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FDIC Federal Register Citations


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.

| 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



 

 

Last Updated 09/17/2004 regs@fdic.gov

Last Updated: August 4, 2024