2 Transaction Accounts What is a transaction account? Transfers or Withdrawals through:ATMsChecksDebit CardsUnlimited amount of transactionsUnlimited amount of transactions as opposed to savings and time deposits which will be covered later
3 Transaction Accounts Always regarded as transaction accounts: Demand DepositsNOW AccountsShare Draft AccountsATS (automatic transfer service) Accounts**Share draft accounts is a share account from which funds may be withdrawn or transferred to third parties by issuance of a negotiable or transferable instrument or other order.**** Similar to checking accounts, but held at credit unions.
4 Line A1C (Other Demand Deposits) Include deposits held for :Individuals, Partnerships, Corporations, State & Local GovernmentsForeign Governments and International InstitutionsUS Government Agencies
5 Line A1C (Other Demand Deposits) Include:Official ChecksCashier’s ChecksTeller’s ChecksMoney OrdersTraveler’s Checks or Teller’s Checks whose funds have not clearedSee page 14 & 15 of 2900 instructionsGive the difference between cashiers and travelers checks page 32 #4Cashier’s checks have no float b/c written on D1Teller’s checks have float because they’re payable through a 3rd party.Cashiers checks do not go through travelers expressPrimary Obligations mature or are demandable in less than seven days
6 Line A1C (Other Demand Deposits) Primary ObligationsMature/Demandable in less than 7 daysMoney Orders drawn on the bank and outstanding on the report dateUnposted CreditsSuspense AccountsTime deposits-must meet Reg. D requirements (simple interest and seven days) Page 33 #13
7 Line A1C (Other Demand Deposits) Escrow AccountsWithdrawn within 6 days from date of depositNot qualifying non-transaction accountsTime depositsEarly withdrawalMaturedSavings accounts which allow transaction limits to be exceededOnly include those escrow accounts setup as transaction accountsPage 17Refer to Treatment of Trust Funds
8 Line A1C (Other Demand Deposits) Exclude:Escrow Funds held in DI’s Trust DepartmentOverdrawn Accounts (report as zero)Deposits due to Depository Institutions (A1a)Deposits due to U.S. Government (A1b)Savings Deposits (C1)Time Deposits (D1/F1)
9 Line A1C (Other Demand Deposits) Common reporting errors:Reporting Overdrawn AccountsFailure to reportUnposted CreditsSuspense AccountsOfficial ChecksOfficial checks such as traveler’s checks, money orders, cashier’s checks, teller’s checks)
10 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers)
11 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) Include:Interest Bearing Checking Accounts (NOW)Automatic Transfer Service Accounts (ATS)Telephone and Preauthorized Transfer AccountsShare Drafts (for Credit Unions)Meet the definition of a time depositAllow payments to be made by third-partiesDebit CardsATM’sRemote Service UnitNOW accounts should not be confused with NINOW accounts which go in A1C and do not require advanced notice of withdrawal.
12 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) Eligible to hold NOW accounts:Individuals or Sole ProprietorshipsNonprofit OrganizationsDomestic Government UnitsIOLTAAs long as institution reserves right to require 7 days advance notice.Nonprofit organizationsPhilanthropicReligiousEducationalPolitical;Ineligible organizations which have been permitted to deposit funds into a NOW account that is held in connection with an IOLTA
13 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) Automatic Transfer Service Accounts (ATS)Overdraft protectionAutomatic payments to reporting institutionTransfers made to an account to cover checks or drafts drawn on the reporting institutionTransfers made to maintain a minimum account balanceThese are only for individuals and sole proprietorships2nd bullet: these are NOT transfers to 3rd partiesPROVIDE A VERBAL DECRIPTION OF AN ATS AND BULEET THE REST
14 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) Oral or Written ArrangementUnlimited WithdrawalsPredetermined Time or on a Fixed ScheduleExample: Automatic bill payment services offered by the reporting institution.Oral/written between reporting institution and account holder to pay a 3rd partyThis contrasts with ATS accounts because those do not include transfers to 3rd parties
15 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) Share Draft AccountsInterest and Non-Interest bearing accountsWithdrawable on demandCredit Union reserves the right to require up to 60 days prior notice of withdrawalInclude only member accounts. Do not credit union’s account at another credit union. This goes in B1.
16 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) Common reporting errors:Including ineligible non-personal accountsIncluding transaction accounts that do not require advance written notice of withdrawalIncorrect GL mapping into/out of A2Corporate accounts are the biggest example of ineligible accounts, businesses are not allowed to receive interest on checking accounts. Incorrect GL mapping: Including accounts that should be in A1C or C1 in A2 or including accounts that should be in A2 in line A1C or C1
17 Line A2 (ATS, NOW/Share Drafts, and Telephone and Preauthorized transfers) IMPORTANTAccount terms and disclosures must state that the institution reserves the right to require 7 days advance written notice of withdrawal. While these rights may not be exercised, not having them in the terms disqualifies them from being included in line A2.
18 Where do these accounts go? Line ItemAccount HolderA2IOLTA Checking AccountA1cQuality Inc. Checking AccountJane Doe’s overdrawn checking accountA1c/A2Girl Scouts interest bearing checking accountA2Lisa’s share draft account at ZY Credit UnionA2
19 Things To Consider Line A1c or Line A2 Interest Bearing/ Non-Interest BearingAdvance Notice of WithdrawalAccount Disclosures/TermsLine A1c or Line A2Type of FinancialInstitutionAccount HolderGeneral Ledger
21 Legitimate Differences Savings and Loans FR2900>OTS 1313Primary ObligationsTellers ChecksFR2900<OTS 13132900 excludes escrow accounts that DI keeps properly segregated as trust funds.
22 Legitimate Differences Credit Unions FR2900>NCUA 5300Share Draft accounts that exceed transaction limits or are not monitoredFR2900<NCUA 53002900 excludes balances at non-US branches of the credit union#1- these are included as share accounts on call