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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

SOUTH LOUISIANA BANK

September 16, 2004

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

Re: RIN Number 3064-AC50: FDIC Proposed Increase in the Threshold for the Small Bank CRA Streamlined Examination

Dear Sir or Madam:

I am the CRA Officer of South Louisiana Bank, located in Houma, Louisiana. I am joined in this letter by my Board of Directors and President. We are located in Terrebonne Parish and serve a diverse community that is tied through support services provided by small businesses to the drilling and production of oil and to agriculture by cane farming and shrimp, crabs and oyster fishing. We consider the entire parish as our community and serve about 100,000 people. Our bank is $208 million in assets and is approaching the large bank threshold. I have reviewed the extensive requirements for the large bank reporting criteria and as a HMDA reporting bank realize the additional amount of time involved with the recordkeeping. I can assure you that we don’t feel like we are a large bank and I am writing you to add our support to the FDIC proposal to raise the asset threshold for the streamlined small bank CRA examination to $1 billion without regard to the size of the bank’s holding company. This will greatly relieve the regulatory reporting burden imposed on many small banks like ours under the current regulation. There is a vast difference between the small banks and the large institutions which have the volume to justify the trained personnel and technology to gather and to monitor the accuracy of the information for the CRA report. We understand that we will continue to meet the credit needs of our entire community and be subject to CRA evaluations. The current criteria are good business for the bank; reaching into all geographic areas of the community and providing products and services for all economic levels. We lose larger customers to the bigger banks and are constantly “growing” new ones to take their place. Less regulatory paperwork allows us to provide services, products, and one to one, face to face contact with our customers and community instead of adding back room staff to keep up with documentation for new reporting requirements. At this time, we probably would have to cut back on other services or the speed of service to keep up with the additional documentation of a large CRA reporting bank.

I also support the addition of a community development criterion to the small bank examination for larger community banks. At our last exam as a small bank we were not able to use the investment test because of the amount and availability of investments in our area. With the mergers and consolidations we as community banks all have significant large bank competition for those investments. We support the new CD criterion to apply to banks greater than $500 million up to $1 billion. From the statistics in your FIL-96-2004 we can see that the banks under $500 million hold about the same percent of industry assets as the community banks under $250 million did a decade ago when the revised CRA regulations were adopted. This adjustment is in keeping with the spirit of the regulation.

The current threshold of $250 million is relatively smaller than it was ten years ago. Community banks are forced to be more streamlined and efficient to stay competitive with the products, prices, and services of the large bank competition now in our back yards through acquisitions and even the internet. The effect of becoming a “large bank” under the current definition and the difference in the CRA program requirements will require massive program reorganization to meet the reporting, monitoring, and investment program. A gradual move as proposed in the expanded but still streamlined small bank examination, that includes the ability to mix Community Development loans, services, and investments to meet the new CD criterion is a significant improvement over the current regulation. The gradual transition is more appropriate to begin for the $500 million to $1 billion banks.

We strongly oppose the CD criterion as a separate test from the banks overall lending test for their CRA evaluation. The current lending test already considers the geographic locations, size of loans, and size of your borrower to measure lending to your entire community. A separate test would mean carving out our credits made to home contractors that provide moderately priced housing, or some daycare centers, organizations, and businesses to track which loans get reported under each test with supporting documentation. These loans are part of lending to the entire community. A separate test creates an additional reporting burden that takes away from the benefits of the streamlined exam.

The FDIC proposal is a significant improvement in the current CRA regulation. We believe that it continues to follow the original intent of the Community Reinvestment Act when it allows the movement of the threshold for the small bank streamlined examination to $1 billion and adds the new Community Development criterion for banks over $500 million as a part of the overall lending test. This improvement captures close to the percent amount of reporting and provides a gradual move towards the large bank reporting requirements for small $500 million banks. Smaller banks now have a difficult time when they suddenly need to divert resources to change their entire CRA program to meet the current large bank reporting requirements. We had felt that we would need to begin a new program at least a year ahead to have the properly trained individuals and systems in place to be able to accurately track and provide the information for a large bank CRA exam. We urge the FDIC to adopt its proposal with the above recommendations.

Sincerely,

Victoria Rhea
Loan Review Officer

Chuck Weaver
President and CEO

Francis O. Bourg, III
Chairman of the Board

 


 

Last Updated 09/28/2004 regs@fdic.gov

Last Updated: August 4, 2024