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FDIC Federal Register Citations


FARMERS STATE BANK

July 26, 2004

Mr Robert E Feldman, Executive Secretary
Attention- Comments
Federal Deposit Insurance Corporation
550 17th St Building N.W.
Washington, DC 20429

Dear Sir,

I am pleased to offer my comments on PR 60-2004 for Farmers State Bank, Inc. Booneville, Kentucky.

Our Overdraft Program has become an integral part of the of the money management plan for our customer base, many of whom are the more disadvantaged persons in our area. As the program has matured our customers have become knowledgeable in the programs structure and how to use it for their best advantage. The program was developed with strong policies and procedures.
These policies and procedures act to strengthen understanding by both our Customer Service Representatives and our Customer.

The foundation of the program is the ability of our customers remain a consumer as long as the account is active. This means deposits are being made regularly to the account, in addition to the check activity. In keeping with our policies and procedures customers with overdrafts over 90 days with no deposit activity are charged-off. There is also the availability of a "restart program" for those .customers are overdrawn up to 90 days but continue to make deposits. This important feature offers a way the customer can place their account into a non-interest bearing repayment account as a way to cure the overdraft. No fees are charged and the overdraft privilege is suspended until repayment, when the customer has the option to continue or decline use of the program.

My concern is the requirement in the proposal to charge-off overdrafts within 30 days of the initial occurrence. This will result in a hardship for many persons and households because of the necessity to close the account. This does not allow customers with ACH or Direct Deposit activity the ability to make arrangements for the receipt of their payments on a timely manner. This could force the return of many checks; some for the 2nd time, which may result in merchant assessed fees in excess of those required by the bank.

Farmers State Bank overdraft program has been well received by the customer base. Any regulation that would curtail the usage or the willingness of financial institutions to provide the service would leave the consumer with one less product to choose from.

Respectfully Submitted,
Harvey E. Hensley
President



Last Updated 08/10/2004 regs@fdic.gov

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