FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 330 RIN 3064ÄAB28 Deposit Insurance Coverage AGENCY: Federal Deposit Insurance Corporation (FDIC). ACTION: Proposed rule. SUMMARY: The FDIC is proposing to amend its deposit insurance regulations to require that: Upon request, an insured depository institution disclose in writing to existing and prospective depositors of employee benefit plan funds certain capital information, including its current Prompt Corrective Action (PCA) capital category and whether employee benefit plan deposits would be eligible for "pass-through'' insurance coverage; upon opening an account comprised of employee benefit plan funds, an insured depository institution disclose in writing its PCA capital category and whether the deposits are eligible for "pass-through'' deposit insurance coverage; upon a reduction in its capital category from "well capitalized'' to "adequately capitalized'' an insured depository institution disclose to all its employee benefit plan depositors the institution's new PCA capital category and whether new, rolled-over or renewed employee benefit plan deposits are eligible for "pass-through'' insurance coverage; and an insured depository institution disclose in writing to employee benefit plan depositors when new, rolled-over or renewed employee benefit plan deposits will not be eligible for "pass-through'' deposit insurance coverage. The FDIC also is proposing two technical amendments to its insurance regulations that are unrelated to the proposed amendments concerning "pass-through'' insurance coverage. The technical amendments involve the insurance rules for joint accounts and accounts for which an insured depository institution is acting as a fiduciary. The intended effects of the proposed rule on "pass-through'' deposit insurance are to reduce the uncertainty about whether employee benefit plan deposits are eligible for "pass-through'' deposit insurance coverage and to require insured depository institutions to provide timely disclosure to employee benefit plan depositors when "pass-through'' deposit insurance coverage is no longer available. The two technical amendments are intended to clarify the insurance rules involving joint accounts and accounts for which an insured depository institution is acting as a fiduciary. DATES: Written comments must be received by the FDIC on or before February 7, 1994. ADDRESSES: Written comments should be addressed to the Office of the Executive Secretary, Federal Deposit Insurance Corporation, 550 - 17th Street, NW, Washington, DC, 20429. Comments may be hand-delivered to Room FÄ400, 1776 F Street, NW., Washington, DC 20429, on business days between 8:30 a.m. and 5 p.m. (FAX number: (202) 898Ä3838). Comments will be available for inspection in room 7118, 550 - 17th Street, N.W., Washington, D.C. between 9 a.m. and 4:30 p.m. on business days. FOR FURTHER INFORMATION CONTACT: Daniel M. Gautsch, Examination Specialist, Division of Supervision (202/898Ä6912) or Joseph A. DiNuzzo, Counsel, Legal Division (202/898Ä7349), Federal Deposit Insurance Corporation, Washington, DC, 20429. SUPPLEMENTARY INFORMATION: Background Section 311 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (Pub. L. 102Ä242, 105 Stat. 2236) (FDICIA) amended various provisions of the Federal Deposit Insurance Act (FDI Act) governing deposit insurance coverage. The FDIC Board of Directors (Board) recently revised the FDIC's insurance regulations to incorporate the amendments made by section 311 of FDICIA to the FDI Act (58 FR 29952 (May 25, 1993)). In particular,  330.12 of the FDIC's regulations (12 CFR 330.12) was substantially revised to reflect the new limitations imposed by section 311 of FDICIA affecting the "pass-through'' deposit insurance provided for employee benefit accounts. (The expression "pass-through'' insurance means that the insurance coverage passes through to each owner/beneficiary of the applicable deposit.) As required by section 311 of FDICIA, under the revised insurance rules, whether or not an employee benefit plan deposit is entitled to "pass-through'' deposit insurance coverage is based, in part, upon the capital status of an insured depository institution at the time the deposit is accepted. Specifically,  330.12(b) provides that employee benefit plan deposits are entitled to "pass-through'' insurance coverage only if made in insured institutions that can accept brokered deposits (pursuant to section 29 of the FDI Act, 12 U.S.C. 1831f) at the time they accept the employee benefit plan deposits. Section 29 of the FDI Act prohibits insured depository institutions that are not "well capitalized'', institutions that are "adequately capitalized'' but have not obtained a waiver from the FDIC and "undercapitalized'' institutions (or institutions in worse capital categories) from accepting brokered deposits.