4000 - Advisory Opinions
Meaning of "Earliest Maturity Date" Clarified
June 14, 1988
Jules Bernard, Senior Attorney
In your letter of May 27, 1988, you ask how the FDIC applies section 8(q) of the Federal Deposit Insurance Act, 12 U.S.C. § 1818(q), to time deposits, and in particular how the FDIC construes the phrase "the earliest maturity date" as that phrase is used in section 8(q):
With respect to the definition of "the earliest maturity date," we request confirmation that such phrase would be construed to mean the stated maturity date of a time deposit or, if such time deposit does not have a stated maturity date or if the terms of such time deposit permit withdrawals prior to the stated maturity date, the first date that the principal amount of such time deposit may be withdrawn without penalty.
In my view, "the earliest maturity date" means the maturity date stated in the time deposit. If the deposit does not have a stated maturity date-- i.e., it requires the depositor to give a certain minimum notice (which may not be less than seven days) before the depositor may withdraw the funds, but allows the depositor to pick the date on which the notice interval is to begin--then "the earliest maturity date" refers to the date on which any such notice interval expires.
I cannot agree, however, that the "earliest maturity date" of a deposit has anything to do with the opportunity for a penalty- free withdrawal of funds from the deposit. Neither the Federal Deposit Insurance Act nor the FDIC's regulations provide for such penalties. State nonmember banks remain free to impose such penalties on their own initiative, but that is a matter of private contract.
You also ask:
[W]e request confirmation that where a depositor of a bank which is assuming the deposits of another insured bank has more than one time deposit in such other bank, any such assumed deposit would continue to be separately insured to the earliest maturity date for such deposit, rather than to the earliest maturity date of all such deposits.
I agree with your interpretation. In my view, "the earliest maturity date" of any deposit must be computed independently for that deposit, without regard for any other deposits that the same depositor might hold.