For those customers that use our internet site for banking, etc. Can we give the annual notice over the site versus mailing the notice? Anyone doing this already?

I believe they have to agree to receive it electronically, but I would have to look it up to be certain.

Actually you have two options.

(c) Annual notices only. A bank may reasonably expect that a customer will receive actual notice of the bank's annual privacy notice if:

(1) The customer uses the bank's web site to access financial products and services electronically and agrees to receive notices at the web site and the bank posts its current privacy notice continuously in a clear and conspicuous manner on the web site; or

(2) The customer has requested that the bank refrain from sending any information regarding the customer relationship, and the bank's current privacy notice remains available to the customer upon request.