®1¯ A brokered deposit is defined in  337.6 of the FDIC's regulations (12 CFR 337.6) as any deposit that is obtained, directly or indirectly, from or through the mediation or assistance of a deposit broker.®2¯ ®1¯ "Well capitalized'' insured institutions can, in certain circumstances, avoid a lapse in eligibility for "pass-through'' insurance of employee benefit plan deposits, should the institution's PCA capital category be reduced to "adequately capitalized'', by applying to the appropriate FDIC Division of Supervision Regional Office for an advance waiver solely for the purpose of continuing "pass-through'' deposit insurance coverage. ®2¯ The FDIC recently amended the capital categories in  337.6 to conform to the PCA capital category definitions in 12 CFR part 325, subpart B. 58 FR 54932 (Oct. 25, 1993). The revised  330.12(b) reiterates an additional provision in section 311 of FDICIA providing that, even if an insured institution cannot accept brokered deposits, employee benefit plan deposits are eligible for "pass-through'' insurance if, at the time the deposit is accepted: (1) The institution meets each applicable capital standard; and (2) the depositor receives a written statement from the institution that such deposits are eligible for insurance coverage on a "pass-through'' basis. This provision applies only to "adequately capitalized'' institutions that have not obtained a brokered deposits waiver from the FDIC and those that have been denied a waiver. Need for the Proposed Rule Section 330.12(b) permits but does not require an insured institution to disclose to existing or prospective depositors its capital levels or its PCA capital category.®3¯ The FDIC has received numerous comments from various sources on the difficulty of obtaining public information on an insured institution's capital levels and on its current PCA capital category. In response to those comments, the FDIC has indicated that FDIC regulations do not prohibit state nonmember banks from disclosing, upon request, their capital levels or PCA capital category to depositors and has encouraged employee benefit plan sponsors and administrators to obtain capital information directly from insured depository institutions. 58 FR 29954 (May 25, 1993). ®3¯ For the respective federal banking regulator's PCA regulations, see 12 CFR parts 308 and 325 (FDIC), 12 CFR parts 208 and 263 (Board of Governors of the Federal Reserve System), 12 CFR parts 6 and 19 (Office of the Comptroller of the Currency) and 12 CFR part 565 (Office of Thrift Supervision). Although, as indicated above, insured institutions generally are not prohibited from disclosing capital information to existing and prospective depositors, there is no regulatory requirement that an insured institution disclose this information.®4¯ There also is no requirement that when an insured institution's capital category changes (so that new employee benefit plan deposits are not eligible for "pass-through'' insurance coverage) that it disclose this fact to existing and prospective employee benefit plan depositors. ®4¯ Moreover, the FDIC received a number of comments on its proposal to revise the deposit insurance rules (57 FR 49027, October 29, 1992) indicating that some employee benefit plan administrators find it necessary to independently verify the capital status of an insured institution in order to satisfy their fiduciary obligations. Currently there are several sources from which an individual can obtain information about the capital status of an insured institution. Quarterly Consolidated Reports of Condition and Income (Call Reports) and Thrift Financial Reports (TFRs) are available, upon request at a nominal charge, from the FDIC or the institution's primary federal regulator. Uniform Bank Performance Reports (UBPRs), which compare individual institutions to their peer groups, and other reports are available from the Federal Financial Institutions Examination Council. In addition, financial data on banks and thrifts are available from state and federal banking regulators and private rating services. Many of these reports provide various ratios used to determine an institution's capital category; however, they may not be adequate for determining whether "pass-through'' insurance coverage is available for deposits placed at an institution. One problem is that only fairly sophisticated financial managers are likely to be able to ascertain an institution's capital category from these reports. The reports also may not meet the "time of acceptance'' requirement contained in the law.