FDIC Federal Register Citations

From: Deborah Barbour [mailto:d6bar@mcsbank.net]
Sent: Monday, September 20, 2004 10:51 AM
To: Comments
Subject: Streamlined CRA Exam; RIN number 3064-AC50

Deborah Barbour
PO Box 38
Sandy Lake, PA 16145

September 20, 2004

Comments to FDIC
,

Dear Comments to FDIC:

As a community banker that is approaching the $250M mark, I join my fellow
community bankers throughout the nation in strong support of the FDIC's
proposal to increase the asset size limit of banks eligible for the
streamlined small-bank CRA examination. I also strongly support the
elimination of the separate holding company qualification. As a small
community bank approaching the threshold that would catapult us into the
large bank arena, I understand the complexities of the requirements of the
large bank examination and realize that due to our location, we will not
have the resources available to us to be able to measure up to the
expectations of the examination.

Our institution has nine branches - seven of those branches are located in
communities where we are the only financial institution in the surrounding
area. All but one of our locations is in a rural area - heavily
agricultural. We are very supportive of all our communities in every way
possible - extending credit to indivuduals and businesses that the large
banks won't even touch. We are very committed to community development
and imposing the additiional requirements of a large bank CRA exam will
not improve our community commitment - if anything it could hinder us from
meeting the needs of our communities due to the additional burden of
complying with the large bank exam. It has always been unfair to place a
smaller institution on the same playing field as the mega banks - we do
not have the resources nor the opportunities that the mega banks have, yet
we are examined on the same requirements.

The proposal will greatly alleviate unnecessary paperwork and examination
burden without weakening our commitment to reinvest in our communities.
Reinvesting in our communities is something we do everyday as a matter of
good business. My community bank will not long survive if my local
communities do not thrive, and that means my bank must be responsive to
community needs and promote and support community and economic
development.

Making it less burdensome to undergo a CRA exam by expanding eligibility
for the streamlined exam will not change the way my bank does business.
In fact, it will free up human and financial resources that can be
redirected to the community and used to make loans and provide other
services.

It is important to remember that the streamlined CRA exam is not an
exemption from CRA. It is a more cost effective and efficient CRA exam.
Banks subject to the simplified CRA exam are still fully obligated to
comply with CRA. Just as now, community banks would continue to be
examined to ensure they lend to all segments of their communities,
including low- and moderate-income individuals and neighborhoods. It just
doesn't make sense and is inequitable to evaluate a $500 million or $1
billion bank using the same exam procedures as for $100 billion or $500
billion bank.

One of the problems with the current large bank CRA exam is that the
definition of "qualified investments" is too limited, and qualified
investments can be difficult to find. As a result, many community banks
(especially those in rural areas) have to invest in regional or statewide
mortgage bonds or housing bonds and the like to meet CRA requirements.
These investments may benefit other areas of the state or region, but they
actually take resources away from the bank's local community. Community
banks and communities would be better off if the banks could truly
reinvest those dollars locally to support their own local economies and
residents.

For this reason, I find that the FDIC's proposed community development
requirement for banks between $250 million and $1 billion is more flexible
and more appropriate than the large bank investment test. The advantage
to this proposal is that it continues to focus on community development,
but considers investments, lending and services. It would let community
banks pursue community development activities that both meet the local
community's needs and make sense in light of the bank's strategic
strengths.

Similarly, the proposal will help rural banks meet the special needs of
their communities by expanding the definition of "community development"
so that it includes activities that benefit rural residents in addition to
low- and moderate-income individuals. Rural banks are frequently called
upon to support needed economic or infrastructure development such as
school construction, revitalizing Main Street, or loans that help create
needed or better-paying jobs. These activities should not be ineligible
for CRA credit because they do not benefit only low- or moderate-income
individuals.

The FDIC's proposed changes to CRA are needed to help alleviate regulatory
burden. Without changes such as this, more and more community banks like
mine will find they cannot sustain independent existence because of the
crushing regulatory burden, and will opt to sell out. For many small
towns and rural communities, the loss of the local bank is a major blow to
the local community. By easing regulatory burden, it will make it easier
for community banks like mine to continue to provide committed service to
local communities that few other financial service providers are willing
to do.

Thank you for considering my views.

Sincerely,

Deborah L. Barbour