I. INTRODUCTION
There are no federal laws or regulations that require all branches of an FDIC-insured depository institution (“institution”) to operate under a single name. Federal bank regulatory agencies are concerned however, that if customers believe they are dealing with two different institutions, they may inadvertently exceed FDIC insurance limits by depositing excess amounts in different branches of the same institution. Regulatory agencies believe that it is important for customers to understand the scope of FDIC insurance in these circumstances.
II. FEDERAL INTERAGENCY STATEMENT
The FRB, FDIC, OCC and OTS issued an Interagency Statement on branch names, effective July 1, 1998. The interagency statement directs institutions that use different trade names for branches or other operating facilities to take reasonable steps to ensure that its depositors are not confused with respect to the extent of deposit insurance coverage (e.g., customers believing that such branches or facilities are separate institutions or that deposits in the differently names branches or facilities are separately insured).
If an institution uses different names, it should take measures that may include, but are not limited to:
If institutions use different trade names on the internet, the same regulatory agency concerns are present and therefore, the Interagency Statement provides that institutions using different names on the internet should take similar reasonable steps, to ensure that customers will not be confused about either the identity of the institution or the extent of FDIC insurance coverage.
III. NEBRASKA LAW
Several sections of the Nebraska Banking Code regulate the use of bank holding company, branch or financial institution names.
Section 8-157 states that the name given to any branch established and maintained pursuant to this section shall not be substantially similar to the name of any existing bank or branch that is unaffiliated with the newly created branch and is located in the same city, village or county. The name of such newly created branch shall be approved by the Director of the Department of Banking and Finance.
Section 8-920 provides that it is unlawful for bank holding company to have a name deceptively similar to an existing unaffiliated bank or bank holding company located in Nebraska.
Section 8-1902 makes it unlawful for two or more financial institutions in the same city, village, or county in Nebraska to have or use the same name or names so nearly alike as to cause confusion in transacting business. In all cases in which a similarity of names now exists or may hereafter exist, a complaint may be made to the Department of Banking and Finance. If in the judgment of the department a similarity does exist and creates confusion in conducting the business of either or both financial institutions, the department may by order require the financial institution which is junior in time in the use of its name in such city, village or county to change or modify its name to prevent confusion. The name change must be approved by the department.
IV. DEPARTMENT OF BANKING AND FINANCE – STATEMENT OF POLICY #4
A. Introduction
The Nebraska Department of Banking and Finance (“NDBF”) issued a Statement of Policy which was established as a part of the NDBF’s responsibilities in approving the chartered name of a bank and the names of all bank offices used within the State of Nebraska and for enforcing the laws prohibiting the use of confusingly similar names by bank offices in the same community or county.
B. Potential for Confusion by Depositors
The NDBF cited the potential for confusion on the part of depositors in a Nebraska bank for whom deposits are insured, with limitations, by the FDIC when one of the following occurs:
C. Goals of the Department in Adopting Policy
The goals used by the NDBF in changing the policy on bank and branch naming were:
D. Elements of Disclosure Requirements
Commencing May 1, 2009, a Nebraska state-chartered bank must disclose to individuals and representatives of legal entities who are applying to open an insured deposit account at a bank or a branch of a bank identified by a name other than a chartered name of the bank that, for purposes of FDIC deposit insurance coverage, any deposits of the applicant in the bank and any of its branches, regardless of the name or names by which the bank or its branches are identified, must be aggregated.
When a bank or any of its branches are identified by a name other than the chartered name of the bank, the disclosures must include:
1. A statement in brochures and other materials available to the public, and, if applicable, on the bank’s web site, describing the deposit accounts offered by the bank or any of its branches that deposit account balances will be aggregated with an account holder’s deposit balances with the insured bank and any other branches of the insured bank, regardless of the name or names used to identify the bank or its branches to the public for purposes of determining FDIC deposit insurance coverage for the account holder.
Set forth below is a model statement acceptable to the NDBF for use in brochures and other material available to the public describing the deposit accounts offered by the bank or any of its branches:
For Federal Deposit Insurance Corporation (FDIC) purposes, a depositor’s account balances in [the charter name of the bank] will be aggregated with any account balances of the depositor in the following offices, branches, or internet sites of [chartered name of the bank].
The total account balances of a depositor with [chartered name of the bank] and its offices and branches will have the benefit of the deposit insurance coverage that the FDIC provides to a depositor’s accounts in a single bank. To determine the level of FDIC deposit insurance coverage available on accounts in a single bank, please ask for the FDIC brochure “Your Insured Deposit” or visit www.fdic.gov and, in the “Deposit Insurance” section, click on “EDIE OnLine Calculator.”
2. In addition, each Nebraska state-chartered bank must obtain a signed statement from the individual or representative of a legal entity (“Applicant”), who is applying to open any type of account eligible for FDIC deposit insurance coverage. The signed statement must reflect that the Applicant understands:
(a) The bank at which Applicant intends to open the account has a chartered name other than the name used to identify the bank; (or)
(b) The branch at which Applicant is applying to open a deposit account is identified by a name other than the chartered name of the bank which operates the branch, and that the balance at any point in time of the deposit account which Applicant intends to open will be combined with deposit balances of Applicant with the bank and any of its other branches, regardless of the names of those other branches, for purposes of determining FDIC deposit insurance coverage for the Applicant. The statement will identify the chartered name of the bank and all offices of the bank which currently operate under a name other than the chartered name of the bank.
E. Required Use of Chartered Name
The chartered name of the bank must be used for legal documents, certificates of deposit, signature cards, account statements, on bank checks and drafts, 1099 statements of interest earned, loan documents, and other similar documents which detail an account relationship with the bank.
F. Change of Bank’s Name
If a bank changes the name of the bank’s main office/charter location, or adds a branch office and identifies the branch with a name other than the chartered name of the bank, or changes the name of an existing branch office to a name other than the chartered name of the bank, the bank must, after receiving prior approval from NDBF of the new name, and prior to opening the new branch or changing the name of the bank’s main office/charter location or an existing branch, notify all depositors of the bank as to the addition or change.
Communication may be made by first class mail or by use of a statement stuffer or email statements included with periodic account statements.
G. Continued Use of Signage
Existing signage, both inside and outside the home office of a bank or a branch facility, identifying offices with names other than the chartered name of the bank may be retained or redesigned at the option of the bank. The bank may, at its option, identify the chartered name of the bank on any branch signage.