®5¯ In addition, the reports do not indicate institutions that have obtained a brokered deposit waiver from the FDIC or that are adequately capitalized but either have not applied for a brokered deposit waiver from the FDIC or have been denied such a waiver. Moreover, they do not indicate whether an institution has an enforcement action or capital directive outstanding thereby excluding it from the "well capitalized'' capital category. ®5¯ Under the PCA regulations, an institution is deemed to be in a particular capital category when its Call Report or TFR is due. It remains in that capital category until the next Call Report or TFR is due unless and until: (1) The institution receives an intervening report of examination which causes the institution to be in a different capital category; or (2) a material event occurs which causes the institution to be in a lower capital category (and it is confirmed by the institution's primary federal regulator); or (3) the institution receives a written notice from its primary federal regulator that it has been reclassified. Because an institution's capital category is not necessarily held constant for an entire quarter, due to the potential for intervening material events noted above, employee benefit plan administrators theoretically will still have to ascertain the capital category of an institution on a daily basis. Also, there can be a considerable lapse of time between the day each institution submits its Call Report or TFR and the date the information becomes available to the public. Call Reports and TFRs include only the raw financial data from which a depositor, if sophisticated enough, could calculate an institution's estimated capital ratios and then, at best, only estimate its PCA capital category. The Proposed Rule The proposed revisions would require that: 1. Upon request (and within two business days after receipt of such request), an insured depository institution provide written notice to any existing or prospective depositor of employee benefit plan funds of the institution's leverage ratio, Tier 1 risked-based capital ratio, total risk-based capital ratio, PCA capital category and whether or not, in the opinion of the institution, employee benefit plan deposits made with the institution would be entitled to "pass-through'' insurance coverage under  330.12 (a) and (b) of the FDIC's regulations (12 CFR 330.12 (a) and (b)). Under  330.12 (a) and (b), "pass-through'' insurance shall not be provided if, at the time an employee benefit plan deposit is accepted, the institution may not accept brokered deposits pursuant to section 29 of the FDI Act unless, at the time the deposit is accepted: (1) The institution meets each applicable capital standard; and (2) the depositor receives a written statement from the institution indicating that such deposits are eligible for insurance coverage on a "pass-through'' basis.®6¯ ®6¯ The recordkeeping requirements of  330.4 of the FDIC's regulations also would have to be satisfied. 12 CFR 330.12(a) & 330.4. 2. Upon the opening of any account comprised of employee benefit plan funds, an insured depository institution provide written notice to the depositor of the institution's PCA capital category and whether or not such deposits are eligible for "pass-through'' insurance coverage; 3. Within two business days after an insured depository institution's PCA capital category changes from "well capitalized'' to "adequately capitalized'', the institution provide written notice to all depositors of employee benefit plan funds of the institution's PCA capital category and whether or not new, rolled-over or renewed employee benefit plan deposits would be eligible for "pass-through'' insurance coverage under  330.12 (a) and (b); and 4. Within two business days after an insured depository institution's PCA capital category changes to a category below "adequately capitalized'', the institution provide written notice to all depositors of employee benefit plan funds indicating that new, rolled-over or renewed deposits of employee benefit plan funds made on or after the date the institution's PCA capital category changed to a category below adequately capitalized will not be eligible for "pass-through'' insurance coverage. An institution's capital levels and PCA capital category are based on the capital and PCA regulations issued by the institution's primary federal regulator.