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Federal Register Publications

FDIC Federal Register Citations



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FDIC Federal Register Citations

BANK OF THE SOUTH

September 29, 2004

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

RE: RIN Number 3064-AC50

Dear Mr. Feldman:

By raising the streamlined small bank CRA threshold from $250 million to $1 billion, the regulatory burden imposed on small banks under the current regulation would be greatly relieved. Therefore, we strongly support the FDIC’s proposal to raise the streamlined small bank CRA examination threshold. Community banks do not have the same resources that their mega-bank counterparts do and under the current regulation they are examined identically. One reason that community banks exist is to meet the credit needs of their communities and we will continue to be evaluated as such by our regulator. The regulatory burden on small banks has grown larger and larger. For instance, there are massive reporting requirements under HMDA, the USA Patriot Act and the privacy provisions of the Gramm-Leach-Bliley Act (to name a few).

We also support the addition of a Community Development criterion to the small bank examination for larger community banks, but we feel that the FDIC should adopt its original $500 million threshold with a Community Development criterion. It has been extremely difficult for community banks, especially those in rural areas, to find appropriate CRA qualified investments within their community. Many small banks have made investments outside their community that more than likely will not benefit their own community.

The nature of community banking has not changed; they exist to serve their communities. When a community bank must comply with the requirements of the large institution CRA examination, the costs to and burdens on a community bank increase dramatically. In looking at our bank, converting to the large institution examination requires that we incur added expense in the form of staff and their associated expenses to monitor the regulatory environment, to train employees on the ever-changing requirements, to monitor for compliance, as well as additional costs for monitoring tools, etc. This imposition of a dramatically higher regulatory burden drains both money and personnel away from the basic function of a community bank -- helping to meet the credit needs of the community.

We strongly believe that a community bank meets the credit needs of its community if it makes a certain amount of loans relative to deposits taken. A community bank is typically less complex than a large bank; it takes deposits and makes loans. Its business activities are usually focused on small, defined geographic areas where the bank is known in the community.

In conclusion, we strongly support increasing the asset-size of banks eligible for the small bank streamlined CRA examination process as a vitally important step in revising and improving the CRA regulations and in reducing regulatory burden. While community banks, of course, still will be examined under CRA for their record of helping to meet the credit needs of their communities, this change will eliminate some of the most problematic and burdensome elements of the current CRA regulation from community banks that are already drowning in regulatory red-tape.

Thank you for your earnest consideration of this proposal.

Sincerely,

Susan Wilson Kay Thomas
Chief Financial Officer

Last Updated 10/05/2004 regs@fdic.gov

Last Updated: August 4, 2024