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ICBA Repeats Call to Halt Proposed Commercial Real Estate Lending Guidance

Proposed Thresholds May Mislead Investing Public

Washington, D.C. (June 23, 2006)—The Independent Community Bankers of America (ICBA) — responding to concerns that stock market analysts are using proposed commercial real estate thresholds as new buy/sell indicators for investment transactions — again urged the federal banking agencies to not move forward with their proposed guidance.

In a letter to the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, ICBA called attention to stock recommendations made by Richard Suttmeier, president of Global Market Consultants, Ltd. and chief market strategist for Joseph Stevens & Co., that were based only on price targets and whether CRE holdings passed or failed the proposed threshold levels. Using this limited analysis, community banks are disadvantaged and the largest banks fare well because their huge size gives them a lower ratio of commercial real estate loans to capital.

"The proposed CRE lending thresholds cannot capture true risk because they treat all CRE loans as having equal risk and do not take into account underwriting standards and risk management practices," said Camden R. Fine, ICBA president and CEO. "And in this case, they mislead the investing public."

In its letter, ICBA asked the banking agencies to reject the proposed CRE guidance, saying "the proposal is overly broad, defining concentrations of risk in a manner that cannot assess the true risk in a bank's commercial real estate lending, and that disproportionately affects community banks."

V iew ICBA's letter, the analysis, and ICBA's original comment letter at www.icba.org.