but no such rate shall be in excess of the applicable maximum rate of return prescribed for regular accounts in said Part 526.

(ii) Account books and certificates. Each certificate, whether incorporated in an account book or printed as a separate certificate, evidencing an account Issued pursuant to this subparagraph (4) shall be in the form prescribed by the Board pursuant to paragraph (b) of § 545.2 and shall bear on its face the following additional words:

Earnings are distributable on this account as determined by the board of directors of the association, subject to § 545.3–1(b) (4) of the rules and regulations for the Federal Savings and Loan System.

(c) Form of certificate. (1) Certificates evidencing savings accounts on which earnings are distributable at a rate higher than the regular rate pursuant to subparagraph (3) of paragraph (b) of this section shall, subject to the requirements contained in this paragraph, be in such form as the board of directors of the association may determine. Any form to be issued shall be set forth in the minutes of the board of directors together with the date after which, and the class of savings account for which, said form will be issued.

(2) Each such certificate, whether incorporated in an account book or printed as a separate certificate, shall include in its provisions and display in easily read type:

(1) The anticipated or stated rate of earnings to be paid and the dates or frequency at which such earnings are distributable;

(ii) The amount of the certificate account and the date on which it is issued;

(iii) The time and minimum balance eligibility requirements applicable to such certificate account if it is to receive earnings at a rate higher than the regular rate;

(iv) The penalty or penalties imposed, for withdrawal prior to completion of the time eligibility period, in accordance with the provisions of subparagraph (3) of this paragraph.

(v) Any provisions limiting the right of the holder to withdraw all or any portion of the certificate account prior to completion of the time eligibility period;

(vi) Any provisions relating to renewal of such certificate account upon expiration of the time eligibility period, which renewal or renewals, for successive periods not exceeding 10 years for each

renewal, shall be at the option of the association; and

(vii) Any provisions relating to the earnings distributable on the certificate account after expiration of the time eligibility period or any renewal of such account.

(3) In the event of withdrawal of all or any portion of any certificate account, issued pursuant to subparagraph (3) of paragraph (b) of this section, prior to completion of the time eligibility period set forth in the certificate evidencing such account

(1) The account holder shall receive earnings from the date of issuance of such account on the amount withdrawn at a rate not in excess of the regular rate then being paid.

(ii) The account holder shall also pay a penalty in an amount not less than the lesser of (a) the earnings at such rate for 90 days (3 months) on the amount withdrawn or (b) all earnings at such rate (since issuance or renewal of the certificate account) on the amount withdrawn.

(iii) If any earnings have been distributed to the account holder prior to such withdrawal, a deduction shall be made from the amount withdrawn to adjust for the penalty applicable to such earnings.

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(4) In the case of early withdrawal of only a portion of a certificate account, the certificate evidencing such account shall be canceled if the applicable minibalance eligibility requirement ceases to be met. If such requirement continues to be met, (1) appropriate notation may be made on the certificate indicating the amount and date of such withdrawal and the remaining account balance, or (ii) the certificate may be canceled and a new certificate issued for the remaining balance of the account with the same eligibility requirements, rate, and dates as in the canceled certificate.

(5) No Federal association shall issue any form of certificate under this paragraph unless the association has first (1) obtained a written opinion by its legal counsel that such form of certificate complies with the requirements of applicable law and regulations and the association's charter, which opinion shall be retained by the association so long as it continues to issue certificates in such form, and (il) submitted a copy of such form of certificate, together with a copy of such legal opinion, to the Federal

Savings and Loan Insurance Corporation: Provided, That such legal opinion need not be obtained if the association uses a form of certificate which has already been approved by the Corporation for use by Federal associations.

(d) Time and manner of distributing earnings. (1) As to an account evidenced by an account book or a notice account book issued pursuant to this section, or by a certificate issued pursuant to subparagraph (4) of paragraph (b) of this section, earnings shall be distributed on such dates as are provided in the association's charter or as have been designated as distribution dates for such class of savings accounts pursuant to paragraph (b) of § 545.1-1.

(2) As to an account evidenced by a certificate issued pursuant to subparagraph (3) of paragraph (b) of this section, earnings shall be distributed, as provided in such certificate, either quarterly, semiannually, annually, at the conclusion of the time eligibility period, or on such dates as are provided in the association's charter or as have been designated as distribution dates for such class of savings accounts pursuant to paragraph (b) of § 545.1-1.

