(c) Use of emblem or short title. No insured bank is required to use the emblem or short title to any extent whatsoever. However, if any insured bank desires to use the emblem, it may do so in any of its advertisements and on any of its bank supplies. Since the approved emblem contains the official advertising statement in the outside circle, its use in the type of advertisements listed in § 303.2(c) will satisfy the mandatory requirements of that section. The short title cannot be substituted for the official advertising statement in the types of advertisements required to include the latter.

Any insured bank may, in addition to the requirements of this regulation, use any proper advertising of insurance of its deposits. For example, as an addition to the official advertising statement, any insured bank may, at its option, use the following in any of its advertisements:

"Deposits in this bank are insured with maximum insurance
of $5000 for each depositor"

Further, in the case of display signs in the banking offices which, under the provisions of this part, are not required to include the official advertising statement, any insured bank may use, for example, any of the following:

(1) "The Federal Deposit Insurance Corporation insures deposits in this bank with $5000 maximum insurance for each depositor."

(2) "Deposits in this bank are insured by the Federal Deposit Insurance Corporation with $5000 maximum insurance for each depositor."

(3) Electric sign or other display reproductions of the official sign.*t [Sec. 4]

303.4 Penalties. No bank will violate any provision of paragraph (2), subsection (v), section 12B of the Federal Reserve Act, as amended (sec. 101 (v) (2), 49 Stat. 701; 12 U.S.C., Sup., 264 (v) (2)), or any provisions of this part if it complies with the provisions

**For statutory and source citations, see note to § 303.1.

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of §§ 303.1, 303.2. No penalty will be imposed for any violation of the provisions of this part until the bank has been given an opportunity to be heard before the Board of Directors of the Federal Deposit Insurance Corporation.*t [Sec. 5]

PART 304-PAYMENT OF DEPOSITS AND INTEREST THEREON BY INSURED NONMEMBER BANKS

Sec.

304.0 Scope.

304.1 Definitions.

304.2 Demand deposits.

304.3 Maximum rate of interest on time and savings deposits.

304.4 Payment of time deposits before

maturity.

Sec.

304.5 Notice of withdrawal of savings deposits.

304.6 Maximum rates of interest payable on time and savings deposits by insured nonmember banks.

Section 304.0 Scope. The regulation contained in this part relates to the payment of deposits and interest thereon by insured nonmember banks. This part is not applicable to banks which are members of the Federal Reserve System. Regulation Q (12 CFR Part 217), prescribed by the Board of Governors of the Federal Reserve System for banks which are members of that System, is not applicable to insured banks which are not members of the Federal Reserve System, except to the extent that the State law of a particular State provides otherwise. The provisions of this part do not apply to mutual savings banks or to any deposit in a bank located outside of or payable only at a bank's office which is located outside of the States of the United States and the District of Columbia. (Sec. 101 (v) (8), 49 Stat. 702; 12 U.S.C., Sup., 264 (v) (8)) [Reg. IV, Feb. 10, 1937, 2 F.R. 316, and Res., Dec. 21, 1935]

304.1 Definitions-(a) Demand deposits. The term "demand deposit" includes every deposit which is not a "time deposit" or "savings deposit", as defined below.

(b) Time deposits. The term "time deposits" means "time certificates of deposit" and "time deposits, open account," as defined below.

(c) Time certificates of deposit. The term "time certificate of deposit," means a deposit evidenced by a negotiable or nonnegotiable instrument which provides on its face that the amount of such deposit is payable:

(1) On a certain date, specified in the instrument, not less than 30 days after the date of the deposit; or

(2) At the expiration of a specified period not less than 30 days after the date of the instrument; or

(3) Upon written notice to be given not less than 30 days before the date of repayment.2

(d) Time deposits, open account. The term "time deposit, open account" means a deposit, other than a "time certificate of deposit" or a "savings deposit", with respect to which there is in force a writ

If the certificate of deposit provides merely that the bank reserves the right to require notice of not less than 30 days before any withdrawal is made, the bank must require such notice before permitting withdrawal.

