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#1404604 - 06/16/10 07:51 PM Overdrawn Checking Account Charged Off To ALL
hawksfan Offline
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Joined: Mar 2004
Posts: 114
Iowa/Illinois
I swear I remember reading something, sometime ago that you cannot write off overdrawn checking accounts through the Allowance for Loan Loss. However, I don't remember much more than this.

Do you know if this is ok? Or if its not, why its not?

Thanks!!!

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Audit
#1404768 - 06/17/10 12:55 PM Re: Overdrawn Checking Account Charged Off To ALL hawksfan
KYAuditor Offline
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KYAuditor
Joined: Jan 2003
Posts: 138
Kentucky
We run all our DDA charge-offs and recoveries through the ALLL. We have a separate account on our general ledger for the DDA allowance, but it is combined with the ALLL for call reporting.
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#1405883 - 06/18/10 10:14 PM Re: Overdrawn Checking Account Charged Off To ALL KYAuditor
davidm Offline
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davidm
Joined: Mar 2003
Posts: 119
Texas
Our examiners (OCC) recently told us that we should be charging overdrawn accounts to the ALLL per GAAP requirements. Our external auditor's deemed the amount immaterial as were taking the write-off to operational losses. However, we have begun charging to the ALLL.

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#1405893 - 06/18/10 11:17 PM Re: Overdrawn Checking Account Charged Off To ALL davidm
califgirl Offline
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califgirl
Joined: Mar 2002
Posts: 2,355
The O.C., California
Overdrafts are loans, therefore they should be charged off to the ALLL.
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#1405905 - 06/19/10 01:47 PM Re: Overdrawn Checking Account Charged Off To ALL califgirl
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,293
Galveston, TX
Not only that, but unplanned overdrafts in which the account has been continuously overdrawn for more than 30 days or more must be reported as past due loans on schedule RC-N.

While charging ODs to ALLL has been under GAP for some time, many banks were taking it to operating losses. The regulators reiterated the proper way to handle OD charge-offs in the 2005 OD guidance document:

"With respect to the reporting of income and loss recognition on overdraft protection programs, institutions should follow generally accepted accounting principles (GAAP) and the instructions for the Reports of Condition and Income (Call Report), and NCUA 5300 Call Report. Overdraft balances should be reported on regulatory reports as loans. Accordingly, overdraft losses should be charged off against the allowance for loan and lease losses."
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#1413899 - 07/12/10 04:15 PM Re: Overdrawn Checking Account Charged Off To ALL rlcarey
MyKidsMom Offline
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MyKidsMom
Joined: May 2004
Posts: 636
TEXAS
But, should OD fees be charged-off to the ALLL or reversed against fee income?

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#1416208 - 07/16/10 07:42 PM Re: Overdrawn Checking Account Charged Off To ALL MyKidsMom
Passing storm Offline
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Joined: Aug 2005
Posts: 111
Here and Now
The guidance says institutions may charge off uncollected overdraft fees against the ALLL if such fees are recorded with overdraft balances of loans and estimated credit losses on the fees are provided for in the ALLL
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