CITIZENS BANK OF WINFIELD From: Chris Carothers [mailto:ccarothers@cbwinfield.com]
Sent: Tuesday, July 06, 2004 4:27 PM
To: Comments
Subject: Joint Agency Notice - Overdraft Protection Programs
I would like to comment on the proposed regulations on Overdraft Protection Guidance, Docket Number OP-1198. Certain consumer advocate groups, regulators and media have been portraying this as something new. This is not new, almost every financial institution in the country offers and has always offered a discretionary overdraft service for its customers. The overdraft program we use (Strunk & Associates) is a very broad based program. Virtually all accounts are approved unless they have displayed excessive overdrafts with very few deposits in a 90 day period. These are customers we feel do not deserve the overdraft privilege. It is just that, a privilege. A privilege not based on income, sex, race, but based on account status or account worthiness. Does this customer make a reasonable effort to deposit money and bring the account back in good standing? Our experience has been that the customers who overdraw their account are people who can “afford” to do this. I do not feel this encourages irresponsible consumer financial behavior. Customers do this regardless if they are on an overdraft program or not. One other point related to this is the bank pays the check. If a program like this did not exist, the customers on these programs would have their checks returned to the payee. This would result in the customer paying an additional charge to the payee to pick the check up. By implementing a program like this, if the customers would have overdrawn their account anyway, we are actually saving them money by not returning the check and the customer paying the charge from the merchant or business they wrote the check to. Also, if the customer was not on the overdraft plan, and the bank returned the check instead of paying it, the check could re-run back through the bank and charge the customer additional overdraft charges. That is another savings the customer gets by using this plan. Thank you for the opportunity to comment on this subject. Sincerely, Chris H. Carothers
Executive Vice President
The Citizens Bank of Winfield
P.O. Box 550
Winfield, AL. 35594
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