Page 10

**For statutory and source citations, see note to § 303.1.

ten contract with the depositor that neither the whole nor any part of such deposit may be withdrawn, by check or otherwise, prior to the date of maturity, which shall be not less than 30 days after the date of the deposit, or prior to the expiration of the period of notice which must be given by the depositor in writing not less than 30 days in advance of withdrawals.'

8

(e) Savings deposits. The term "savings deposit" means a deposit evidenced by a pass book consisting of funds (1) deposited to the credit of one or more individuals or of a corporation, association or other organization operated primarily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes and not operated for profit," or (2) in which the entire beneficial interest is held by one or more individuals or by such a corporation, association or other organization and in respect to which

(i) The depositor is required, or may at any time be required, by the bank to give notice in writing of an intended withdrawal not less than 30 days before such withdrawal is made; or the bank consistently continues to adhere to a practice existing prior to January 23, 1936, of requiring notice of at least 15 days before permitting withdrawal;

(ii) Withdrawals are permitted in only two ways, either upon presentation of the pass book through payment to the person presenting the pass book, or without presentation of the pass book, through payment to the depositor himself but not to any other person, whether or not acting for the depositor."

The provisions of subparagraphs (1) and (2) of this paragraph, limiting savings deposits to funds of certain classes of persons shall not be applicable to deposits received and credited on or before February 1, 1936, to accounts evidenced by pass books in insured nonmember banks and these deposits, together with interest subsequently payable on such deposits, less any withdrawals from such accounts, may be classed by insured nonmember banks as savings deposits under the terms of this paragraph, even though such deposits belong to an association, organization or corporation organized for profit. The said

'Deposits, such as Christmas club accounts and vacation club accounts, which are made under written contracts providing that no withdrawal shall be made until a certain number of periodic deposits have been made during a period of not less than 3 months, constitute "time deposits, open account" even though some of the deposits are made within 30 days from the end of such period.

If a deposit be made with respect to which the bank merely reserves the right to require notice of not less than 30 days before withdrawal is made, the bank must require such notice to be given before permitting withdrawal. "Deposits in joint accounts of two or more individuals may be classified as savings deposits if they meet the other requirements of the above definition, but deposits of a partnership operated for profit may not be so classified. Deposits to the credit of an individual of funds in which any beneficial interest is held by a corporation, partnership, association or other organization operated for profit or not operated primarily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes may not be classified as savings deposits.

Presentation of a pass book may be made over the counter or through the mails; and payment may be made over the counter, through the mails or otherwise, subject to the limitations of paragraph_(e) (2) (ii) of this section as to the person to whom such payment may be made.

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provisions of subparagraphs (1) and (2) of this paragraph, however, shall be applicable to deposits received subsequently to February 1, 1936, whether or not such deposits are credited to an account existing prior to February 1, 1936.

The presentation by any officer, agent or employee of the bank of a pass book or a duplicate thereof retained by the bank or by any of its officers, agents or employees is not a presentation of the pass book within the meaning of this part except where the pass book is held by the bank as a part of an estate of which the bank is a trustee or other fiduciary, or where the pass book is held by the bank as security for a loan. If a pass book is retained by the bank, it may not be delivered to any person other than the depositor for the purpose of enabling such person to present the pass book in order to make a withdrawal, although the bank may deliver the pass book to a duly authorized agent of the depositor for transmittal to the depositor.

Every withdrawal made upon presentation of a pass book shall be entered in the pass book at the time of the withdrawal, and every other withdrawal shall be entered in the pass book as soon as practicable after the withdrawal is made.*t

*88 304.1 to 304.6, inclusive, issued under the authority contained in sec. 101 (v) (8), 49 Stat. 702; 12 U.S.C., Sup., 264 (v) (8).

†In 88 304.1 to 304.5, inclusive, the numbers to the right of the decimal point correspond with the respective section numbers in Reg. IV, FDIC, Feb. 10, 1937, 2 F.R. 316.

304.2 Demand deposits-(a) Interest prohibited. Except as hereinafter provided, no insured nonmember bank shall directly or indirectly, by any device whatsoever, pay any interest on any demand deposit. Within this part any payment to or for the account of any depositor as compensation for the use of funds constituting a deposit shall be considered interest.

