FDIC Federal Register Citations

Iowa State Bank & Trust Co.



From: Marcia McKeag
Sent: Friday, August 06, 2004 10:16 AM
To: Comments
Subject: Joint Agency Notice - Overdraft Protection Programs

July 28, 2004

FDIC
comments@fdic.gov

Re: Interagency Guidance on Overdraft Protection Programs

Ladies and Gentlemen:

Thank you for this opportunity to comment on the proposed Guidance. We appreciate the Agencies’ intent to assist insured depository institutions in the responsible disclosure and administration of overdraft protection services and offer the following comments.

Safety and Soundness Considerations
We agree with the proposed recommendation for written policies and procedures that adequately address credit, operational and other risks. Although individuals that excessively use this type of service may pose a higher credit risk, we have found monitoring the timeliness of bringing the account to a positive balance to be a more accurate indicator of declining credit or ability to repay.

We do not agree that overdraft balances should generally be charged off within 30 days from the date first overdrawn. This is not enough time and we recommend at least 45 days.

What is meant by “routinely communicates” the available amount of overdraft protection to depositors? Would this be normal advertising intended primarily to attract new customers, lobby signage, brochures or information on the bank’s web page? Or is it providing the available amount of overdraft protection on an account statement and balance inquiry or including a periodic statement stuffer?

We do not agree that available amounts of overdraft protection should be reported as “unused commitments” in regulatory reports. This would grossly skew these reports as a significant number of customers never or rarely use the overdraft protection service. If “routinely communicates” is defined as regularly including the available amount on account statements and in balance inquiries such as by ATM or online banking access, this may have merit, otherwise, we do not see how this would be of benefit but would generate distorted reports.

Again, thank you for this opportunity to comment.

Respectfully,

Marcia McKeag
Compliance Officer
Iowa State Bank & Trust Co.
Iowa City, Iowa