| WILLIAMSBURG FIRST
NATIONAL BANK July 19, 2004
Mr. Robert E. Feldman
Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Dear Mr. Feldman,
I appreciate the opportunity to comment on the proposed guidelines
concerning Overdraft Protection Programs currently being offered by many
banks. The following comments are offered relating to the proposed
guidelines:
The regulations, if adopted would require that all overdrafts be
charged off after thirty (30) days. We have a process in place which we
feel is fair to the customer and does not create excessive risks for the
bank. Overdrafts are carried up to sixty (60) days prior to being
charged off. Through the end of June 2004, our demand deposits averaged
$32,000,000 and total deposits averaged $63,000,000. The average
overdraft balances for the first six months of the year was $60,000
which poses very little risk to the bank.
The second item I would like to address in the proposal concerns
unused commitments. Our bank and most banks I have talked to give
special consideration to any overdrafts outstanding under our overdraft
program when calculating the bank's loan loss reserve. In our opinion,
reporting in the manner suggested in the guidelines would greatly
overstate the risks associated with this service.
Most financial institutions in our area have accounts which are
advertised as free accounts. Most of these accounts, if not all, do
access charges to customers when certain services other than account
activity is rendered to the customer. We advocate continuing to allow
the advertising of free accounts as long as conspicuous disclaimers are
included making it clear that other restrictions or other fees may
apply.
Our bank gives the customer a notice every time a check is posted to
the customer's account. This notice includes any service fees and the
amount the account is overdrawn. We feel that this is more than adequate
notice and object to the mandatory inclusion of additional information
suggested by the guidelines. Many systems will not accommodate the
inclusion of the type of information suggested without considerable
expense and adjustment.
Thank you again for the opportunity to comment on the proposed
guidelines. Please feel free to contact me if I can be of any further
assistance.
Sincerely,
Jim M. Cherry, Jr.
President
Williamsburg First National Bank
Kingstree, SC 29556
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