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FDIC Federal Register Citations

Citrus and Chemical Bank

From: Cheryl Nakashige
Sent: Tuesday, July 25, 2006 4:11 PM
To: Comments
Cc: Doug Small; Rosie Rivas; Joanna Reall

Subject: Advertisement of Membership - 12 CFR Part 328

July 25, 2006

Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429

RE: FDIC Advertisement of Membership Proposal

RIN 3064-AD05

To Whom It May Concern:

Thank you for the opportunity to comment on the FDIC Advertisement of Membership proposal that was issued on July 17, 2006. Citrus and Chemical Bank is an $850 million community bank located in Bartow, Florida. I am the compliance officer for the bank, a former OTS examiner, and have been in the industry for approximately 19 years. Please consider the following comments:

• Section 328.1 - I agree that it would be in the best interests of both insured banks and savings associations to require only one official FDIC sign be used. Since I have worked for both types of financial institutions, this part of the regulation was quite confusing and was probably more onerous for savings institutions to abide by.

• Section 328.1 - I am not a proponent of the revision to the FDIC sign that states “Each depositor insured to at least $100,000.” The revised FDIC law states that the FDIC insurance limit could change every five years depending on the rate of inflation. Therefore, if the rate of inflation changes five years from now, will all insured banks and savings associations need to again replace all the FDIC official signs if the language is revised (i.e., “Each depositor insured to at least $105,000”)? This would be a continuous cycle every five years if the limits change. That is burdensome to financial institutions and unnecessary if the FDIC official sign language is one that is not considered “PERMANENT.” While we are not a large bank, can you imagine Bank of America having to replace all the official FDIC signs every five years in its thousands of branches. Could that language be removed entirely or at least revised where it will not need to be changed again in the future? Most of the public is probably aware of the FDIC insurance limits, there is ample reference material on the Internet, few people probably look at the FDIC official sign, or financial institution staff can answer questions related to the amount of insurance if need be.

• Section 328.3 – I strongly disagree with certain proposals related to the use of the FDIC advertising statement (e.g., Member FDIC), specifically removal of various items that were previously exempted (FDIC proposing to remove 15 of 20 exemptions):

-- It is being proposed that “ALL advertisements that either promote deposit products and services OR generally promote banking services offered by the institution include the FDIC advertising statement.” “Generally promote banking services” is too ambiguous in my opinion. Previously, the regulation stated that advertisements relating to the making of loans by the bank or loan services were exempted. Since loans are a banking service, will the revision require us to add the “Member FDIC” to loan advertisements? I thought only deposits were insured by the FDIC. Adding “all banking services” that will require the FDIC advertising statement appears to be more burdensome, will require policy and procedural changes, and training where necessary. I recommend maintaining the exemption for loan-related advertising so as not to burden financial institutions with this additional regulatory requirement or confuse the public. I also recommend that the FDIC advertising statement only be required for advertisements promoting deposit products since that is all that FDIC will insure.

-- I am STRONGLY OPPOSED to removing the exemption for “bank supplies such as stationery, envelopes, deposit slips, checks, drafts, signature cards, deposit passbooks, certificates of deposit, etc.” The Regulatory Flexibility Act section of the proposal states that “insured banks have complied with similar advertising requirements for over seventy years without significant expense…..Moreover, mandatory compliance with the advertising requirements by savings associations would not entail significant expense.” Further, it states that there would not be a significant economic impact on a substantial number of small entities. If insured banks and savings associations are going to be required to begin including “Member FDIC” to its stationery, envelopes, and every other piece of bank supply that may generally promote banking services, that will be a huge expense to every financial institution that will need to comply. The Regulatory Flexibility Act section as written does not appear to address all the expenses involved in such a process. If the final regulation includes requiring the advertising statement where we are generally promoting banking services, then such items as envelopes that are given to customers to put cash in from a withdrawal (envelope shows Polk County’s Bank Since 1954 and our bank name) or even a post-it note that says “Thanks for recommending C&C Bank” may need “Member FDIC” added since this could be considered as promoting bank services or designed to attract public attention or patronage to a product or business (definition of advertisement). This would be unduly burdensome and costly to institutions, and I recommend that the bank supply exemption remain in the final regulation.

-- “Listings in directories” also was an exemption to the “Member FDIC” statement, but the proposal has removed it. I am assuming that this means telephone directories. If so, I am opposed to the removal of this exemption since insured financial institutions do not publish telephone directories and cannot conceivably have “Member FDIC” shown after their name and telephone number in a telephone book listing. If an institution has an advertisement in the telephone directly, then I agree that the advertising statement should be included when required. I recommend that the directory exemption remain in the final regulation.

-- “Advertisements relating to safekeeping box business or services” is another exemption that is proposing to be removed. I believe this refers to safe deposit boxes. If so, I believe that safe deposit boxes are NOT insured by the FDIC; therefore, advertisements of this type of service cannot display “Member FDIC” in my opinion. I recommend that the safekeeping box business or services exemption remain in the final regulation

• The proposed rule also stated that there would be clarifications in section 328.3 regarding temporary exemptions from advertising requirements for good cause, concerns on advertising copy that does not include the official advertising statement that is on hand on the date the advertising requirements become operative, and how to handle outstanding billboard advertisements. However, none of these were included in the proposed rule for review.

• The proposal requested comments on advertising for non-deposit products (NDPs) or hybrid products that offer both NDP and deposit-related products or services. This often is a matter of confusion for compliance officers and should be clarified. The proposal also was somewhat confusing since it was soliciting comments on prohibiting use of the official advertising statement for hybrid products AND require that the official advertising statement be segregated from information about NDPs and insured deposit products. Did the proposal mean “OR” between these two statements. Our financial institution, as well as probably many others, has a trust department that offers NDP products such as insurance or investments. Some of the trust department products such as IRAs are FDIC insured, while other investments such as mutual funds are not. Marketing Departments often like to include all the services that are offered by trust departments, investments, insurance and the like all in one advertisement. This makes it difficult to comply with the FDIC regulation and the Interagency Policy Statement on Retail Sales of Nondeposit Investment Products at the same time. Not including “Member FDIC” or including it in hybrid advertisements produces violations. To clarify, I recommend that the official advertising statement not be required for NDP only or hybrid products.

Thank you for your consideration of these comments when revising the FDIC advertising regulation.


Cheryl Nakashige

C&C Bank
5860 Cypress Gardens Blvd.
Winter Haven, FL 33884



Last Updated 07/26/2006

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