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MORGANTOWN BANK & TRUST
July 2, 2004
Robert E. Feldman, Executive Secretary
ATTN: Comments
Federal Deposit Insurance Corporation
550 17th Street NW Washington D.C. 20429
RE: Comments on Interagency Guidance on ODP Programs Dear Sir;
Morgantown Bank & Trust has reviewed the newly published Interagency
Guidance on Overdraft Protection Programs, published in Volume 69,
Number 109 of the Federal Register on June 7, 2004. Comments to these
proposed guidelines are due back to any of the agencies before August 6,
2004. Morgantown Bank & Trust was pleased to see that the majority of
the requirements and best practices are already being followed in
financial institutions utilizing the IMPACT Overdraft Privilege Service.
However, there are a few areas, which we believe, are worthy of comment
and they are as follows:
I. Charge Off Overdrafts at 30 days:
IMPACT has considered this issue and has created a collection process
designed to minimize losses to the Financial Institution While still
focusing on customer retention. This process is designed to make
systematic contact with the customers and determine which customers wish
to cure their negative balance and which are deserving of being charged
off. This process has been used for quite some time
and we believe that it efficiently manages the risk of the financial
institution. Accordingly, Morgantown Bank & Trust would advocate that
overdrafts be allowed up to an aging of sixty (60) days prior to
charging off an overdraft.
II. Unused Commitment Reporting:
The Proposed Guidelines provide that the amount of unused commitments
should be reported in regulatory reports when an institution routinely
communicates the available amount of overdraft protection. Morgantown
Bank & Trust maintains loss reserves based on the historical performance of the overdraft
protection service. However, reporting in the manner suggested by the
guidelines would greatly overstate the risks associated with this
product.
III. Free Account Disclosures:
Morgantown Bank & Trust has enjoyed great success through marketing Free
Accounts. These accounts have proven equally valuable for a large
segment of depositors. However, it would appear to be common sense that
fees can be charged on the account under certain circumstances that are
set out in detail in the depository agreement. Morgantown Bank & Trust
would advocate allowing free account advertising with overdraft
protection when conspicuous disclaimers are included in the
communication that make clear that other restrictions may apply.
IV. Notices Upon First and Subsequent Overdrafts:
The proposed regulations suggest that notices be provided containing
certain specific information upon the first overdraft paid under the
service as well as later uses of the privilege. Morgantown Bank & Trust
issues a notice promptly upon an overdraft being created. However, the
system that we use does not accommodate inclusion of the type of
additional information suggested by the guidelines. Accordingly,
Morgantown Bank & Trust would suggest that this suggestion be deleted.
V. Repayment Plans:
The guidelines suggest that repayment arrangements that are formalized
between a depositor and a bank should be charged off when the underlying
overdraft has aged past thirty (30) days. Morgantown Bank & Trust has
experienced a high degree of success in utilizing repayment plans and
find that they provide an additional safety net for our customers. These
repayment arrangements also produce a small degree of risk during the
period in which they are being paid according to their terms.
Accordingly, Morgantown Bank & Trust would suggest that current and
performing repayment plans not be charged off.
Sincerely yours,
Kenneth E. Cox, Pres. & CEO
Morgantown Bank & Trust
cc: Impact Financial Services
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