Peoples Bank & Trust
1. Charge Off Overdrafts at 30 days: Peoples Bank & Trust has considered this issue and with Impacts recommendation, has created a collection process designed to minimize losses to Peoples Bank & Trust 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 to our bank. Accordingly, PB&T would advocate that overdrafts be allowed up to an aging of sixty (60) days prior to charging off an overdraft but in no event less than forty-five (45) days as regulations currently require. 2. 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. Impact has advocated loss reserves be maintained by PB&T and that these reserves be based on the historical performance of the overdraft protection service. However, reporting in the manner suggested by the guidelines would, in PB&T opinion, greatly overstate the risks associated with this product.
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. PB&T would not argue that a notice should be issued promptly upon an overdraft being created. However, the systems which financial institutions frequently use do not accommodate inclusion of the type of additional information suggested by the guidelines. Accordingly, PB&T would suggest that this suggestion be deleted. 4. Repayment plans: The guidelines suggest that repayment arrangements which are formalized between a depositor and a bank should be charged off when the underlying overdraft has aged past thirty (30) days. PB&T has experienced a high degree of success in utilizing repayment plans and find that they provide an additional safety net for the 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, PB&T would suggest that current and performing repayment plans not be charged off.
Thank you, Jan Wells, Executive Vice President |
| Last Updated 07/08/2004 | regs@fdic.gov |