarming rate of increased paperwork and recordkeeping to comply with today’s regulatory burden. Without a doubt we are the most regulated industry that I know of in business today. Since 1995 when the Community Reinvestment Act (CRA) was rewritten, we have added new reporting requirements under HMDA, the USA Patriot Act and the privacy provisions of the Gramm-Leach Bliley Act and I am sure there are more that don’t come to mind at this time. The nature of a community bank has not changed but complying with the requirements of the large institution CRA examination is going to increase our salary and support expense by 25% to 30%. Not only will this be costly to our bank from an overhead point of view, but it will take personnel away from helping to meet the credit needs of our respective communities as they have to deal with all of the regulatory issues related to CRA.

Your proposal to increase the threshold for the small bank examination is in no way an exemption from CRA and I understand that my bank would still have to help meet the credit needs of our communities and be evaluated by my regulator. I truly believe that it is now and always has been in our best interest to reinvest into our respective communities.

I am in support of the addition of a community development CD criterion to the small bank examination for large community banks. It appears to be an improvement of the investment test. However, I do urge you to apply the new CD criterion to community banks with assets of $500 million to $1 billion. It is my understanding that banks under $500 million now hold about the same percentage of overall industry assets as community banks under $250 million did a decade ago when the revised CRA regulations were adopted, so this adjustment would seem appropriate. Even considering the size of our bank and the areas we serve, there have been very limited opportunities to acquire community development loans. I could go out of market, but how is that going to benefit my communities?

Another reason I support your CD criterion is that it allows a bank a more gradual approach to the large bank examination process. Your proposal allows a bank to move from the small bank examination to an expanded, but still streamlined, small bank examination which, I believe, will be a significant improvement over the current regulation.

I strongly oppose making the CD criterion a separate test from the overall CRA evaluation. As a community bank, we view CD lending the same as proving credit to the entire community. The current small bank test considers our overall lending in our 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 closing, I again would like to thank you for this opportunity to express my support for increasing the threshold to $1 billion in assets for community banks eligible for the small bank examination and to encourage you to approve this proposal as quickly as possible. Community banks need regulatory relief and your proposal is a step in the right direction.

Sincerely,

Edwin N. Clift
Chairman and CEO

ccs: The Honorable Alan Greenspan
E. Philip A. Simpson, Jr., FRB, Boston, Mass.
 

Last Updated 09/29/2004 regs@fdic.gov

Last Updated: August 4, 2024