SpiritBank
From: Gail Smith [mailto:gsmith@SpiritBank.com]
Sent: Friday, September 17, 2004 12:58 PM
To: Comments
Cc: psmith@aba.com
Subject: RIN No. 3064-AC50
Dear Sir or Madam:
I am Gail Smith, Vice President of SpiritBank, located in Tulsa,
Oklahoma. My branch is in the small town of Oilton, with a population
of approximately 1,000 residents. My bank is a $550 Million bank
and already subject to the large bank CRA exam. In our last several
CRA exams, we have received the rating of "outstanding",
which we are very proud of. Serving our communities, whether large
or small, is an integral part of who our bank is.
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. I understand that this is not an exemption from
CRA and that my bank would still have to help meet the credit needs
of its entire community and be evaluated by my regulator. However,
I believe that this would lower my current regulatory burden by many
man-hours. 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 the intent of Congress when it enacted CRA. 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.
I strongly support the FDIC’s proposal to change the definition
of "community development" from only focusing on low- and
moderate-income area residents to including rural residents. I think
that this change in the definition will go a long way toward eliminating
the current distortions in the regulation. We caution the FDIC to
provide a definition of "rural" that will not be subject
to misuse to favor just affluent residents of rural areas. We have
branches across rural Creek County, Payne County and Lincoln County
in Oklahoma. Some of these, indeed, qualify at this time as low-moderate
income areas, but others are not considered to be in these census
tracts, but the economy of the town - for example, Stroud, Oklahoma,
clearly shows that any lending should qualify as CD lending.
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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.
Sincerely,
Gail Smith, Vice President
SpiritBank
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