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ICBA Strongly Supports OTS CRA Proposal

Washington, D.C. (Jan. 24, 2005) - Independent Community Bankers of America (ICBA), the nation's largest banking trade association, sent a comment letter today to the Office of Thrift Supervision (OTS) strongly urging approval of two changes to Community Reinvestment Act (CRA) rules to further alleviate burden.

The two changes would greatly alleviate regulatory burden for the thrift institutions affected. Under the proposal, the definition of community development would be expanded to include activities that benefit rural residents or areas. In addition, the OTS is proposing to give thrifts subject to the large-bank CRA exam (those with over $1 billion in assets) additional flexibility.

Under the current large bank CRA exam, thrifts are rated for their lending, investments and services according to a matrix, with a 50 percent weight for lending and 25 percent each for investments and services. Under the OTS proposal, at least 50 percent of the assessment would still be based on lending, but the remaining 50 percent could be allocated in any way the institution deems appropriate.

"It is frequently difficult to isolate needed community development activities in rural areas so that they are focused solely on low- and moderate-income individuals or geographies. Expanding the definition of community development to include activities that generally benefit rural areas recognizes the realities of rural demographics and that CRA is not solely a regulation that should be designed to address the problems of the inner city," wrote ICBA. "Allowing larger institutions the flexibility to establish their own assessment matrix for CRA acknowledges the institution's understanding of its local market and individual business plan while still ensuring CRA requirements are met."

"Obviously there has been a great deal of recent interest in CRA," said Karen M. Thomas, executive vice president of ICBA. "The OTS has already acknowledged the changing realities of CRA by increasing the asset-size limit for the 'small bank' streamlined CRA exam to $1 billion. We commend them for further recognizing the ability of financial institutions to know and serve their local community best-something ICBA has been fighting to have recognized for years."

The full text of the letter is available at www.icba.org/pressroom.