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, 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. and First National Bank of Santa Fe, in New Mexico. It is also the largest institution and the first east of the Mississippi.

The CD has been indirectly approved by the FDIC and the Office of the Comptroller of the Currency, which didn't object after Blackfeet first announced in late 1993 that it would offer the account.

But the product is under fire from Congress and state insurance commissioners in Florida and New Mexico. They argue it is really an annuity, shouldn't be federally insured, and violates state laws restricting banks from offering annuities.

Rep. John D. Dingell (D-Mich.) introduced a bill last year to expand state insurance powers to effectively bar the sale of the CD. Sen. Alfonse D'Amato (R-N.Y.) and Sen. Christopher Dodd (D-Conn.) also have proposed legislation to strip the product of the FDIC protection. The D'Amato bill is expected to pass because of his new clout in the Senate.

And the two state commissioners have filed suit to prevent Blackfeet and First National, respectively, from selling the CD in their states.

National has not been notified of concerns or pending action by the Pennsylvania Insurance Department, Mr. Glass said. But officials are aware of the possibility of state action.

"We certainly have talked about it since there has been some action in other states," he said. But "we're not sure that would take place."

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