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#1987396 - 01/08/15 07:24 PM Early Withdrawal Penalty on a CD/Bank Merger
complianceworld Offline
Junior Member
Joined: Sep 2013
Posts: 32
We have recently acquired a bank and one of the customers of the acquired bank went into the branch to withdraw a CD that had already matured and past the grace period. The branch would not waive the early withdrawal penalty; however the customer is complaining that he should not be charged a penalty due to the merger. I read Reg D 204.2(c) (1). Can someone look at this and see if this should be interpreted in the manner that the customer is saying:

A time deposit, or a portion thereof, may be paid during the period when an early withdrawal penalty would otherwise be required under this part without imposing an early withdrawal penalty specified by this part:


(c) Where the depository institution pays that portion of a time deposit on which federal deposit insurance has been lost as a result of the merger of two or more federally insured banks in which the depositor previously maintained separate time deposits, for a period of one year from the date of the merger;

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#1987403 - 01/08/15 07:34 PM Re: Early Withdrawal Penalty on a CD/Bank Merger complianceworld
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Well, first, the assessment of any early withdrawal outside of an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit is really up to the bank regardless if an exception in footnote 1 applies.

The footnote applies if the customer through the merger would have for example, more than $250,000 in the combined institution. But again, it is bank option to waive the penalty.
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#1987438 - 01/08/15 08:26 PM Re: Early Withdrawal Penalty on a CD/Bank Merger complianceworld
complianceworld Offline
Junior Member
Joined: Sep 2013
Posts: 32
Thank you rlcarey.

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