Magazine article American Banker

Fla. Case Shows Small Banks Not Immune to CRA Protest

Magazine article American Banker

Fla. Case Shows Small Banks Not Immune to CRA Protest

Article excerpt

Two small Florida banks have found out that community-group protests aren't just big-bank problems anymore, and they certainly aren't cheap.

First Commerce Banks of Florida and Prime Bank of Central Florida spent thousands of dollars to fend off a Community Reinvestment Act challenge to their merger from the Fair Housing Coalition.

The Cocoa-based group's protest surprised First Commerce officials because both banks are small. The Winter Haven-based bank has $103 million in assets, while Prime, in Titusville, has $46 million.

Last year, nearly three-fourths of the CRA protests decided by the Federal Reserve Board involved a bank with more than $3 billion in assets, according to data provided by the central bank. Almost five of every six protests involved banks with assets of over $1 billion, the Fed data indicated.

Although the Fed ultimately approved the deal on June 5, the whole process left First Commerce chairman Charles E. Harris convinced that protests are no longer just a big-bank problem.

"It was very expensive given the size of the institutions involved," said Mr. Harris. "They say that in terms of legal fees and things like that that it costs about the same for a $500 million bank to fight a protest as it does for a $50 million bank."

Mr. Harris declined to reveal the exact amount of his legal bill.

Karen Thomas, director of regulatory affairs for the Independent Bankers Association of America, said First Commerce's experience should put other small banks on notice that they no longer are safe from CRA protests.

"This shows that they can't be complacent," Ms. Thomas said. "Community banks will have to think twice and know that a protest is a consideration if they apply for something that is subject to CRA."

Mr. Harris said he was stunned that the group would target Prime. …

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