calendars, matchbooks, pens, pencils, and key chains;

(11) Advertisements which contain a statement to the effect that the bank is a member of the Federal Deposit Insurance Corporation, or that the bank is insured by the Federal Deposit Insurance Corporation, or that its deposits or depositors are insured by the Federal Deposit Insurance Corporation to the maximum of $100,000 for each depositor;

(12) Advertisements relating to the making of loans by the bank or loan services;

(13) Advertisements relating to safekeeping box business or services;

(14) Advertisements relating to trust business or trust department services; (15) Advertisements relating to real estate business or services;

(16) Advertisements relating to armored car services;

(17) Advertisements relating to service charges or analysis charges;

(18) Advertisements relating to securities business or securities department services;

(19) Advertisements relating to travel department business, including traveler's checks on which the bank issuing or causing to be issued the advertisement is not primarily liable;

(20) Advertisements relating to savings bank life insurance.

(d) Outstanding billboard advertisements. Where an insured bank has billboard advertisements outstanding which are required to include the official advertising statement and has direct control of such advertisements either by possession or under the terms of a contract, it shall, as soon as it can consistent with its contractual obligations, cause the official advertising statement to be included therein.

(e) Official advertising statement in non-English language. The non-English equivalent of the official advertising statement may be used in any advertisement: Provided, That the translation has had the prior written approval of the Corporation.

(Sec. 3(m), 9, 64 Stat. 881; 12 U.S.C. 1813(m), 1819).

[32 FR 10189, July 11, 1967, as amended at 35 FR 460, Jan. 14, 1970; 39 FR 41358, Nov. 27, 1974; 45 FR 23645, Apr. 8, 1980]

Demand deposits.

329.2 329.3 Interest on time and savings deposits. 329.4 Payment of time deposits before maturity.

329.5 Withdrawal of savings deposits. 329.6 Maximum rates of interest payable on time and savings deposits by insured nonmember banks other than insured nonmember mutual savings banks.

329.7 Maximum rates of interest or dividends payable on deposits by insured nonmember mutual savings banks.

329.8 Advertising of interest on deposits. 329.9 [Reserved]

329.10 Obligations other than deposits. 329.101 Computation and payment of interest on time and savings deposits. APPENDIX A-FOREIGN, INTERNATIONAL AND SUPRANATIONAL ENTITIES DESIGNATED EXEMPT FROM § 329.6

AS

AUTHORITY: Secs. 9, 18, 64 Stat. 881, 891; 12 U.S.C. 1819, 1828, unless otherwise noted. § 329.0 Scope.

The provisions of this Part 329 apply to the advertisement and payment of interest or dividends on deposits in insured nonmember banks.1 The provisions of this Part 329 do not apply to any deposit in a bank 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. Except for §§ 329.7, 329.8, and 329.10, the provisions of this Part 329 do not apply to: (a) Mutual savings banks; (b) guaranty savings banks operating in the State of New Hampshire, so long as the guaranty savings banks operate substantially under and pursuant to the laws of the State of New Hampshire pertaining to mutual savings banks and do not engage in commercial banking; or (c) corporations operating in the Commonwealth of Massachusetts as banking companies pursuant to the provisions of

'Wherever the terms "insured nonmember bank" or "insured nonmember mutual savings bank" appear in this Part 329, they shall be deemed to include banks and mutual savings banks, respectively, in Massachusetts that are not insured by the Federal Deposit Insurance Corporation.

(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 fourteen (14) days after the date of the deposit.

(2) At the expiration of a specified period not less than 14 days after the date of the instrument: or

(3) Upon written notice to be given not less than 14 days before the date of repayment.

la

(d) Time deposits, open account. The term "time deposit, open account" means a deposit other than a "time certificate of deposit," with respect to which there is in force a written 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 14 days after the date of the deposit,2 or prior to the expiration of the period of notice which must be given by the de

La If the certificate of deposit provides merely that the bank reserves the right to require notice of not less than fourteen (14) days before any withdrawal is made, the bank must require such notice before permitting withdrawal.

