Change in Customer Statement Presentment

Soon after September 11, 2001, The Federal Reserve, President Bush, and Congress accelerated an existing piece of legislation, which is changing check processing for the first time in decades. Under this new Federal Law known as Check 21 (The Check Clearing for the 21st Century Act) a new instrument will be introduced called a substitute check which will be regarded as the legal equivalent as the original check. The main goal of Check 21 legislation, which became effective October 2004, is to improve the overall efficiency and security of the nation's payment system.

This new program will have significant benefits to the customer, the bank, and the economy. It will eventually lead to a paperless transaction clearing process through out the Nation, which will most noticeably lead to the truncation of the customers checks.

In other words, the customer will not receive any of their original checks back in their monthly statement. If the customer desires a copy of an original check, a bank generated image of a check or a substitute check will take the place of the original check when presented as legal proof of payment. We will continue to send our customers a free monthly transcript (no checks) statement; however, due to Check 21 and the eventual truncation of checks nationwide, there will be a charge for a statement with check images.

Since 1998, the use of checks has been on the decline, and electronic forms (debt cards, ACH, etc) of payments have been increasing. The electronic form of payments surpassed the number of checks written, in the 3rd quarter of 2004. The Citizens Bank of East Tennessee, as well as other banks, must comply with Check21 operationally and thru technological changes. These changes benefit both the customers and the banks, in helping to reduce fraud, reduce float, and increase efficiency.