I would like to know if other banks have established a policy regarding acceptance of deposit control agreements. If they are being accepted, do they plan to restrict the conditions of the control of agreements to minimize the monitoring requirements? How will that be accomplished?

Pat, Can you expand on what you are specifically referring to as "deposit control agreements". I have recently reviewed UCC 9, but I don't know that term. Are you referring to security agreements or assignments?

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Allan D. Virr, CRCM

I am referring to Control Agreements deposit account owners sign in order to pledge a portion of the account funds as security for an obligation to another bank. These agreements have always existed, however, now under Revised Article 9 the lenders security interest is now "perfected".

We are concerned that if we accept Control Agreements from other banks we will be subject to a detailed review of each agreement and close monitoring of the account in order to comply with the terms. I wanted to know what other banks have decided to do in terms of accepting the agreements at all, and if they are to be accepted, how they will minimize the review and monitoring requirements.

Thanks for clearing that up for me. In my experience many banks will not accept or honor control agreements. I am a consultant to five independent community banks - none will currently accept or honor control agreements. They are legal but in my experience seldom seen. Hope my contribution helps.

This is my opinion exclusively.

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Allan D. Virr, CRCM

We have approached it in our deposit agreements as a statement the bank must approve this action. It covers us if a customer does attempt this action with another financial institution.