2 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 14 days from the end of such period.

positor in writing not less than 14 days in advance of withdrawals.3

(e) Savings deposits. (1) The term "savings deposit" means a deposit:

(i) Which consists of funds deposited to the credit of one or more individuals, or of a public unit, as defined in section 3(m) of the Federal Deposit Insurance Act, 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 in which the entire beneficial interest is held by one or more individuals or public units, or by such a corporation, association, or other organization; or

4

(ii) Which consists of funds deposited to the credit of, or in which all or part of the beneficial interest is held by a corporation, partnership, association, or other organization which does not come within paragraph (e)(1)(i) of this section, but only to the extent that such deposits do not exceed $150,000 for any such corporation, partnership, association, or other organization in any one bank; and

(iii) In the case of both paragraphs (e)(1)(i) and (e)(1)(ii) of this section, with respect to which the depositor is not required by the deposit contract but may at any time be required to give notice in writing of an intended withdrawal not less than 14 days

3 A deposit with respect to which the bank merely reserves the right to require notice of not less than 14 days before any withdrawal is made is not a "time deposit, open account," within the meaning of the above definition.

'Deposits in joint accounts of two or more individuals may be classified as savings deposits under paragraph (e)(1)(i) if they meet the other requirements of the definition in paragraph (e)(1)(i), but deposits of a partnership operated for profit may not be so classified. Deposits to the credit of an individual or a public unit of funds in which the 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 except to the extent permitted in paragraph (e)(1)(ii).

5

before such withdrawal is made and which is not payable on a specified date or at the expiration of a specified time after the date of deposit.

(2) (i) Except as provided in paragraph (e)(2)(ii) of this section, the term "savings deposit", as defined in paragraph (e)(1)(i) of this section, shall include all interest-bearing deposits subject to withdrawal by negotiable or transferable instruments for the purpose of making transfers to third parties where such withdrawals are authorized by law.

(ii) No insured nonmember bank or insured nonmember mutual savings bank shall maintain an interest-bearing deposit for a corporation, partnership, association or other organization under paragraph (e)(1)(ii) of this section, or for a public unit, as defined in section 3(m) of the Federal Deposit Insurance Act, if such deposit is subject to withdrawal by negotiable or transferable instrument for the purpose of making transfers to third parties: Provided, That any insured nonmember bank or insured nonmember mutual savings bank may maintain such a deposit for a public unit until January 1, 1976 if the deposit was established before May 5, 1975: And provided, That any deposit which would otherwise be prohibited by this paragraph (e)(2)(ii) shall not be subject to such prohibition if it is held by a public unit operated primarily for charitable, educational or other similar purposes.

(f) Multiple maturity time deposit. The term "multiple maturity time deposit" means any time deposit: (1) That is payable at the depositor's option on more than one date, whether on a specified date or at the expiration of a specified time after the date of deposit (e.g., a deposit payable at the option of the depositor either 3 months or 6 months after the date of deposit), (2) that is payable after written notice of withdrawal, or (3) with respect to which the underlying instrument or contract or any informal understanding or agreement provides for automatic renewal at maturity.

"The exercise by the bank of its right to require such notice shall not cause the deposit to cease to be a savings deposit.

(g) Obligations issued by the parent bank holding company of a nonmember bank. For the purposes of this Part, the "deposits" of a nonmember bank other than a mutual savings bank also include an obligation that is (1) issued in a denomination of less than $100,000; (2) required to be registered with the Securities and Exchange Commission under the Securities Act of 1933; (3) issued or guaranteed in whole or in part as to principal or interest by the nonmember bank's parent which is a bank holding company within the meaning of 12 U.S.C. 221a(b) regardless of the use of the proceeds; and (4) issued with an original maturity of 4 years or less, or which is redeemable at intervals of 4 years or less at the option of the holder. The term "deposits" does not include those obligations of a bank holding company that are subject to interest rate limitations imposed pursuant to Pub. L. 89-597.

[15 FR 8641, Dec. 5, 1950, as amended at 31 FR 9862, July 21, 1966; 31 FR 15795, Dec. 15, 1966; 39 FR 42339, Dec. 5, 1974; 40 FR 46302, Oct. 7, 1975; 40 FR 47757, Oct. 10, 1975; 41 FR 11477, Mar. 19, 1976; 45 FR 18373, Mar. 21, 1980; 45 FR 72109, Oct. 31, 1980]

§ 329.2 Demand deposits.

(a) Interest prohibited. Except as provided in this part, 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. 6

(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

"The absorption of normal or customary exchange charges by an insured nonmember bank, in connection with the routine collection for its depositors of checks drawn on other banks, does not constitute the payment of interest within the provisions of this part.

