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ICBA Applauds OCC for Expanding Lending Pilot Program

Washington, D.C. (August 18, 2004) - The Independent Community Bankers of America (ICBA) applauded the Office of the Comptroller of the Currency (OCC) today for extending and expanding a pilot program that allows national banks located in states that have higher lending limits for residential real estate loans or small business loans to apply and use the higher lending limits.

"We commend the OCC for extending its pilot program for national banks," said Karen Thomas, ICBA executive vice president and director of regulatory relations. "We are particularly pleased that the OCC has decided to expand the program to include secured agricultural loans-a step ICBA had urged since the inception of the program. This will be especially beneficial for community banks located in rural markets that depend on agricultural lending and that face serious competition from state-chartered banks and the Farm Credit System."

National banks are generally allowed to lend no more than 15 percent of their capital on an unsecured basis-plus an additional 10 percent secured by readily marketable collateral-to a single borrower. Many states have established higher limits for the banks they charter. In June 2001, the OCC started a three-year pilot program that allowed well-run national banks to lend up to the state limit-but no more than 25 percent of capital-to single borrowers for small business and certain residential loans. The OCC is now renewing the pilot program for another three years, or until June 11, 2007, and expanding it to include agricultural loans.

"Community banks with national charters in states with higher lending limits for state-chartered banks have a competitive disadvantage," explained Thomas. "Because of the national bank lending limits, they are often unable to meet customer needs. The pilot program will expand the ability of participating community banks to serve their customers."