(3) When any savings account issued pursuant to this section has met the applicable eligibility requirements fixed pursuant to paragraph (b) of this section, any earnings on the account that then remain undistributed may thereupon be credited or paid to the owner thereof.

(4) As to an account issued under this section which is evidenced by an account book and which has met the applicable eligibility requirements fixed pursuant to paragraph (b) of this section, the association, while such account continues to be eligible to receive a higher rate, shall continue to distribute earnings at a higher rate pursuant to this section at each date as of which the association regularly distributes earnings on such class of savings accounts, until such time as the board of directors determines to discontinue such higher rate.

(5) As to any account issued under subparagraph (3) of paragraph (b) of this section which is evidenced by a certificate issued on or after October 1, 1966, and which does not provide for renewal, earnings at the regular rate shall be distributed for any period during which such account is outstanding beyond the time eligibility requirements fixed pursuant to paragraph (b) of this section at

each date on which the association regularly distributes earnings on such class of savings accounts.

(6) While an account evidenced by certificate issued prior to October 1, 1966, under this section continues to be eligible to receive, and the association continues to distribute, earnings at a higher rate pursuant to this section, earnings on such account shall be distributed, for any period during which such account is outstanding beyond the time eligibility requirement fixed pursuant to paragraph (b) of this section, at each date on which the association regularly distributes earnings on such class of savings accounts, at such applicable higher rate as is from time to time determined by the board of directors, within the limitations of this section.

(7) While any certificates issued pursuant to subparagraph (3) of paragraph (b) of this section remain outstanding, a reserve for undistributed earnings on such accounts shall be maintained and appropriate credits and debits shall be made to such reserve at each date on which the association regularly distributes earnings on such class of savings accounts.

(e) Exchange of accounts. Such part of any savings account as is not less than the minimum amount fixed pursuant to paragraph (b)(3) of this section may, upon request by the holder of such account, be exchanged for one or more separate certificates issued pursuant to and in accordance with paragraphs (b) and (c) of this section; and the association may, either at the time of such exchange or at the next date as of which it regularly distributes earnings, distribute any undisturbed earnings and any applicable bonus on the savings account, or part thereof, so exchanged.

(f) Exclusion. This section shall not be applicable to distribution of earnings on any savings account on which such association is paying or is obligated to pay a bonus under any provision of this part.

(g) Notice requirements. Each Federal association which determines after the effective date of this paragraph to distribute earnings pursuant to the provisions of this section shall, within 30 days, give notice of such determination by at least one of the following means:

(1) Postage prepaid to each member having a savings account at the time of determination with a balance of not less

than the determined amount at the last address of the member appearing on the books of such Federal association;

(2) Posting in a conspicuous place in each of the offices of the association for so long as the association continues to offer the plan; or

(3) Publishing in a newspaper printed in the English language and of general circulation in the city or county in which each office of the association is located. Each Federal association which on the effective date of this paragraph is distributing earnings pursuant to this section shall, if it has not previously done so, give the notice required by this paragraph within 30 days from the effective date of the paragraph.

[31 F.R. 12838, Oct. 1, 1966; 31 F.R. 13000, Oct. 6, 1966, as amended at 35 F.R. 3025, Feb. 14, 1970; 35 F.R. 7693, May 19, 1970; 36 FR 15427, Aug. 14, 1971; 38 FR 18460, July 11, 1973; 38 FR 30866, Nov. 8, 1973; 39 FR 44659, Dec. 26, 1974]

§ 545.4 Withdrawals.

When a Federal association that has a Charter N is unable to pay all withdrawal requests within a period of 30 days from the date of receipt of written request therefor, the association shall then number and file all withdrawal requests in the order received and shall proceed in the following manner while any withdrawal request remains unpaid for more than 30 days:

