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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

SUMMIT NATIONAL BANK

September 17, 2004

Summit National Bank
P.O. Box 1087
Greenville, SC 29602

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 would like to take this opportunity to express my comments as they relate to the cut off size of small bank examination classification for CRA as well as my support of the proposed changes. We ended our most recent fiscal year dated December 31, 2003, with $341MM in assets. Our bank converted to the large bank criteria beginning January of that year.

Upon making this transition, we have come under the same regulatory burden as the much larger banks in our market area. In addition, we are expected to perform by the same standards to which they are held. We still consider ourselves a community bank and our focus of catering to small-business customers validates this point. Our deposit market is dominated by several large super-regional and interstate banking organizations; our bank’s market share within our assessment area is ~2%. This statistic is in line with the fact that there is a widening gap as it relates to market share. Asking a bank with assets in the millions to be evaluated on the same level as banks with assets in the billions is not fair.

Our bank prides itself in managing more assets per employee than almost any other bank in our peer group. In order to accomplish that, we have had to recruit individuals who are capable of handling multiple tasks and then get the most out of them we can. By being spread thin, it is difficult to adjust to increased regulatory burden such as that which has been imposed upon us by the existing CRA rules.

Being a bank with under $500MM in assets, our profits are much more sensitive to fluctuations in interest rates than larger banks. Factoring in the added cost associated with large bank CRA examination criteria, our earnings have come under even more pressure in trying to perform under the Lending, Service, and Investment tests. In addition, the increased regulatory burden has required that individuals currently monitoring our bank’s CRA performance have been forced to neglect some other duties that they presently perform. Furthermore, additional software purchases will be necessary to facilitate timely and accurate monitoring of the bank’s performance under the large bank evaluation criteria.

With respect to the Service and Investment tests, we are at a disadvantage from the outset. Specifically, every community has a limited number of investment opportunities so competition plays into the equation. Larger banks have the resources, both time and financial, to attract those opportunities better than a bank our size. Also, smaller banks have only a limited number of investment opportunities, whereas larger banks that can draw from multiple assessment areas have a much greater prospect of having an impact.

In summary, we 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.

In addition, we support the addition of a community development criterion to the small bank examination for larger community banks, but we believe that the FDIC should adopt its original $500 million threshold without a Community Development (CD) criterion. The new 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.

It is our contention that banks should be compared with their peers when being evaluated under the CRA requirements and that the cutoff be increased to $1 billion in order to promote a better degree of reasonable comparison. Understand that we are not attempting to disserve our community; we are first and foremost a community bank and pride ourselves in our ability to serve our community. This point is supported by our previous CRA ratings. Our position is that by limiting regulatory burden, we can continue to focus on meeting the needs of our assessment areas as well as running a sound and profitable financial institution.

Sincerely,

Blake M. Goldman
Vice President and CRA Officer


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

Last Updated: August 4, 2024