®7¯ ®7¯ See footnote 3, above, for the applicable CFR citations. The proposed rule is aimed at requiring the applicable disclosures at the most critical times when an employee benefit plan depositor needs to know whether "pass-through'' insurance is available: When opening an account and when new, rolled-over or renewed employee benefit plan deposits are no longer eligible for "pass-through'' coverage. Thus, an insured depository institution would be required to disclose its PCA capital category and whether employee benefit plan deposits would be eligible for "pass-through'' deposit insurance coverage at the time an employee benefit account is opened and within two business days after its PCA capital category changes from "well capitalized'' to "adequately capitalized''. In addition, an institution would have to notify all employee benefit depositors within two business days after its PCA capital category changes to a category below "adequately capitalized'' and to inform the depositors that new, rolled-over or renewed employee benefit plan deposits would not be insured on a "pass-through'' basis, unless and until the institution's PCA capital category improved and the other applicable requirements were satisfied. The proposed rule also would require an insured depository institution to provide to all existing and prospective employee benefit plan depositors, upon request, the institution's capital levels, PCA capital category and whether employee benefit plan deposits would be eligible for "pass-through'' insurance coverage. Inasmuch as it requires disclosure of an institution's capital levels, this provision goes beyond the other disclosure requirements of the proposed rule. The FDIC believes such information should be made available to provide existing and prospective employee benefit plan depositors with meaningful, objective information on an institution's capital condition. The capital ratios disclosed to a depositor should be the most recent information available, but need not be as of the date of the deposit. Obtaining this additional information could prove beneficial in determining whether to establish or continue a deposit relationship with the institution. As noted above, sufficient current financial information on an institution's capital levels may otherwise not be available. The proposed rule would require notification to existing employee benefit plan depositors of a reduction in an institution's PCA capital category within two business days of such reduction.®8¯ Because a reduction in a depository institution's PCA capital category may mean that new, rolled-over or renewed employee benefit plan deposits might not be eligible for "pass-through'' insurance coverage, the FDIC believes this relatively short two-day time frame is necessary and appropriate. Adopting a longer time frame may increase an employee benefit plan depositor's uninsured exposure. This is an issue on which the FDIC specifically requests comment, particularly as to the feasibility of compliance and other alternatives. The FDIC also expressly solicits comment on whether the proposed disclosures should be required when an institution's capital category has changed from "well capitalized'' to "adequately capitalized'' but the institution has obtained a brokered deposits waiver and, thus, there would be no change in the eligibility of employee benefit plan deposits for "pass-through'' coverage. ®8¯ See footnote 5, above, on how an institutions's PCA capital category may change. Assuming such notice is required, specific comment is also requested on whether the final rule should include a specific notice that institutions would have to provide employee benefit plan depositors when an institution's PCA category changes from "well capitalized'' to "adequately capitalized''. One type of notice could read: On [date] [name of institution]'s Prompt Corrective Action (PCA) capital category changed from "Well Capitalized'' to "Adequately Capitalized''. [Because of] [or] [Despite] this change in [name of institution]'s PCA capital category, any employee benefit plan deposits placed, rolled-over or renewed with [name of institution] after [date] will [NOT] [or] [continue to] be eligible for "pass-through'' deposit insurance coverage under  330.12 of the FDIC's regulations. [This unavailability of "pass-through'' insurance coverage will continue until the institution's PCA capital category improves and the other applicable requirements are satisfied.] A sample disclosure also could be required if an institution's PCA capital category changed to a level below "adequately capitalized''. It could read as follows: On [date] [name of institution]'s Prompt Corrective Action (PCA) capital category changed from [previous PCA category] to [current PCA capital category]. Because of this change in [name of institution]'s PCA capital category, any employee benefit plan deposits placed, rolled-over or renewed with [name of institution] after [date] will NOT be eligible for "pass-through'' deposit insurance coverage under  330.12 of the FDIC's regulations. This unavailability of "pass- through'' insurance coverage will continue until the institution's PCA capital category improves and the other applicable requirements are satisfied. The FDIC also specifically requests comment on the form of disclosure; for example: Whether the required disclosures should have to be in a separate mailing; whether a written