From: Marcia McKeag
Sent: Friday, August 06, 2004 10:16 AM
To: Comments
Subject: Joint Agency Notice - Overdraft Protection Programs
July 28, 2004
FDIC
comments@fdic.gov
Re: Interagency Guidance on Overdraft Protection Programs
Ladies and Gentlemen:
Thank you for this opportunity to comment on the proposed Guidance.
We appreciate the Agencies’ intent to assist insured depository
institutions in the responsible disclosure and administration of
overdraft protection services and offer the following comments.
Safety and Soundness Considerations
We agree with the proposed recommendation for written policies
and procedures that adequately address credit, operational and
other risks. Although individuals that excessively use this type
of service may pose a higher credit risk, we have found monitoring
the timeliness of bringing the account to a positive balance to
be a more accurate indicator of declining credit or ability to
repay.
We do not agree that overdraft balances should generally be charged
off within 30 days from the date first overdrawn. This is not enough
time and we recommend at least 45 days.
What is meant by “routinely communicates” the available
amount of overdraft protection to depositors? Would this be normal
advertising intended primarily to attract new customers, lobby
signage, brochures or information on the bank’s web page?
Or is it providing the available amount of overdraft protection
on an account statement and balance inquiry or including a periodic
statement stuffer?
We do not agree that available amounts of overdraft protection
should be reported as “unused commitments” in regulatory
reports. This would grossly skew these reports as a significant
number of customers never or rarely use the overdraft protection
service. If “routinely communicates” is defined as
regularly including the available amount on account statements
and in balance inquiries such as by ATM or online banking access,
this may have merit, otherwise, we do not see how this would be
of benefit but would generate distorted reports.
Again, thank you for this opportunity to comment.
Respectfully,
Marcia McKeag
Compliance Officer
Iowa State Bank & Trust Co.
Iowa City, Iowa
