Earnings Credit Calculation

Credit will be determined by using the previous month’s average 91-day Treasury bill rate and applying the rate to the monthly average collected balance, less Federal Reserve requirements.  The following illustration assumes there is $40.00 of activity fees on your account, with an earnings credit of 6% and a Federal Reserve requirement of 10%.

Average Collected Balance  
Less Reserve Requirement (10%) 
Equals Average Investible Balance
Net Earnings Credit (6%)
Activity Fee
Less Earnings Credit 
Equals Monthly Activity Fee charged to account


Definitions Used in Calculating Earnings Credit:

Average Collected Balance: The total collected daily balances divided by the number of days in a statement cycle.

Federal Reserve Requirement: Federal regulations require banks to hold a percentage of funds on deposit deducted from the average collected balance.

Average Investable Balance: The balance remaining after the reserve requirement is subtracted from the average collected balance.  The earnings credit rate is applied to this amount.

Earnings Credit: A non-cash credit applied to your business checking account that may only offset service charges.