(a) Withdrawal requests shall be paid in the order received and if any holder of a savings account or accounts has requested the withdrawal of more than $1,000, he shall be paid $1,000 in order when reached and his withdrawal request shall be charged with such amount as paid and shall be renumbered and placed at the end of the list of withdrawal requests, and thereafter, upon again being reached, shall be paid a like amount, but not exceeding the withdrawal value of his savings account, and until such withdrawal request shall have been paid in full, shall continue to be so paid, renumbered, and replaced at the end of the withdrawal requests on file: Provided, That when any such request is reached for payment, such association shall so advise the holder of such savings account by registered mail to his last address as recorded on the books of the association and, unless such holder shall apply in person or in writing for the payment of such withdrawal request within 30 days from the date of the mailing of such notice, no payment on ac

count of such withdrawal request shall be made and such request shall be cancelled: And provided further, That the board of directors shall have absolute right to pay on an equitable basis an amount not exceeding $200 to any holder of a savings account or accounts in any calendar month and without regard to any other provision of this section;

(b) When a Federal association that has a Charter N is unable to pay all withdrawal requests within a period not exceeding 30 days from the date of receipt of written request therefor it shall allot to the payment of such requests the remainder of the association's receipts from all sources after deducting from total receipts appropriate amounts for expenses, required payments on indebtedness, earnings distributable in cash to holders of savings accounts, and a fund for general corporate purposes equivalent to not more than 20 percent of the association's receipts from holders of its savings accounts and from its borrowers. [23 F.R. 9899, Dec. 23, 1958]

§ 545.4-1 Payments to third parties by withdrawals or transfer of savings accounts; checks and money orders.

(a) Withdrawals and transfers—(1) General. Savings accounts in a Federal association shall not be subject to check or to withdrawal or transfer on negotiable or transferable order or authorization to the association. However, withdrawal requests may be in the form of nontransferable orders or authorizations to the association for the payment of amounts in savings accounts to third parties periodically or otherwise. Any such order or authorization which may be honored as a withdrawal request for payment to a third party may, if so authorized by the third party, also be honored as a transfer to a savings account of such third party. The association may charge a fee for its services in making any payment or transfer pursuant to this section.

(2) Restrictions. An accountholder shall not have a right to transmit or deliver any such order or authorization to a third party to whom a withdrawal is to be paid or transferred, and a Federal association shall not accept any such order or authorization which is received by it from or through such a third party. A Federal association may accept orders or authorizations for payment by the association to third parties only for purchase of obligations of the United States,

payment of premiums on mortgagor or savings member insurance plans, systematic payment of withdrawals to a relative of the accountholder, and payment on behalf of accountholders for housing and housing-related items and loans for such items, including residential real estate mortgages, taxes, and insurance, rent, utilities, home improvements, mobile homes, fixtures, major home furnishings, major home appliances, and similar items.

(3) Exception for transaction accounts. Notwithstanding this paragraph (a) or any other provision of this Subchapter C to the contrary, each Federal association having its home office in New Hampshire or Massachusetts may allow the owner of a savings account on which interest or dividends are paid to make withdrawals by negotiable or transferable instruments for the purpose of making transfers to third parties.

(b) Sale of checks and money orders. As an incident to its principal activities and for the convenience of its members and others, a Federal association may provide for the sale of checks, including travelers checks, and money orders on which the drawee is a Federal Home Loan Bank, commercial bank, or other organization engaged in the business of handling such instruments.

[35 FR 12834, Aug. 13, 1970 as amended at 35 FR 18914, Dec. 12, 1970; 38 FR 26710, Sept. 25, 1973]

§ 545.4-2

Remote service units (temporary provision).

(a) General provisions. Notwithstanding and without regard to any other provision of this part other than this section, a Federal association may establish, maintain or use one or more remote service units located (1) within the State in which the home office of such association is located; or (2) within the primary service area, as determined by the Board, of any branch office of such association located outside of such State. A remote service unit may be, but is not required to be, located in a place of business other than a place of business solely of a Federal association such as a retail sales establishment, shopping center, office building, factory, or transportation terminal.

(b) Financial services authorized for remote service units. A Federal association may, to the extent authorized by a resolution of its board of directors, render one or more of the following financial

services to the public by means of a remote service unit:

(1) The placing or transferring of funds to the credit of savings accounts or deposits at such association, but no savings accounts or deposits may be opened at such a unit;

(2) Withdrawals of savings accounts or deposits in such association, which withdrawals may be total or partial and may be effected through the use of nontransferable orders or authorizations, but not through the use of negotiable or transferable orders or authorizations to the association other than a Federal association having its home office in New Hampshire or Massachusetts: Provided, That in no case may the association permit or authorize withdrawals in excess of a holder's balance in such an account or deposit;

(3) Receiving payments related to loans invested in or being serviced by such association: Provided, That in no case may applications for loans or approvals of loans be made at a remote service unit; and

(4) Such other related financial services, except those services specifically prohibited by paragraph (b) of this section, as the Board may approve upon application therefor.

