Cattaraugus County Bank just completed one of its busiest seasons ever, but its president is not pleased.

It wasn't a boom in customers or deposits or hiring that made things so hectic at the tiny Little Valley, N.Y., bank. Rather, they found themselves overrun with examiners.

At one point, 11 federal and state examiners roamed the bank's main office, which has just 20 employees.

"I know their job, and, to some degree, I sympathize," said Cattaraugus president Salvatore Marranca, a former Federal Deposit Insurance Corp. examiner. "I'm not blaming the cop on the beat, but there is something wrong with the process.

"They spent 40 man-hours on our Community Reinvestment Act exams," Marranca continued. While acknowledging that on-the-job training of inexperienced examiners during the bank's examination made the process longer, he said "it's still ridiculous."

Mr. Marranca detailed his $80 million-asset bank's headaches in a letter to Independent Bankers Association of America executive vice president Kenneth Guenther.

According to the letter, the bank went through eight exams, including separate state and federal compliance and CRA tests, in the third quarter. Cattaraugus County Bank also was examined for compliance with the Bank Secrecy Act, safety and soundness, loan audit, and electronic data processing.

This situation is hardly unique, Mr. Guenther said; examination overload taxes nearly every small bank.

"That's the world of community banking," Mr. Guenther said. "You spend one month each year baby-sitting regulators."

Paul Sachtleben, the FDIC's director of compliance and consumer affairs, said the agencies are concerned about the burden on banks, and are changing the process to relieve overloaded institutions.

By making better use of the agency's field offices and incorporating new software, the agency hopes to significantly reduce on-site exam time, a sentiment echoed by FDIC Chairman Ricki Helfer in a speech before the Independent Bankers of Texas in September.

Mr. Sachtleben said examiner hours have dropped an average of 10% from last year.

"We've been tearing apart the exam process to see where the overlap, duplications, and inefficiencies are," Mr. Sachtleben said. "We're focusing on spending more time in field offices and analyzing data ahead of time, so we spend less time in the actual banks."

He added that most banks prefer to get their exams out of the way in one fell swoop. He said about 65% of FDIC banks in a recent poll indicated they preferred having all their exams done concurrently.

But in Cattaraugus' home state, the burden is even greater. New York is one of 10 states, along with the District of Columbia, which has compliance and CRA exams of their own. Connecticut, Iowa, Maryland, Massachusetts, Michigan, Missouri, Ohio, West Virginia, and Washington are the others.

Mr. Sachtleben said the FDIC has agreed with Connecticut and Massachusetts regulators to prevent overlaps by alternating exams between the agency and the state, thereby avoiding situations like the one at Cattaraugus. No such pact is in place in New York, he said, but one is in the works.

But Mr. Marranca said the duplicative exams are a waste. He said his bank earned a "satisfactory" rating on its CRA exam in 1993, and is highly capitalized, and doesn't warrant tight regulation.

"I don't think we should have one (CRA) exam, much less four in 24 months," he said. "A small bank like ourselves just wouldn't survive if they didn't serve their community well."

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