4000 - Advisory Opinions
Savings, Loan and Mortgage Charts Listing Both Insured and Uninsured Institutions Need Not Include Official FDIC Advertising Statement
December 14, 1990
Valerie J. Best, Senior Attorney
I am writing in response to your letter dated November 6, 1990, asking for confirmation of your understanding of 12 CFR §§328.3(c)(7) and 329.3(b). Your company prepares savings, loan, and mortgage charts listing both insured and noninsured institutions. It is my understanding that these charts are advertisements or solicitations prepared by you on behalf of various institutions. You ask us to verify your understanding that 12 CFR §328.3(c)(7) would apply with the result that the "official advertising statement" would not have to be included in such group charts. Your understanding is correct.
As you know, 12 CFR §328.3(a) requires insured banks to include the official advertising statement in all advertisements except as provided in paragraph (c) of section 328.3. The official advertising statement is the statement "Member of the Federal Deposit Insurance Corporation." Paragraph (c) of sections 328.3 provides that the official advertising statement does not have to be included in "[j]oint or group advertisements of banking services where the names of insured banks and noninsured banks or institutions are listed and form a part of such advertisements." Since your charts include both insured and noninsured institutions, you need not include the official advertising statement in the charts.
For your information, credit unions are regarded as "noninsured institutions" for purposes of section 328.3. Shares in credit unions are generally insured by the National Credit Union Share Insurance Fund (NCUSIF), an arm of the National Credit Union Administration (NCUA). NCUA is an independent agency of the United States. Nonetheless, credit unions are not insured by the FDIC and so would be regarded as noninsured institutions for purposes of section 328.3.
You also ask if the chart showing interest on deposits could include a footnote reading "[m]ethod of compounding varies with each institution," in lieu of a more specific statement explaining how the yield was computed for each institution. Such a substitution would not be acceptable.
Section 329.3(b) provides: "Where a percentage yield achieved by compounding interest during 1 year is advertised, the annual rate of simple interest shall be stated with equal prominence, together with a reference to the basis of compounding." The statement you propose is not sufficient, in our opinion, to satisfy the requirement that a reference to the "basis" of compounding be included in the advertising. You may, however, satisfy this requirement by showing the frequency of compounding through a code, with an explanation of the code contained in a footnote. For example, you could put the letter "m" for monthly, or the letter "y" for yearly, next to the applicable yield. Then, in a footnote, you could explain that "m" means monthly, etc.
I have confined my comments to the specific questions raised in your letter. I have not reviewed the charts for compliance with other applicable consumer credit advertising rules.