West View Savings Bank

Town of McCandless * 9001 Perry Highway, Pittsburgh, Pennsylvania 15237-5387 (412) 364-1911

TTFL
O39

Ms. Cynthia L. Johnson

Director-Cash Management Policy & Planning Division
Financial Management Service-Room 420

401 14" Street, SW

Washington, DC 20227

September 24, 1999

Dear Ms. Johnson:

| am writing to you to express my views on the Proposed Amendment to
the Treasury Tax and Loan Rate of Interest as attached to the Federal Reserve
Bank of Cleveland’s Circular Letter 99-56.

The Treasury's stated goals of providing depositories “with an easily
understandable rate which will be publicly available” and providing a “readily
accessible indicator on which to estimate the cost of funds” are laudable.
However | am gravely concerned with the disparate impact of this proposal on
small and medium sized depositories. Based upon my experience in shopping
repurchase agreements in the $1 million to $10 million range, with a variety of
primary dealers and the Federal Home Loan Bank System, our bank has never
been able to affect a 2 basis point difference. Smaller market participants, such
as West View Savings Bank, are unable to command Treasury's level of pricing
from the primary dealers due to the lack of economies of scale. Small to medium
size financial institutions accornmodate small businesses who generaliy deposit
small tax payment coupons. It seems grossly unfair to penalize small to medium
sized financial institutions from a cost of funds standpoint since we are already
burdened by processing a relatively large number of small dollar tax payment
coupons. Treasury's operating cost reimbursement rate does not fully
compensate our bank and we depend upon the current interest factor to help us
break-even.

From a participation standpoint West View Savings Bank will seriously
reconsider our continued role as a depository — simply put, we cannot afford to
use this program as a “loss leader” to segue other bank small business products.
This is particularly troubling since our bank has recently increased our note
balance option from $1 million to $3 million in tangible support of small

Community Offices * West View — 456 Perry Highway, Pittsburgh, PA 15229-1890 © (412) 931-2171
Cranberry — 20531 Perry Highway, Cranberry Township, PA 16066-7508 * (412) 776-3480
Bellevue — 572 Lincoln Avenue, Pittsburgh, PA 15202-3530 * (412) 761-5595
Franklin Park — 2566 Brandt Schoo! Road, Wexford, PA 15090-7930 * (412) 935-7100

Loan Division (412) 935-7400


businesses in our local community and to the Treasury's need to invest
temporary surplus funds.

With respect to obtaining TT&L note balances for a guaranteed term, our
bank is most interested in further exploring this concept. If priced fairly, and not
on terms that only much longer participants could achieve with primary dealers,
we would seriously entertain a guaranteed term note option.

In closing, | believe that Treasury’s Proposed Amendment would
disproportionately impact small to medium sized depositories. Our bank would
most probably withdraw from the TT&L program unless we would receive a larger
operating cost reimbursement. Notwithstanding the foregoing comments, we
would generally welcome a guaranteed term to the note option, subject to an
economical and fair interest factor.

Sincerely,

David J. Bursic
President and
Chief Executive Officer