Under what section of Regulation DD can I cite a violation for having an inaccurate Average Ledger Balance on the periodic statement. We know that it is needed to verify the APY. The APY and the interest paid is correct, it's only the Average Ledger Balance that is not.

thanks,

Where is it that you found the requirement to disclose an average ledger balance?

I couldn't find a requirement to disclose it but if we do disclose it, shouldn't it be correct? Would it be UDAAP for not properly disclosing something to the consumer?

thanks,

Why would you want to disclose the average ledger balance?

Honestly, I'm not sure...it's always been disclosed. It's used to verify the APY by our auditors and examiners.

So if we don't disclose it, how would auditors verify the APY?

Will it be a violation for not disclosing accurate information? or just write it up as a comment so Management can decide what action to take to correct it?

thanks,

Section 1030.6 reflects the required disclosures on a periodic statement. The "average ledger balance" is not a required disclosure and the more correct term under Regulation DD would be the "average daily balance" if that's how you calculate interest.

Regardless, just as you say, if you are going to disclose it then it certainly should be correct. It should be mentioned as needing correction, but internal auditors should be reluctant to describe anything as "unfair" or "deceptive" unless they are pointing to a precedent involving the same practice.

You do not want to plant a seed that might grow...

thank you

If we remove the Average Ledger balance and the Average collected balance from the periodic statements, we would have to let the OCC APYWIN program to compute it by entering balance for every day, correct?

thanks,

Yes, again assuming that your are paying on the average daily balance, not the daily balance itself.

Just curious. Is your bank actually paying some accounts on the collected balance?

Doing so requires a documented periodic review of the speed at which your items clear and ongoing adjustments based on that information. The only banks I know of that have done it eventually got in hot water with the regulators and discontinued it. Moreover, the current time value of money today simply doesn't merit the effort.

Interest is accruing on collected balance.

Where can I find information on this so we can look into it.

thanks,

You're making me nervous.

Regulation DD cross references Reg CC at 229.14 regarding when funds must begin to earn interest. In essence, if you are going to delay interest accrual until you have good funds, it must be based on your institution's actual clearing arrangements, not an arbitrary time frame. Regulation CC dates back to 1988. In the intervening years the clearing system has accelerated. Moreover, your bank may have changed its actual clearing arrangements.

So, even a valid, documented calculation of average collection times has a limited life expectancy.