| CITIZENS NATIONAL BANK IN
WAXAHACHIE
From: Mark Singleton [mailto:mes3@cnbwax.com]
Sent: Thursday, September 16, 2004 8:25 AM
To: Comments
Cc: psmith@aba.com; George Singleton
Subject: increase the Community Reinvestment Act threshold for small
banks to $1 billion
September 16, 2004
To whom it may concern:
I 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 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 also strongly support the addition of a community development
criterion to the small bank examination for larger community banks, but
we believe the new community development (CD) criterion should be
applied only to banks greater than $500 million up to $1 billion.
Community banks up to $500 million now hold about the same percent of
overall industry assets as community banks up to $250 million did a
decade ago when the revised CRA regulations were adopted, so this
adjustment in the CRA threshold is appropriate. 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. This result certainly was not
intended by Congress 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.
Sincerely;
Marvin E. Singleton III
President and CEO
Citizens National Bank in Waxahachie
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