(c) Advertising. No advertisement, announcement or solicitation by a Federal association relating to a remote service unit may be inaccurate or misleading with respect to such a unit. Any advertisement, announcement or solicitation by a Federal association relating to a remote service unit is subject to revision or termination by the Board.

(d) Bonding requirements. A Federal association shall take all steps necessary to protect its interest in the financial services processed at each remote service unit, including acquisition of available fidelity, forgery and other appropriate insurance.

(e) Participation with other financial institutions. Except as provided in this paragraph, a Federal association may, but is not required to, participate in the establishment, maintenance or use of one or more remote service units with one or more financial institutions insured by the Federal Savings and Loan Insurance Corporation or by the Federal Deposit Insurance Corporation, or with such other financial institutions as the Board may approve. The Board may, consistent with the purposes of this section and upon application therefor, require a

Federal association to permit such participation at a reasonable cost by an institution insured by the Federal Savings and Loan Insurance Corporation if a remote service unit used by such Federal association is located either in the standard metropolitan statistical area in which the home office or branch office of such insured institution is located or in the primary service area, as determined by the Board, of the home office or branch office of such insured institution. A Federal association may not enter into an agreement of any kind for the exclusive right to use a remote service unit at any location of a business organization of any kind, or under which other financial institutions would be excluded from using a remote service unit at any location of such business organization where such Federal association does not use a remote service unit.

(f) Confidentiality of account information. A Federal association shall establish and maintain safeguards acceptable to the Board to insure the privacy and confidentiality of account information.

(g) Applications. (1) A Federal association may not establish, maintain, or use a remote service unit, or participate in the establishment, maintenance, or use of a remote service unit, without prior written approval by the Board. Applications for Board approval to establish a remote service unit shall be filed on or before January 31, 1975. One original and one copy of any application pursuant to this section shall be filed with the Supervisory Agent and two copies of such application shall be sent to the Director, Office of Industry Development, Federal Home Loan Bank Board, Washington, D.C. 20552. An applicant may file additional information in support of its application and may amend the application. The Director or the Supervisory Agent may request an applicant to furnish additional information.

(2) Except as may be otherwise provided in a resolution by the Board in a particular case, the participation in or the establishment, maintenance or use of a remote service unit pursuant to this section shall not be altered in any material respect from that approved by the Board under this section unless in compliance with the procedures of this section an application to do so is filed and approved in writing by the Board prior to making such alteration.

(3) A Federal association which participates in or establishes, maintains or uses a remote service unit pursuant to this section shall submit to the Board, at such association's expense, such reports as the Board may require relating to the operation of such unit. The Board may require such Federal association to modify or terminate, in whole or in part, such participation, establishment, maintenance or use. Any contract, agreement or understanding, whether written or oral, between or among a Federal association and any other financial institution or other business organization relating to the participation in or the establishment, maintenance or use of a remote service unit by such Federal association shall be subject to any rules and regulations which the Board may hereafter prescribe or any resolution which the Board may adopt including a requirement that any such contract, agreement or understanding be terminated.

(h) Consideration of competitive implications. The Board will consider competitive implications of applications made under this section and may, in an appropriate case either (1) request the views of the Antitrust Division of the Department of Justice; or (2) specifically request that a Federal association making an application under this section request a business review letter from the Antitrust Division of the Department of Justice pursuant to the provisions of 28 CFR § 50.6 as amended.

(i) Adequate security devices and procedures. A remote service unit shall comply with the minimum security devices requirements of Part 563a of the Insurance Regulations as though such unit were an "office" as defined in § 563a.1 of said Part, except to the extent that an applicant makes a showing satisfactory to the Board that such requirements are inappropriate and that alternate measures satisfactory to the Board will be taken for the installation, maintenance, and operation of security devices and procedures, reasonable in cost, to discourage robberies, burglaries and larcenies and to assist in the identification and apprehension of persons who commit such acts.

(j) Definitions. As use in this section: (1) The term "remote service unit" means an information processing device, including associated equipment, structures and systems, by means of which information relating to financial services rendered to the public is stored and