(b) Exceptions. The prohibition stated in paragraph (a) of this section does not apply to

(1) Payment of interest accruing before August 24, 1937, on any deposit made by a "savings bank" as defined in section 12B of the Federal Reserve Act, as amended (sec. 101, 49 Stat. 684; 12 U.S.C., Sup., 264), or by a mutual savings bank;

Sup

(2) Payment of interest accruing before August 24, 1937, on any

'Section 12B (c) of the Federal Reserve Act, as amended (sec. 101 (c) (7), 49 Stat. 685; 12 U.S.C., Sup., 264 (c) (7)), provides:

The term "savings bank" means a bank (other than a mutual savings bank) which transacts its ordinary banking business strictly as a savings bank under State laws imposing special requirements on such banks governing the manner of investing their funds and of conducting their business: Provided, That the bank maintains, until maturity date or until withdrawn, all deposits made with it (other than funds held by it in a fiduciary capacity) as time savings deposits of the specific term type or of the type where the right is reserved to the bank to require written notice before permitting withdrawal: Provided further, That such bank to be considered a savings bank must elect to become subject to regulations of the Corporation with respect to the redeposit of maturing deposits and prohibiting withdrawal of deposits by checking except in cases where such withdrawal is permitted by law on the effective date from specifically designated deposit accounts totaling not more than 15 per centum of the bank's total deposits.

Page 12

deposit of public funds made by or on behalf of any State, county, school district, or other subdivision or municipality, or on any deposit of trust funds, if the payment of interest with respect to such deposit of public funds or of trust funds is required by State law when such deposits are made in State banks;

(3) Payment of interest in accordance with the terms of any certificate of deposit or other contract which was lawfully entered into in good faith before February 1, 1936 (or, if the bank became an insured nonmember bank thereafter, before the date upon which it became an insured nonmember bank), which was in force on such date, and which may not legally be terminated or modified by such bank at its option and without liability; but no such certificate of deposit or other contract may be renewed or extended unless it be modified to eliminate any provision for the payment of interest on demand deposits, and every insured nonmember bank shall take such action as may be necessary, as soon as possible consistently with its contractual obligations, to eliminate from any such certificate of deposit or other contract any provision for the payment of interest on demand deposits.

(c) Deposits in "savings banks" in specifically designated deposit accounts with respect to which withdrawal by checking is permitted in accordance with paragraph (7), subsection (c), section 12B of the Federal Reserve Act, as amended (sec. 101 (c) (7), 49 Stat. 685; 12 U.S.C., Sup., 264 (c) (7)), shall for the purposes of this part be classed as demand deposits.**

304.3 Maximum rate of interest on time and savings deposits— (a) Maximum rate prescribed from time to time. Except in accordance with the provisions of this part, no insured nonmember bank shall pay interest on any time deposit or savings deposit in any manner, directly or indirectly, or by any method, practice, or device whatsoever. No insured nonmember bank shall pay interest on any time deposit or savings deposit at a rate in excess of such applicable maximum rate as the Board of Directors of the Federal Deposit Insurance Corporation shall prescribe from time to time; and any rate or rates which may be so prescribed by the Board will be set forth in supplements (see § 304.6) to this part, which will be issued in advance of the date upon which such rate or rates become effective.

(b) Modification of contracts to conform to regulation. No certificate of deposit or other contract shall be renewed or extended unless it be modified to conform to the provisions of this part, and every insured nonmember bank shall take such action as may be necessary, as soon as possible consistently with its contractual obligations, to bring all of its outstanding certificates of deposit or other contracts into conformity with the provisions of this part.

(c) Savings deposits received during the first five days of month. An insured nonmember bank may pay interest on a savings deposit received during the first five days of any calendar month at

9

8 See footnote on p. 12.

'Deposits of moneys paid into State courts by private parties pending the outcome of litigation are not deposits of "public funds", within the meaning of the above provision.

**For statutory and source citations, see note to § 304.1.'