FDIC Federal Register Citations

The Peoples Bank Co

Thank you for the opportunity to comment on proposed changes to the Community Reinvestment Act, (CRA). We were recently examined for CRA compliance as a small bank and received a satisfactory rating using the small bank streamlined method. In January of 2005, if no changes are made to the definition of small bank, we will be required to perform under the large bank standards since this will be the second year that our asset size exceeded $250 million at year-end.

The Peoples Bank Co. is located in a rural area, composed of agriculture and some small businesses. None of our assessment area is located within an MSA. We have six offices and several ATMs located throughout our assessment area.

Your proposal to raise the small bank asset size to $1 billion will be helpful, but I question the need to incorporate a community development criterion for banks with assets between $250 million and $1 billion. Our assessment has no more than two businesses that employ over 500 persons and most farms and businesses would fall below $1 million in gross annual revenue. A bank our size ($258,891,605 as of 12/31/03) in a rural community must serve the needs of the farmers and small business owners as well as its consumers or it would not continue to grow and prosper. Qualified community development investments are non-existent in our assessment area and few community development services are available. Other than the lending qualification, we will be hard pressed to meet the other criteria and keep our investment dollars within our assessment area. Under your proposal we will be required to take funds we would have loaned in our local area to make an investment outside our area that would qualify as a community development investment. The addition of rural to be added with the low & moderate income for the investment test will not change the availability of these investments, because we do not have the population base to support these types of investment activities.
As a community bank we would not survive if we did not have products to meet the needs of the areas we serve. When our small businesses and farmers have a tough year because of economic conditions or weather we work with them to help them survive until they have an opportunity to turn things around. That is often contrary to the suggestions from our regulators or how a larger holding company bank treats its customers.

Our management continues the support of raising the small bank definition to banks of $1 billion or less with no additional criteria. We see no logical reason or evidence that banks between $250 million and $1 billion have less of an involvement in their community and often it is banks of this size that can bring many additional services to the in which they serve community that a smaller institution does not have the resources to support. If a community bank meets or exceeds the loan to deposit threshold the community development criterion should not be required.

Sincerely,

Jack A. Hartings
President
The Peoples Bank Co