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#1211640 - 07/02/09 08:14 PM Deposit Account Audit
ramelton35 Offline
New Poster
Joined: Jun 2009
Posts: 12
I recently audited our Deposit Accounts and found that we are using the collected balance to accrue interest on our accounts. First of all is this appropriate? Reg. DD says you must give credit on a deposit the same day your institution recieves provisional credit. But when using the collected balance a foreign check is not included in the collected balance. We recieve provision credit the same day through our correspondent bank. Are we wrong in using the collected balance? Our disclosure says we use the daily balance method. Are we in compliance with our disclosure. I also found the specifications are using the parameter if the average balance is equal to or greater than $100 then a fee will not be imposed. Regulation DD also states that, “the same balance method to calculate interest that is used to calculate the minimum balance for the account”. Since it is using the average balance to calculate the minimum and supposedly the daily balance method to calculate the interest is this out of compliance as well?

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#1212837 - 07/06/09 04:14 PM Re: Deposit Account Audit ramelton35
DownSouth1 Offline
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Joined: Jul 2005
Posts: 24
KY
The commentary to Reg DD 230.7(c)2. says that use of the collected balance to accrue interest on accounts is appropriate as long as you are giving your customers credit for their deposits in accordance with Reg CC 229.14.

My bank also pays interest on the collected balance - never have had any questions or problems with it from the regulators.

As far as your question on fees goes, the section you are referring to in Reg DD is addressing interest calculations, not fees. 230.7 says that you must use the same method to determine any minimum balance required to earn interest as you use to determine the balance on which interest is calculated.

If you will look in the commentary (Section 230.7(a)(2)7.), it says banks can use other methods for purposes not related to interest payment calculations:

7. Minimum balances not affecting interest. Institutions may use the daily balance, average daily balance, or any other computation method to calculate minimum balance requirements not involving the payment of interest--such as to compute minimum balances for assessing fees.

I think your bank is ok on both areas.

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#1216034 - 07/10/09 08:10 PM Re: Deposit Account Audit DownSouth1
BrendaC Offline
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BrendaC
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
You need to verify what drives your "collected balance". If it is your proof sort table, test to make sure that balances are updated in accordance with when the bank receives credit for funds. Reg CC requires bank to begin accruing interest on interest-bearing accounts not later than the day on which the bank receives credit for the funds deposited. If you getting credit the next day, but not updating your account collected balances, you are in violation.

Also, make sure you are not impacting the collected balance with other parameters that may exist in your system (such as cash back on split deposits). I've seen that happen.
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#1217221 - 07/14/09 09:33 PM Re: Deposit Account Audit BrendaC
ramelton35 Offline
New Poster
Joined: Jun 2009
Posts: 12
We recieve provisional credit the day the customer makes the deposit from our correspondent bank, but it appears that when a customer makes a non-on-us check deposit that the collected balance does not reflect the non-on-us deposit even though we recieve provisional credit. So are we in violation of Reg. DD? As far as I know we are in compliance with Reg. CC.

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