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FIRST BANK AND TRUST CO.
September 15, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
FDIC
550 17th Street, NW
Washington, DC 20429
Dear Mr. Feldman:
My name is Steve Sayers. I am a consumer loan officer for First Bank
and Trust Co. in Norman, Oklahoma. We have branches in Duncan, Healdton,
Ardmore, and Norman, Oklahoma. We are a $250 million bank. I am writing
to strongly support the FDIC’s proposal to raise the threshold for the
streamlined small bank CRA exam 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 ours under the current
regulation. I understand this is not an exemption from CRA and that my
bank would still have to help meet the credit needs of our entire
communities and be evaluated by regulators. However, I believe that this
would lower our current regulatory burden immensely.
I also support the addition of a community development criterion to
the small bank exam 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 percentage of overall industry assets as
community banks under $250 million did a decade ago when the revised CRA
regs were adopted. Thus, this adjustment 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 those small, rural communities. Many small banks have had
to make regional or statewide investments that are extremely unlikely to
ever benefit the banks’ own communities. That could not have been the
intent of Congress when it enacted CRA.
Another reason to support the FDIC’s CD criterion is that it
significantly reduces the current reg’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 sometimes as much as two years in advance. 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 exam, 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 exam 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 regs, one that much more closely aligns the regs
with the CRA Act itself. I urge the FDIC to adopt its proposal with the
recommendations above. I will be happy to discuss these issues further
with you if desired.
Sincerely,
Steven D. Sayers
AVP/Consumer Loan Officer
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