Magazine article American Banker

Pa.'s First Commonwealth Unit Latest to Offer Retirement CD

Magazine article American Banker

Pa.'s First Commonwealth Unit Latest to Offer Retirement CD

Article excerpt

A Pennsylvania bank, risking the wrath of the state's insurance industry, has become the latest institution to offer the "Retirement CD."

National Bank of the Commonwealth Retirement CD

Minimum ini-    $2,500
tial deposit
Annual deposit  At least $1,000
Interest        Nontaxable
Insurance       FDIC
Maturity        Up to 2/3 on
                retirement, re-
                mainder in
                monthly pay-
                ments
Provider        American De-
                posit Corp.

National Bank of the Commonwealth, a subsidiary of First Commonwealth Financial Corp., began offering the product late last month and already has opened a few accounts, said president and chief executive Johnston A. Glass. About a dozen other customers also have expressed interest.

"We thought it was worth a try," Mr. Glass said. "It seems like it would be a darn good product, something that's good for our customers and good for the industry, so we felt we would get involved with it."

But the move has put the bank on the radar screen of the state insurance department, which is reviewing the product and its possible conflicts with state law.

The CD is an FDIC-insured, tax-deferred bank account that provides guaranteed monthly payments after a retirement date set in advance by the depositor. The insurance industry opposes the product, however, seeing it as an encroachment on their turf that gives banks an unfair edge because of the government insurance.

The $500-million-asset National is the third institution in the country to offer the product, behind Blackfeet National Bank in Browning, Mont. …

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