authorized by law. Those eligible to hold such deposits shall be limited to individuals and those organizations described in Section 329.1(e) (1) (i).

(2) Time deposits of $100,000 or more. There is no maximum rate of interest or dividends presently prescribed on any time deposit of $100,000 or more.

(3) Time deposits of less than $100,000. Except as provided in paragraphs (b) (4) and (5) of this section, no insured nonmember mutual savings bank shall pay interest or dividends on any time deposit of less than $100,000 at a rate in excess of the applicable rate under the following schedule:

(5) Time deposits of public units. No insured nonmember mutual savings bank shall pay interest or dividends on any time deposit of a public unit as defined in section 3 (m) of the Federal Deposit Insurance Act at a rate in excess of the maximum rate that may be paid on any time deposit of less than $100,000 by any insured nonmember bank (including a mutual savings bank) subject to the provisions of this Part.

(c) Compounding interest. In determining the maximum amount of interest or dividends permitted to be paid, the effects of compounding may be

disregarded.

(d) Grace periods in computing interest. An insured nonmember mutual savings bank may pay interest or dividends

14 Federal law limits the offering of such deposits by mutual savings banks to those banks located in Massachusetts and New Hampshire (87 Stat. 342).

on a deposit received during the first 10 calendar days of any calendar month at the applicable maximum rate prescribed in paragraph (b) of this section calculated from the first day of such calendar month until such deposit is withdrawn or otherwise ceases to constitute a deposit upon which interest or dividends are payable; and an insured nonmember mutual savings bank may pay interest or dividends on a deposit withdrawn during the last 3 business days of any calendar month ending a regular quarterly or semiannual interest or dividend period at the applicable maximum rate prescribed in paragraph (b) of this section calculated to the end of such calendar month.

(e) Systematic savings account deposits in insured nonmember mutual savings banks in Massachusetts. No insured nonmember mutual savings bank located in the Commonwealth of Massachusetts shall pay interest or dividends on any systematic savings account deposit, as defined in section 22B of chapter 168 of the General Laws of the Commonwealth of Massachusetts, at a rate in excess of the applicable rate under the following schedule:

(f) Time deposits. The provisions of this Part 329 with respect to time deposits, except the provisions of § 329.6, shall apply to all such deposits in insured nonmember mutual savings banks.

[38 FR 20248, July 30, 1973; 38 FR 22120, Aug. 16, 1973, as amended at 38 FR 29315, Oct. 24, 1973; 38 FR 34458, Dec. 14, 1973; 39 FR 42340, Dec. 5, 1974; 39 FR 43295, Dec. 12, 1974]

§ 329.8 Advertising of interest on deposits.

Every advertisement, announcement, or solicitation relating to the interest or dividends paid on deposits in insured nonmember banks (including insured nonmember mutual savings banks) shall be governed by the following rules:

(a) Annual rate of simple interest. Interest or dividend rates shall be stated in terms of annual rates of simple interest or dividends. In no case shall a rate be advertised which is in excess of the applicable maximum rate for the particular deposit.

(c) Percentage yields based on periods in excess of 1 year. No advertisement shall include any indication of a total percentage yield, compounded or simple, based on a period in excess of a year, or an average annual percentage yield achieved by compounding during a period in excess of a year.

(d) Time or amount requirements. If an advertised rate is payable only on deposits that meet time or amount requirements, such requirements shall be clearly and conspicuously stated. Where the time requirement for an advertised rate is in excess of a year, the required number of years for the rate shall be stated with equal prominence, together with an indication of any lower rate or rates that will apply if the deposit is withdrawn at an earlier maturity.

(e) Profit. The term "profit" shall not be used in referring to interest or dividends paid on deposits.

(f) Accuracy of advertising. No insured nonmember bank shall make any advertisement, announcement or solicitation relating to the interest or dividends paid on deposits which is inaccurate or misleading or which misrepresents its deposit contracts.

