FDIC Federal Register Citations

First State Community Bank

October 14, 2004

Mr. Robert E. Feldman
Executive Secretary
Attention: Comments/Legal ESS
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429

Mr. Feldman:

I 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 small banks under the current regulation, which are required to meet the standards imposed on the nation's largest $1 trillion banks. Community banks would still be required to help meet the credit needs of their entire communities and would continue to be so evaluated by their regulator.

I feel community development criterion (CD), and the investment criterion, especially for rural banks, should be changed to reflect an overall analysis of the bank's loan portfolio and investment practices. I think an overall analysis in these areas would better demonstrate what and how rural community banks are performing and benefiting the communities they serve. As bankers and 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. Congress certainly, did not intend this result, when it enacted CRA.

I strongly oppose making the CD criterion a separate test from the bank's overall CRA evaluation. Such differentiation creates the impression that CD lending is different from the provision of credit to the entire community. The current small bank test considers the institution's overall lending in its community. A separate test would create an additional CD obligation and regulatory burden, eroding the intent 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. This change will go a long way toward eliminating the current distortions in the regulations that result in a small rural bank being told to invest in regional affordable housing bonds for an urban area not in the bank's community.

Chris Wigger
President