Skip to main content
U.S. flag
An official website of the United States government
Dot gov
The .gov means it’s official. 
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.
Https
The site is secure. 
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.
Federal Register Publications

FDIC Federal Register Citations



Home > Regulation & Examinations > Laws & Regulations > FDIC Federal Register Citations




FDIC Federal Register Citations




Lake Michigan Financial Corporation

From: Bart Jonker
Sent: Friday, September 10, 2004 9:19 AM
To: Comments
Subject: RIN 3064-AC50 -- CRA proposal comment letter

Robert E. Feldman, Executive Secretary
Attention: Comments/Legal ESS (RIN 3064-AC50)
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429
Via email: comments@fdic.gov

Gentlemen,
We wish to comment on the Notice of Proposed Rulemaking for 12 CFR 345, Community Reinvestment, as posted on August 20, 2004 in the Federal Register.

Lake Michigan Financial Corporation is a two-bank bank holding company with combined assets at year-end 2003 of approximately $419 million. One bank, The Bank of Holland, is located in Holland, Michigan and it operates two offices – one in downtown Holland and the other in downtown Grand Rapids. This affiliate ended 2003 with $278 million in assets, and will qualify for large-bank status under the present Community Reinvestment Act definition on January 1, 2005.

The other affiliate, The Bank of Northern Michigan, is located in Petoskey, Michigan, operating from one location and ending 2003 with $141 million in assets. This bank does not qualify for large-bank evaluation under the current CRA, based either on the asset size of the bank itself or on the asset size of the parent holding company. Therefore, the balance of our comments will reflect the perspective of The Bank of Holland – the institution that will be most directly impacted by any changes to the CRA.

We applaud the FDIC for taking a leadership role among the regulatory agencies in consideration of redefining the large bank definition, and we appreciate your careful evaluation of the needs of the industry as well as the desires of the public at large. The proposed change to the definition of large bank is in line with our original comment letter dated March 4, 2004, in which we recommended a threshold of $1 billion to qualify for evaluation as a large bank. We continue to support this position.

As an institution approaching the current large bank threshold, our most significant concern is the establishment of procedures (and associated personnel costs) involved in collecting and accurately reporting information on small business and small farm loans. In our view, the proposal goes to appropriate lengths to reduce this regulatory burden. We are particularly pleased by the proposed elimination of the $1 billion holding company threshold for large bank status.

The proposal seeks comment on a newly-created community development criterion, which would apply to FDIC banks between $250 million and $1 billion. We believe this is a reasonable transition step between small-bank and large-bank status, and may serve as an effective political compromise in assuring adoption of the proposal. The ability to achieve satisfactory or outstanding status by virtue of strength in community development lending, investments, or services is also reasonable, and allows the financial institutions a level of flexibility in determining the most effective way to serve their communities.

The proposal also seeks comment on expansion of the definition of community development to include rural areas. We do not agree with this approach, given the present emphasis on low and moderate income geographies and individuals. We believe the present definition is sufficient, and the addition of a rural designation would be less than beneficial. In our market, we currently provide service in metropolitan, suburban, and rural communities. Rural areas are characterized primarily by a lower population density – there still exist percentages of low, moderate, middle and upper income individuals within rural geographies, but the inhabitants of the rural census tracts are more spread out. We see no benefit in extending CRA-related credit for service to this population mix, which – in our markets – tend to have significant levels of middle and/or upper income individuals.

Stated more simply, in rural areas surrounding our Holland affiliate those individuals in poverty are less concentrated. A higher concentration of poverty results in census tract income in the low or moderate range, and the existing definitions provide appropriate CRA-related credit in our opinion.

We appreciate the opportunity to comment on this proposal. Should you have questions or need further information, please don’t hesitate to contact me at The Bank of Holland – 616-494-9035.

Cordially,
Bart Jonker, CRCM
Corporate Compliance Officer
Lake Michigan Financial Corporation

 

Last Updated 09/13/2004 regs@fdic.gov

Last Updated: August 4, 2024