acknowledgement from the intended recipient of the disclosure should be required; whether the disclosure should be required to be prominent and conspicuous (for example, requiring bold type); whether the disclosure should be part of the deposit agreement; whether other related information may be disclosed; and on any other aspects of the notification requirements. The proposed rule would dramatically increase the chance that prospective and existing employee benefit plan depositors are provided with the information necessary to make an informed decision about where to place their funds. The proposed rule, however, would not bind the FDIC, in its deposit insurance determinations, to the information provided by the insured institution to depositors on the eligibility of employee benefit plan deposits for "pass-through'' insurance coverage. The FDIC is not responsible for a depository institution's failure to provide the required notices to depositors or for erroneous information provided by insured institutions, intentionally or otherwise. If the proposed rule is adopted, however, it is intended that compliance be monitored by the institution's primary federal regulator during the course of examinations. Violations of the regulatory requirements would be subject to the full array of enforcement sanctions (including the imposition of civil money penalties) contained in section 8 of the FDI Act, 12 U.S.C. 1818. In this connection, the FDIC requests specific comment on whether a free-standing enforcement and/or penalty provision should be included in  330.12 as part of the proposed rule. Minimal Regulatory Burden It is the FDIC's overall intention to balance the undesirability of imposing regulatory requirements on insured institutions with the importance of providing timely notice to existing and prospective employee benefit plan depositors of the extent of "pass-through'' insurance coverage on their deposits. Only institutions that accept employee benefit plan deposits would be subject to the proposed rule. Moreover, based on the most recent Call Report and TFR information (as of June 30, 1993), only 370 insured institutions reported data indicating a PCA capital category of "adequately capitalized''. This represents approximately 2.7 percent of the 13,006 insured institutions reporting. In addition, more than 96 percent of all FDIC-insured institutions were "well capitalized'' and, thus, employee benefit plan deposits placed with these institutions would be eligible for "pass-through'' insurance. The FDIC does not believe that it would be burdensome for an affected insured institution to disclose its PCA capital category because under existing rules an institution must know its individual PCA capital category in order to determine whether it is subject to certain statutorily mandated restrictions. Moreover, this information would greatly assist small, unsophisticated employee benefit plan depositors in making informed decisions about where to place their funds. In addition, for purposes of the proposed rule, generally, the FDIC would deem an employee benefit plan depositor and a prospective employee benefit plan depositor to be the administrator or manager of the plan assets. The required information and notices, therefore, would have to be provided to such person, not to each participant in the plan. The FDIC has consulted with the other federal regulators on the proposed rule and intends to continue to work with the other regulators to assure, among other things, consistent and minimally burdensome implementation of the final rule, if adopted. Technical Amendments to Part 330 Unrelated to the Proposed Amendments to  330.12 The FDIC also is proposing two technical amendments to its insurance regulations that are unrelated to the proposed amendments to  330.12. The first would clarify the meaning of  330.7(c) of the FDIC's regulations (12 CFR 330.7(c)) concerning joint accounts. That provision specifies the requirements an account must meet to qualify for separate insurance coverage as a joint account. Section 330.7(c) exempts certain types of accounts, including certificates of deposit, from the general requirement that each co-owner sign a signature card, but the regulation states that "all such deposit accounts must, in fact, be jointly owned''. Some courts, contrary to the FDIC's longstanding interpretation, have interpreted the quoted language to require the FDIC to consider state law and evidence outside of the deposit account records of the insured institution to contradict otherwise unambiguous deposit account records, in connection with claims that what appear to be joint accounts are in fact individually owned accounts. The proposed amendment would clarify that an account holder seeking to prove that what appears to be a joint account is actually an