Comptroller of the Currency John D. Hawke Jr. on Wednesday vowed to deliver significant regulatory relief to small national banks.
"We are already working at identifying specific regulations that might be changed to give community banks new opportunities for profit and growth without jeopardizing safety and soundness," Mr. Hawke said.
Restrictions on reverse stock splits will be eased, which should make it easier for community banks to convert to tax-advantaged S corporations, Mr. Hawke told 1,000 members at the annual convention of the Independent Community Bankers of America.
The agency also plans to ease lending limits, which Mr. Hawke said prevent some community banks from meeting the credit needs of larger local businesses. Federal law generally bars a national bank from extending more than 15% of its capital to any single borrower. But Mr. Hawke told reporters that some states give their banks higher loan limits. The Comptroller's Office, he said, may permit national banks in those states to use the same caps.
Rules on bank capital and corporate governance will be streamlined, including reducing the paperwork required to open branches, he added in his speech.
"The initiatives I have just described represent a down payment on a promise I am making to you here and now to do everything in our power while I am comptroller to ensure that OCC supervision is responsive to your needs as community bankers," Mr. Hawke said.
The agency also is designing a free, Internet-based system that will let community banks compare their financial performance against similar institutions, Mr. Hawke said.
The comptroller said he hoped these initiatives would change the view that the agency caters more to big banks than community institutions.
"If such a perception persists, we need to dispel it," he said. "It is simply not supported by the facts."
Eliciting cheers from the audience, the comptroller blasted the credit union industry, which competes with community banks but does not pay federal income tax.
"While Congress may be reluctant to address this issue, we cannot afford to simply let it fade away," Mr. Hawke told the ICBA members. "The competitive inequity that favors credit unions at the expense of small banks must be addressed."
ICBA is the new name adopted Wednesday by the Independent Bankers Association of America.
Community bankers said expanding loan limits is crucial for farm banks.
For instance, grain elevators often need more credit than the local national bank can offer, said Jim Caspary, president of First National Bank of Clifton, Ill. "Their costs have grown rapidly over the last few years," he said. "Our lending authority needs to grow as well."
Karen M. Thomas, the ICBA's director of regulatory affairs, said complicated rules governing reverse stock splits have made it tough for some banks to qualify as S corporations. "It is one of the most difficult hurdles you need to get over to convert to an S corporation," she said.
Making branch applications less onerous also should help, Ms. Thomas said. "Many community banks need to expand to survive," she said. "So making it easier to open a new branch would be welcome."
Mr. Hawke said all future regulatory proposals will include an analysis of their effect on community banks. The agency also will convene roundtable discussions nationwide in the third quarter to learn what other rules should be revised, he said.
"I want to hear directly from you about what we're doing well and what we could be doing better," he said. "With that feedback, we can take the necessary steps to strengthen our outreach program and to make our community bank supervision even better."
To reduce the paperwork burden on small-bank presidents, the OCC will try to weed out regulatory mailings that do not apply to community banks, he said. One small-bank chief executive officer told the OCC that he got 336 regulatory notices last year, Mr. Hawke said.