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#32252 - 09/11/02 07:02 PM Fee Income audit
Walleye Woman Offline
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Walleye Woman
Joined: Jul 2002
Posts: 832
We are charging bad checking accounts back to the income account. I always thought that overdrawn deposit accounts were considered loans and should be charged against reserves. Does anyone have any ideas?
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Marilyn, CRCM

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Audit
#32253 - 09/11/02 07:18 PM Re: Fee Income audit
Neytiri Offline
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Neytiri
Joined: Jul 2002
Posts: 645
Pandora
We charge ours off to NSF fees because that is what our overdrafts are; we pay NSF checks and overdraw accounts only if the customer has sufficient funds in another deposit account to cover and if they have had no prior NSFs. Have you checked to see if this is the case at your bank?

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#32254 - 09/11/02 07:35 PM Re: Fee Income audit
Lestie G Offline

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Joined: May 2002
Posts: 3,605
Near the Land of Enchantment
The amount of NSF fees, service charges, OD charges, etc. should be subtracted from the total amount to be charged off. Those fees should be offset against non-interest income. The remainder should be charged against the reserve because, as you said, it's an extension of credit.
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#32255 - 09/11/02 07:37 PM Re: Fee Income audit
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 77,285
Galveston, TX
A loss on a checking account is an operational loss and is taked directly from the bottom line. You should not be charging checking account losses against your loan loss reserves.
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#32256 - 09/11/02 08:24 PM Re: Fee Income audit
Lestie G Offline

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Joined: May 2002
Posts: 3,605
Near the Land of Enchantment
I guess you learn something new every day! I did a little checking, and according to OCC guidance, you can do it either way. I was 'brought up' in banking to believe it had to be charged against the reserve, and maybe that's because the first bank I worked for had a large volume of charged off deposit accounts - the regulators probably made them start reserving for that loss.
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#32257 - 09/11/02 09:25 PM Re: Fee Income audit
Walleye Woman Offline
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Walleye Woman
Joined: Jul 2002
Posts: 832
Thanks for all the help. I guess we'll keep doing it the way we have as we do not have to charge off very much.
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Marilyn, CRCM

I'd rather be fishing.


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#32258 - 09/13/02 12:04 AM Re: Fee Income audit
Tina A Sweet Offline
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Tina A Sweet
Joined: Aug 2001
Posts: 1,033
Marysville, Ca.
My opinion, take it or leave it, would be if you are obtaining a substantial amount of dollars in od accounts, you should apply to them your loan loss reserves.
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Tina A Sweet-Williams
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