account held in a right and capacity other than joint ownership (for example, as an individual account) must satisfy the requirements of  330.4(a) of the FDIC's regulations (12 CFR 330.4(a)) on the recognition of deposit ownership. Section 330.4(a) provides, in part, that, if the FDIC determines that the deposit account records of an insured depository institution are clear and unambiguous, no other records shall be considered as to the manner in which those funds are owned. Section 330.5(a) of the FDIC's regulations (12 CFR 330.5(a)) already explicitly addresses the situation where more than one natural person has the right to withdraw funds from an account. The proposed amendment applies to situations involving deposits which appear to be jointly owned but are claimed to be held in other rights and capacities. Section 330.6(a) of the FDIC's regulations (Id. at 330.6(a)), which addresses the insurance coverage of agency or fiduciary type accounts, currently indicates that funds deposited by an insured depository institution acting in a fiduciary capacity are governed by  330.10 of the insurance regulations. The second technical revision is a proposed amendment to  330.6(a) to clarify that, starting December 19, 1993,  330.10 will govern only when an insured depository institution is acting as a trustee of an irrevocable trust. As noted above, in May 1993 the FDIC amended  330.10, along with several other sections of the insurance regulations, to implement revisions to the insurance rules made by section 311 of FDICIA (58 FR 29952 (May 25, 1993)). One of those required revisions limits, effective December 19, 1993, the separate insurance (provided for in  330.10) applicable to accounts held by insured depository institutions in fiduciary capacities. The proposed technical amendment would simply cross-reference in  330.6(a) the revision already made to  330.10. Request for Public Comment The Board hereby requests comment on all aspects of the proposed rule, particularly those specifically mentioned above. The Board also solicits comment on whether the capital levels and PCA capital category of an institution should be made a general disclosure requirement in, for example, Call Reports. In this way, existing and prospective employee benefit plan depositors and other interested parties would be able to obtain an official, publicly available financial statement on the institution which clearly indicates this vital information. As noted above, this information is not currently available in any public document. Interested persons are invited to submit written comment during a 60-day comment period. Paperwork Reduction Act The proposed rule is intended to reduce uncertainty about whether employee benefit plan deposits are eligible for "pass-through'' insurance coverage and to require depository institutions to provide timely disclosure to employee benefit plan depositors when "pass-through'' deposit insurance coverage is no longer available. No collections of information pursuant to the Paperwork Reduction Act are contained in the proposed rule. Consequently, no information has been submitted to the Office of Management and Budget for review. Regulatory Flexibility Act The proposed rule would not have a significant impact on a substantial number of small businesses within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq). Accordingly, the Act's requirements relating to an initial and final regulatory flexibility analysis are not applicable. List of Subjects in 12 CFR Part 330 Bank deposit insurance, Banks, banking, Savings and loan associations, Trusts and trustees. The Board of Directors of the Federal Deposit Insurance Corporation hereby proposes to amend part 330 of title 12 of the Code of Federal Regulations as follows: PART 330 DEPOSIT INSURANCE COVERAGE 1. The authority citation for Part 330 continues to read as follows: Authority: 12 U.S.C. 1813(l), 1813(m), 1817(i), 1818(q), 1819(Tenth), 1820(f), 1821(a), 1822(c). 2. Section 330.6 is amended by revising the last sentence of paragraph (a) to read as follows:  330.6 Accounts held by an agent, nominee, guardian, custodian or conservator. (a) * * * When such funds are deposited by an insured depository institution acting as a trustee of an irrevocable trust, the insurance coverage shall be governed by the provisions of  330.10 of this part. * * * * * 3. Section 330.7 is amended by revising paragraph (c) to read as follows:  330.7 Joint ownership accounts. * * * * * (c) Qualifying joint accounts. (1) A joint deposit account shall be deemed to be a qualifying joint account, for purposes of this section, only if: (i) All co-owners of the funds in the account are natural persons; and (ii) Each co-owner has personally signed a deposit account signature card; and (iii) Each co-owner possesses withdrawal