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
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