(g) Solicitation of deposits for banks. Any person or organization which solicits deposits for an insured nonmember bank shall be bound by the rules contained in this section with respect to any advertisement, announcement or solicitation relating to such deposits. No such person or organization shall advertise a percentage yield on any deposit it solicits for an insured nonmember bank which is not authorized to be paid and advertised by such bank.

(h) Time deposits. Every advertisement, announcement, or solicitation relating to the interest paid on time deposits shall include a clear and conspicuous statement that in the event the depositor is allowed to withdraw all or part of his deposit before maturity, a "substantial penalty" will be imposed.

(1) Deposits bearing interest or dividends subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties. The dissemination of any advertisement, announcement or solicitation by an insured nonmember bank relating to any interest or dividend-bearing deposit subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties shall be limited, to the extent practicable after considering the media or means chosen, to the States in which Federal law permits banks to accept such withdrawals.14c

[34 F.R. 9703, June 21, 1969, as amended at 37 FR 10341, May 20, 1972; 38 FR 22546, Aug. 22, 1973; 38 FR 34458, Dec. 14, 1973]

§ 329.10 Obligations other than deposits.

(a) General. Except as provided in this section, the provisions of this Part 329 shall apply to obligations other than deposits that are issued or undertaken by insured nonmember banks for the purpose of obtaining funds to be used in the banking business." The term "obligations" includes but is not limited to: Promissory notes, acknowledgments of advance, due bills, repurchase agreements, or similar obligations (written or oral).18

(b) Exceptions. The provisions of this Part 329 shall not apply to any obligation other than a deposit obligation of an insured nonmember bank that:

(1) Is issued to (or undertaken with respect to), and held for the account of, (i) a bank," (ii) any organization the

14c See footnotes 4a and 148.

15 The term "insured nonmember bank" includes insured nonmember mutual savings banks as defined in § 329.7(a).

10 The provisions of this section shall not apply to any obligation of a bank which is payable only at an office of the bank located outside of the United States, the District of Columbia, Puerto Rico, Guam, American Samoa, and the Virgin Islands.

17 The term "bank" includes a member bank, a nonmember commercial bank, a savings bank (mutual or stock), a building or savings and loan association or cooperative bank, the Export-Import Bank of the United States, or a foreign bank. It also includes bank subsidiaries that engage in business in which their parents are authorized to engage and subsidiaries the stock of which is by statute explicitly eligible for purchase by national banks.

time deposits of which are exempt from § 329.6 pursuant to the provisions of § 329.3(g), (iii) an agency of the United States or the Government Development Bank for Puerto Rico, or (iv) Minbanc Capital Corp. (where such obligation is subordinated to the claims of depositors to the extent of any deposits they may have in the issuing bank);

(2) Evidences an indebtedness arising from a transfer of direct obligations of, or obligations that are fully guaranteed as to principal and interest by, the United States or any agency thereof, that the bank is obligated to repurchase; (3) (i) Bears on its face, in bold-face type, the following:

This obligation is not a deposit and is not insured by the Federal Deposit Insurance Corporation;

(i) Has an original maturity of 7 years or more and is in an amount of at least $500;

(ii) States expressly that it is subordinated to the claims of depositors and is ineligible as collateral for a loan by the issuing bank;

(iv) Is unsecured; and

(v) Has been approved by the Federal Deposit Insurance Corporation as an addition to the bank's capital structure." Provided, That the restrictions on maturity set forth in subparagraph (3) (ii) of this section shall not apply to any obligation which otherwise meets all the requirements in paragraph (3) of this section and with respect to which the Federal Deposit Insurance Corporation has determined that exigent circumstances require the issuance of such obligation without regard to the provisions of this Part 329; or

(4) Arises from a borrowing by an insured nonmember bank from a dealer in securities, for one business day, of proceeds of a transfer of deposit credit in & Federal Reserve Bank (or other immediately available funds), commonly referred to as "Federal funds", received by such dealer on the date of the loan in connection with the clearance of securities transactions.