rights on the same basis. (2) The requirement of paragraph (c)(1)(ii) of this section shall not apply to certificates of deposit, to any deposit obligation evidenced by a negotiable instrument, or to any account maintained by an agent, nominee, guardian, custodian or conservator on behalf of two or more persons. (3) All deposit accounts that satisfy the criteria in paragraph (c)(1) of this section (including those that come within the exception provided for in paragraph (c)(2) of this section) shall be presumed to be jointly owned unless, in accordance with the provisions of  330.4(a) of this part, the deposit account records of the insured depository institution clearly indicate, to the satisfaction of the FDIC, that the account is owned in some other right or capacity. The signatures of two or more persons on the deposit account signature card or the names of two or more persons on a certificate of deposit or other deposit instrument shall be conclusive evidence that the account is a joint account unless the signature card, the certificate of deposit or other deposit instrument clearly states, to the satisfaction of the FDIC, that there is a contrary ownership capacity. * * * * * 4. Section 330.12 is amended by adding a new paragraph (h) to read as follows:  330.12 Retirement and other employee benefit plan accounts. * * * * * (h) Disclosure of capital status. (1) Disclosure upon request. An insured depository institution shall, upon request, provide written notice to any existing or prospective depositor of employee benefit plan funds of the institution's leverage ratio, Tier 1 risk-based capital ratio, total risk-based capital ratio and prompt corrective action (PCA) capital category, all as defined in the regulations of the institution's primary federal regulator, and whether or not employee benefit plan deposits made with the institution would be eligible for "pass-through'' insurance coverage under paragraphs (a) and (b) of this section. Such notice shall be provided to the depositor within two business days after receipt of the request for disclosure. (2) Disclosure upon opening of account. An insured depository institution shall, upon the opening of any account comprised of employee benefit plan funds, provide written notice to the depositor of the institution's PCA capital category and whether or not such deposits are eligible for "pass-through'' insurance coverage. (3) Disclosure by adequately capitalized institutions. Whenever an insured depository institution receives notice or is deemed to have notice (under the PCA regulations issued by the institution's appropriate federal banking agency, as defined in section 3(q) of the Act (12 U.S.C. 1813(q)) that its PCA capital category has been reduced from "Well Capitalized'' to "Adequately Capitalized'', the institution shall provide written notice to all depositors of employee benefit plan funds of the institution's new PCA capital category and whether or not new, rolled-over or renewed employee benefit plan deposits would be eligible for "pass-through'' insurance coverage under paragraphs (a) and (b) of this section. Such notice shall be provided within two business days after the institution receives notice or is deemed to have notice of such a reduction in its PCA capital category. (4) Disclosure by undercapitalized institutions. Whenever an insured depository institution receives notice or is deemed to have notice (under the PCA regulations issued by the institution's appropriate federal banking agency, as defined in section 3(q) of the Act (12 U.S.C. 1813(q)) that its PCA capital category has been reduced from either "Well Capitalized'' or "Adequately Capitalized'' to a category below "Adequately Capitalized'', it shall provide written notice to all existing depositors of employee benefit plan funds of its new PCA capital category and that new, rolled-over or renewed deposits of employee benefit plan funds made on or after the date the institution's capital category was reduced to a category below adequately capitalized would not be eligible for "pass-through'' insurance coverage. Such written notice shall be provided within two business days after the institution receives notice or is deemed to have notice of such a reduction in its PCA capital category. (5) Definition of "employee benefit plan''. For purposes of this paragraph, the term employee benefit plan has the same meaning as provided under paragraph (g)(1) of this section but also includes any eligible deferred compensation plans described in section 457 of the Internal Revenue Code of 1986. By order of the Board of Directors. Dated at Washington, DC, this 30th day of November, 1993. Federal Deposit Insurance Corporation. Robert E. Feldman, Deputy Executive Secretary. [FR Doc. 93Ä29877 Filed 12Ä7Ä93; 8:45 am] BILLING CODE 6714Ä01ÄP