Home State Bank
September 9, 2004
Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RE: Proposed Amendments to the Community Reinvestment Act
Dear Mr. Feldman:
Thank you for
the opportunity to comment on the FDIC’s proposal
to amend the “small institution” test for banks under
the Community Reinvestment Act. Home State Bank is a state-chartered,
community bank of $370 million in assets, located in Loveland and
Fort Collins, Colorado.
Home State Bank
strongly supports the FDIC’s proposal to increase
the asset size of banks eligible for the small bank CRA examination
from $250 million to $1 billion. In fact, we encourage the FDIC to
follow the OTS’ lead in raising the asset threshold to $2 billion.
Because of our asset size, we have experienced first hand the cost
in transitioning from “small bank” to “large bank.” We
began our first year of CRA data collection under the large bank
requirements in January of this year. We have seen a significant
cost in terms of software, developing and implementing policies,
procedures, forms, training programs, audit procedures, as well as
a staff addition to monitor compliance.
We believe increasing
the asset threshold to $2 billion would be reasonable in today’s
economic climate. Raising the threshold will help to restore the
competitive balance in our industry given
the disparity between small community banks and larger banks. Recent
years have seen the regulatory burden increase greatly with the passage
of new laws such as Gramm-Leach-Bliley Act, the USA Patriot Act,
the FACT Act, Check 21, and revisions to the Home Mortgage Disclosure
Act. Added to this, community banks like Home State Bank have long
been at a competitive disadvantage to credit unions that do not have
the same regulatory burden as commercial banks, particularly under
the Community Reinvestment Act.
Home State bank does not support the proposal to add a mandatory
community development performance criterion to the evaluation method
for small banks with assets greater than $250 million up to $1 billion.
A separate community development test would not reduce the burden
for small banks within this asset range and would require the bank
to compete with much larger banks for the same community development
loans and investment activities as is currently required under the
large bank exam requirements.
In closing, we urge the FDIC to adopt the increased asset size threshold
for small banks, and to maintain the current CRA small-bank streamlined
exam guidelines.
Sincerely,
Georgia Zastrow, CRCM
CRA Officer
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