[35 F.R. 18314, Dec. 2, 1970, as amended at 36 FR 3112, Feb. 18, 1971; 38 FR 16347, June 22, 1973]

"Capital notes or debentures issued by insured nonmember banks are subject to the retirement provisions of section 18(1) (1) of the Federal Deposit Insurance Act whether or not such capital notes or debentures are exempt from the provisions of Part 329.

§ 329.101

Computation and payment of interest on time and savings deposits

The Board of Directors of the Federal Deposit Insurance Corporation has adopted the following position concerning the methods of computing interest. on time and savings deposits.

(a) The maximum rate of simple interest that an insured nonmember bank may pay on a deposit is established by §§ 329.6 and 329.7 of the rules and regulations of the Federal Deposit Insurance Corporation. In January 1970, the Federal Deposit Insurance Corporation established certain rates on deposits with a maturity of "1 year or more." To qualify for the maximum rate that may be paid on such a deposit, the deposit must not mature before 1 full year, 365 or 366 days as the case may be, from the date of deposit.1

(b) Section 329.3 (e) of the Corporation's regulations has been amended to authorize the use of 360 or 365 days (or 366 in a leap year) as the basis for computing interest on time or savings deposits, regardless of the actual number of days the funds earn interest. For example, in computing interest on a 295-day deposit, the bank could use the fraction 295/360 or 295/365 or 295366 if a leap year. On

20

"Part 329 of the Corporation's regulations prescribes certain maximum interest rates for consumer-type time deposits (1.e., deposits of less than $100,000) with maturity intervals of 30 days or more and 90 days or more. Deposits that mature 1 month from the date of deposit or at 1-month intervals normally cover a period of at least 30 days. Deposits that mature 3 months from the date of deposit or at 3-month intervals normally cover a period of at least 90 days. However, if the date of deposit is in February such deposits will mature 28 days or 89 days, respectively, from the date of deposit in years other than leap years. The Board of Directors regards this de minimis departure from the 30- or 90-day interval required for payment of interest at the applicable maximum rate as justified on grounds of fairness and mathematical simplicity.

20 Interest may not be computed or paid on time deposits after maturity or the expiration of the period of notice given with respect to the repayment thereof, except in the case of deposits which are renewed within 10 days therafter (§ 329.3 (f)). This is true even where the funds remain on deposit for a longer period of time. Consequently, interest must be computed on the number of days the funds are actually eligible to earn interest and not necessarily on the number of days the funds remain on deposit.

a 360-day deposit the fraction could be 360360 or 360/365 or 360366 if a leap year. On a 365-day deposit the fraction may exceed a value of 1, i.e. 365/360. Additionally, § 329.3 (e) authorizes 1 montì, or multiples thereof, to be figured as 30 days, or multiples thereof, for interest computation purposes. For example, for a deposit made February 1 for 1 month, the fraction could be 360 or 3365 or 28360 or 28365, etc.

[37 F.R. 10341, May 20, 1972]

APPENDIX A

FOREIGN, INTERNATIONAL AND SUPRANATIONAL ENTITIES DESIGNATED AS EXEMPT FROM § 329.6

EUROPE

Bank for International Settlements. European Atomic Energy Community.

330.2

330.3

European Coal and Steel Community.

330.4

The European Communities.

Accounts held by executors or administrators.

Accounts held by a corporation or partnership.

330.6

Accounts held by an unincorporated

330.7

association.

Independent activity.

330.8

Public unit accounts.

330.9

Joint accounts.

330.10

Trust accounts.

Andean Subregional Group.

330.11

Caribbean Development Bank.

Deposits evidenced by negotiable instruments.

Caribbean Free Trade Association.

330.12

Caribbean Regional Development Agency.

Central American Bank for Economic Inte

Deposit obligations for payment of items forwarded for collection by bank acting as agent.

Continuation of prior coverage.
Notification of depositors.

INTERPRETATIONS

330.101 Recognition of deposit ownership in custodial accounts.

APPENDIX-Examples of insurance coverage afforded deposit accounts in banks insured by the Federal Deposit Insurance Corporation.

AUTHORITY: The provisions of this Part 330 issued under secs. 3, 7, 9, 11, 12, 64 Stat. 873, 881, sec. 303, 80 Stat. 1056; 12 U.S.C. 1813, 1817, 1819, 1821, 1822.

