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FDIC Federal Register Citations

Bank of Glen Burnie

From: Rie Atkinson [mailto:RAtkinson@bogb.net]
Sent: Tuesday, October 19, 2004 1:05 PM
To: Comments
Subject: RIN # 3064-AC50

I strongly support the FDIC's proposal to increase the asset size of banks eligible for the small bank CRA examination to $1 billion and eliminating the holding company size requirement. However, I encourage the Board to retain the small bank examination standard in its current form, without the addition of new community development criteria.

Community banks are put at a competitive disadvantage since non-banks and credit unions are not subject to the same CRA requirements, not to mention the tax advantage afforded to credit unions. Regulatory burden has increased greatly over the past few years with the passage of such laws as the Gramm-Leach-Bliley Act, the USA PATRIOT Act, the FACT Act, the Sarbanes Oxley Act and the Check 21 Act. While banks understand the need for banking regulations, community banks find complying with them especially burdensome. The FDIC's proposal to change the asset threshold for the streamlined CRA exam to $1 billion is needed to help alleviate some of the regulatory burden. Without such changes more and more community banks will find they cannot sustain their independent existence due to the crushing regulatory burden.

I have been the CRA Officer since 1995 when the FDIC adopted major amendments to the CRA regulations including the $250,000 small bank definition. At that time The Bank of Glen Burnie was considered a small bank and has been until this year, 2004. I have personally seen the increase in documentation, staffing and research required to comply with the large bank criteria.
With all six of our branches within a 10 mile radius of the main office and the operations building in the same block, we are still a community bank with strong community ties. However, we are now required to compete with the very large banks for investments and community development activities in our area as well as provide the increased documentation required with the large bank status. While our bank spends much more money to comply with the regulations, we do not provide any more to our community than we previously provided. The majority of our "community activities" do not qualify under the stringent definition of "community development".

Another problem with the current large bank CRA exam is that the definitions of "qualified investments" and "community development loans" are too limited, often making them difficult to find. As a result, many community banks have to invest in regional or statewide investments to meet CRA requirements. These investments may benefit larger areas of the state or region, but they actually take resources away from the bank's local community. Community Development Loans are also difficult to obtain in some areas. There are very few opportunities in our area and the very large banks often out bid the smaller banks or fund the entire loan in order to fulfill their CRA requirements, leaving the smaller banks out of the projects.
It is important to understand that the streamlined CRA exam is not an exemption from CRA. It is a more cost effective CRA exam. Banks subject to the simplified CRA exam are still examined to ensure that they lend to all segments of their communities, including low- and moderate-income individuals and neighborhoods and small businesses. Eliminating the required, and costly, annual reporting of small business and small farm loans in no ways weakens a banks community involvement.
Eliminating the holding company size requirement would also reduce the regulatory burden for many community banks. Small banks that are part of holding companies with total bank or thrift assets of a $1 billion or more are at a competitive disadvantage when examined under the large bank requirements based on their holding company status. Such banks should be measured with their peers, not measured against large banks.

We do not, however, support adding a mandatory community development performance criterion for banks with assets greater than $250 million and up to $1 billion as an additional component of small bank standards. The proposal does not explain what the community development criterion is or how it will be tested. Also, smaller institutions will continue to have a difficult time competing with larger more established banks for community development loans, investments and services.
In conclusion, while we strongly supports the FDIC's proposal to increase the asset size of banks eligible for the small bank CRA examination to $1 billion and eliminating the holding company size requirement, we do not support the addition of new tests or criteria to the current small bank criteria

Sincerely,

Yvonne "Rie" Atkinson
CRA Officer, AVP
The Bank of Glen Burnie
P. O. Box 70, Glen Burnie, MD

 


Last Updated 11/09/2004 regs@fdic.gov

Last Updated: August 4, 2024