We have a CD special for 59 months that will renew to a 48 month CD. The interest is semi-annually for the 59 months. The interest on the 48 month CD is quarterly. Since we sold a 59 month CD with semi-annual interest, are we required to change the interest to quarterly or can we leave it at semi-annual because of the original 59 month term?

You could have two different 48-month CDs -- one with semiannual interest and the other with quarterly. Your disclosures that will be sent in advance of the 59-month CD's maturity will say what the interest payment/crediting frequency will be.

If you only have quarterly interest 48-month CDs and a customer wants to keep the semi-annual interest schedule, you could allow it (it would not be a smart choice for the consumer, in my opinion).

If we want to change all current 59-month CDs to quarterly interest rate instead of the current semiannually interest rate, do we need to redisclose if this is to the benefit of the customer?

One of our directors is requesting that we give him a 4 point spread on his CD being held for collateral. We are a FBR bank and we do match other competitive rates for customers. Can we do this and can we offer him the same match on other CDs? Thanks

What do you mean a 4-point spread?

12 USC 376 (section 22(e) of the Federal Reserve Act)

Interest on deposits of directors, officers, and employees

(e) No member bank shall pay to any director, officer, attorney, or employee a greater rate of interest on the deposits of such director, officer, attorney, or employee than that paid to other depositors on similar deposits with such member bank.

[12 USC 376. As added by act of June 21, 1917 (40 Stat. 240); and amended by act of Sept. 26, 1918 (40 Stat. 971), which completely revised this section.]

If we want to change all current 59-month CDs to quarterly interest rate instead of the current semiannually interest rate, do we need to redisclose if this is to the benefit of the customer?

Are you talking about the compounding/crediting frequency?

Yes.

You would disclose the change as part of the next maturity notice of the certificate if it automatically renews.