SOURCE: The provisions of this Part 330 appear at 32 F.R. 10408, July 14, 1967, unless otherwise noted.

§ 330.1

REGULATIONS

General principles applicable in determining insurance of deposit

accounts.

(a) General. This Part 330 provides for determination by the Corporation of the insured depositors of an insured bank and the amount of their insured deposit accounts. The rules for deter

mining the insurance coverage of deposit accounts maintained by depositors in the same or different rights and capacities in the same insured bank are set forth in the following provisions of this part. Insofar as rules of local law enter into such determinations, the law of the jurisdiction in which the insured bank's principal office is located shall govern.

(b) Records. (1) The deposit account records of the insured bank shall be conclusive as to the existence of any relationship pursuant to which the funds in the account are deposited and on which & claim for insurance coverage is founded. Examples would be trustee, agent, custodian or executor. No claim for insurance based on such a relationship will be recognized in the absence of such disclosure.

(2) If the deposit account records of an insured bank disclose the existence of a relationship which may provide a basis for additional insurance, the details of the relationship and the interests of other parties in the account must be ascertainable either from the records of the bank or the records of the depositor maintained in good faith and in the regular course of business.

(3) The deposit account records of an insured bank in connection with a trust account shall disclose the name of both the settlor (grantor) and the trustee of the trust and shall contain an account signature card executed by the trustee.

(4) The interests of the co-owners of a joint deposit account shall be deemed equal, unless otherwise stated on the insured bank's records in the case of a tenancy in common.

(c) Valuation of trust interests. (1) Trust interests in the same trust deposited in the same account will be separately insured if the value of the trust interest is capable of determination, without evaluation of contingencies, except for those covered by the present worth tables and rules of calculation for their use set forth in § 20.2031-7 of the Federal Estate Tax Regulations (26 CFR 20.2031-7).

(2) In connection with any trust in which certain trust interests are not capable of evaluation in accordance with the foregoing rule, payment by the Corporation to the trustee with respect to all such trust interests shall not exceed the basic insured amount of $40,000.

(3) Each trust interest in any trust established by two or more settlors shall be deemed to be derived from each settlor pro rata to his contribution to the trust.

(4) The term "trust interest" means the interest of a beneficiary in an irrevocable express trust, whether created by trust instrument or statute, but does not include any interest retained by the settlor.

(5) With respect to trust funds held by an insured bank in a fiduciary capacity pursuant to section 7(i) of the Act, the term "trust interest" shall mean the same as the term "trust funds" as used in section 3(p) of the Act.

[32 F.R. 10408, July 14, 1967, as amended at 35 FR 460, Jan. 14, 1970; 39 FR 41359, Nov. 27, 1974]

§ 330.2 Single ownership accounts.

Funds owned by an individual and deposited in the manner set forth below shall be added together and insured up to $40,000 in the aggregate.

(a) Individual accounts. Funds owned by an individual (or by the community between husband and wife of which the individual is a member) and deposited in one or more deposit accounts in his own name shall be insured up to $40,000 in the aggregate.

(b) Accounts held by agents or nominees. Funds owned by a principal and deposited in one or more deposit accounts in the name or names of agents or nominees shall be added to any individual deposit accounts of the principal and insured up to $40,000 in the aggregate.

(c) Accounts held by guardians, custodians, or conservators. Funds held by a guardian, custodian, or conservator for the benefit of his ward or for the benefit of a minor under a Uniform Gifts to Minors Act and deposited in one or more deposit accounts in the name of the guardian, custodian, or conservator shall be added to any individual deposit accounts of the ward or minor and insured up to $40,000 in the aggregate.

[32 F.R. 10408, July 14, 1967, as amended at 35 FR 460, Jan. 14, 1970; 39 FR 41359, Nov. 27, 1974]

§ 330.3 Testamentary accounts.

(a) Funds owned by an individual and deposited in a revocable trust account, tentative or "Totten" trust account,