'Section 3(g) of the Federal Deposit Insurance Act provides:

Footnote continued on next page.

in the Federal Deposit Insurance Act, or by a mutual savings bank;

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

non

(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 member 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

Footnote continued from previous page. "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: Providing 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 was permitted by law on August 23, 1935, from specifically designated deposit accounts totaling not more than 15 per centum of the bank's total deposits."

"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.

§ 329.3 Interest on time and savings deposits.

(a) Maximum rate. Except as provided in this section, no insured nonmember bank shall, directly or indirectly, by any device whatsoever, 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 in § 329.6 of this part. In determining the maximum amount of interest permitted to be paid, the effects of compounding may be disregarded. The maximum rate of interest that may be paid by a bank on an additional deposit to any existing time deposit shall not exceed the maximum rate that may be paid in accordance with the provisions of § 329.6 on the date the additional deposit is made.

(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) Insured nonmember banks limited to maximum rate under State law. The rate of interest paid by an insured nonmember bank upon a time deposit

See footnote 7 on previous page.

or a savings deposit shall not in any case exceed: (1) The applicable maximum rate prescribed pursuant to the provisions of paragraph (a) of this section, or (2) the applicable maximum rate authorized to be paid upon such deposits under the laws of the State in which the insured nonmember bank is located, whichever may be less.

(d) Grace periods in computing interest on savings deposits. An insured nonmember bank may pay interest on a savings deposit received during the first ten (10) calendar days of any calendar month at the applicable maximum rate prescribed pursuant to paragraph (a) of this section calculated from the first day of such calendar month until such deposit is withdrawn or ceases to constitute a savings deposit under the provisions of this part, whichever shall first occur; and an insured nonmember bank may pay interest on a savings deposit withdrawn during its last three (3) business days of any calendar month ending a regular quarterly or semiannual interest period at the applicable maximum rate prescribed pursuant to paragraph (a) of this section calculated to the end of such calendar month.

(e) Computation of interest on time and savings deposits. In computing interest on time and savings deposits, the time factor should be expressed as a fraction in which the actual number of days the funds earn interest is the numerator, and the denominator is either 360, 365, or, in a leap year, 366. However, when a deposit matures in 1 month, or multiples thereof, the bank may use 30 days in the numerator, or corresponding multiples thereof.

(f) No interest after maturity or expiration of notice; exception. After the date of maturity of any time deposit, such deposit is a demand deposit, and no interest may be paid on such deposit for any period subsequent to such date. After the expiration of the period of notice given with respect to the repayment of any time deposit or savings deposit, such deposit is demand deposit and no interest may be paid on such deposit for any period subsequent to the expiration of such notice, except that, if the owner of such deposit advise the bank in writing that the deposit will not be with

a

drawn pursuant to such notice or that the deposit will thereafter again be subject to the contract or requirements applicable to such deposit, the deposit will again constitute a time deposit or savings deposit, as the case may be, after the date upon which such advice is received by the bank. Notwithstanding the foregoing, if a time deposit is renewed, automatically or by action of the depositor, within ten (10) days after maturity, the renewed deposit or renewed portion may draw interest from the maturity date of the matured deposit; and if a time or savings deposit is renewed, automatically or by action of the depositor, within ten (10) days after expiration of the period of notice given with respect to its repayment, the renewed deposit or renewed portion may draw interest from the date such notice period expired. 10

11

(g) Time deposits of foreign governmental entities and international organizations. Section 329.6 does not apply to the rate of interest that may be paid by an insured nonmember bank on a time deposit having a maturity of 2 years or less and representing funds deposited and owned by: (1) A foreign national government, or an agency or instrumentality thereof "1 engaged principally in activities which are ordinarily performed in the United States by governmental entities, (2) an international entity of which the United States is a member, or (3) any other foreign, international or supranational entity specifically designated by the Board of Directors as exempt from § 329.6. All certificates of deposit issued by insured nonmember banks to such entities on which the contract rate of interest exceeds the maximum prescribed under § 329.6 shall provide that: (i) In the event of transfer, the date of transfer, attested to in writing by the transferor, shall appear on the certificate, and (ii) the maximum rate

10Where a time certificate is renewed within ten (10 days after maturity, the renewal certificate may be dated back to the maturity date of the matured certificate.

"Other than States, provinces, municipalities, or other regional or local governmental units, or agencies or instrumentalities thereof.