Maintain Dividend Rates

System Management System Management Maintain Dividend Rates

This document provides technical guidance for using the “Maintain Dividend Rates” function within the FLEX system. This feature allows users to manage and update dividend and loan rates for various account types.

1. Overview

The “Maintain Dividend Rates” program is a central utility for managing rates across Shares, Certificates, and Loans within the FLEX Main Menu. Regardless of the menu path taken to access it (Shares, Certificates, or Loans), the program interface and functionality remain consistent.

2. Accessing Maintain Dividend Rates

The “Maintain Dividend Rates” option can be found under the following menus in the FLEX Main Menu:

  • Shares
  • Certificates
  • Loans

3. Share Rates Tab

The “Share Rates” tab displays all share types configured with their respective rates.

3.1. Share Rates Tab Fields

The Share Rates tab provides the following information for each share type:

  • Type: Unique identifier for the share type.
  • Description: A brief description of the share type.
  • Dividend Rate: The current dividend rate.
  • APY: Annual Percentage Yield.
  • Dividend Method Frequency Code: Code indicating the method and frequency of dividend calculation.
  • Minimum Balance: The minimum balance required for the account.

3.2. Actions on Share Rates

Highlighting an existing share type allows users to perform the following actions:

  • View: Display current share rates.
  • Copy: Duplicate an existing share rate record.
  • Edit: Modify an existing share rate record.
  • Delete: Remove an existing share rate record.
  • Add: Create a new share rate record.

3.3. Edit Share Rate Details

When adding or editing a share rate, the following fields are available:

  • Type: (Read-only for existing records)
  • Description: (Read-only for existing records)
  • Method Code: Selects the method for rate calculation.
    • Truth In Savings (TIS) Covered Codes:
      • 1: Single rate NCUA rollback
      • 2: Tiered rate NCUA rollback
      • 3: Multi-rate NCUA rollback
      • 4: Single rate no NCUA rollback
      • 5: Tiered rate no NCUA rollback
      • 6: Multi-rate no NCUA rollback
      • 7: Single rate based on daily balance
      • 8: Tiered rate based on daily balance
      • 9: Multi-rate based on daily balance
      • 10: Single rate based on average daily balance
      • 11: Tiered rate based on average daily balance
      • 12: Multi-rate based on average daily balance
    • Note: Codes 1-6 are invalid for types covered by Truth In Savings.
  • Single Rate:
    • Enter the Annual Percentage Rate (APR).
    • Click Unlock APY to enter the Annual Percentage Yield (APY) directly.
    • The system automatically calculates the corresponding APR/APY.
  • Posting Frequency: Select how often dividends will post.
  • Consider Holds: Indicates if hold amounts in the balance are used for calculation (Yes/No).
  • Minimum Balance: The minimum balance required to earn dividends. This is distinct from the minimum balance to maintain the account.
  • Daily/Accrual Compounding:
    • No Compounding: Dividends are not compounded, except if they pay back to the share account when paid.
    • Daily Compounding: Dividends are compounded daily.
    • Accrual: Compounding is based on the accruing frequency.
  • Min Dividend Amt For Payment: The minimum dividend amount required for payment.
  • Accruing Frequency: Selects the frequency of accruing dividends.
    • Caution: If Posting Frequency is quarterly and Accruing Frequency is monthly, the system calculates dividends monthly and inserts them into memo interest. The total accrued dividend (including previous months’ memoed interest) posts in the third month. Ensure dividend rates are correct monthly in such cases. For credit unions declaring rates just before quarter-end and paying quarterly, Accruing Frequency should be quarterly.
  • Effective Date: The date when the dividend will pay to accounts.
  • Withholding %: The percentage rate used for backup withholding, if applicable.

3.4. Split and Tiered Dividend Rates and Account Balance Breaks

These fields become active if a tiered or multi-rate method is selected in the Method Code field.

  • Defining Levels:
    • The 1st Balance Break MUST always be 0.01.
    • The system considers the Minimum Balance along with the first balance break.
  • Tiered Rate Interpretation:
    • The first rate applies to balances between the 1st and 2nd balance break (considering minimums).
    • Subsequent rates apply to balances between their respective balance breaks (e.g., 2nd rate for balances between 2nd and 3rd balance break).
  • Multi-Rate Interpretation:
    • The 1st rate applies to balances up to the 2nd break level.
    • Balance breaks define the starting balance for the next rate.
    • Each subsequent rate applies to its defined balance range.

3.5. Miscellaneous Tab (Share Rates)

This tab contains fields for calculating dividends for shares not covered by Truth in Savings regulations.

  • Share Increment Amount: If dividends are calculated on share increments, enter the increment amount here.
  • Cut Off Day: Indicates the day of the month by which funds must be deposited to be eligible for dividends for that month.
    • Example: If 10 is entered, a deposit made on the 15th will not earn dividends for the month of deposit.
  • Minimum Balance Code: Determines how dividends are calculated if the minimum balance is not met during the entire dividend period.
    • 1: Dividends are forfeited only for the days the balance is below the minimum.
    • 2: Dividends are forfeited for the entire dividend period if the balance ever drops below the minimum.

4. Certificate Rates Tab

The “Certificates” tab displays all certificate types in the system, along with their rates and APY.

4.1. Global and Bonus Rates (Certificates)

  • The bottom panel shows any global rates that apply to all certificate types.
  • Bonus rates automatically provide a renewing certificate a higher rate than the base rate, based on balances.
  • Global options set here apply to all certificate types.
  • Bonus rates can also be assigned to individual certificate types.

4.2. Actions on Certificate Rates

Similar to Share Rates, highlighting an existing certificate type allows users to:

  • View: Display current certificate rates.
  • Copy: Duplicate an existing certificate rate record.
  • Edit: Modify an existing certificate rate record.
  • Delete: Remove an existing certificate rate record.
  • Add: Create a new certificate rate record.

4.3. Certificate Rate Details

When adding or editing a certificate rate, the following fields are available:

  • Rates:
    • Enter the APR or click Unlock APY to enter the APY.
    • The system calculates the corresponding value automatically.
  • Where to Pay: Indicates the default payment destination for dividends when posted. This can be changed at the member level.
    • 1: Pay back to the current certificate.
    • 2: Close the certificate and transfer to shares. (Share account and suffix can be defined in Certificate Maintenance at the member level).
    • 3: Generate a check. (Pay To information is in Certificate Maintenance at the member level).
  • Variable Rate Code: Stores the default variable rate code associated with the certificate type, if applicable.
  • Days/Year: The number of days in the year used for dividend calculation.
  • Dividend Frequency: The default frequency for dividend payments. This can be changed at the member level.
  • Daily Compounding: If checked, dividends will be compounded daily. (This increases APY and is not a common option).
  • Use Dividend or Interest: Indicates whether “dividend” or “interest” will appear on the member’s statement.
  • Federal/State Withholding Rate: For IRA certificates, this sets the default percentage rate(s) for Federal and/or State withholding. The system-calculated amount can be changed or waived by a teller during a transaction.

4.4. Certificate Bonus Rates (Specifics)

  • Bonus rates provide a higher rate for renewing certificates based on balances.
  • The process for adding bonus rates is the same whether applied globally or by type.
  • Adding Bonus Rates:
    • Start with the lowest balance first.
    • The system automatically assigns the To Balance based on the next bonus rate added.
    • Enter the From Balance and Bonus Rate.
    • Click Save.
  • Managing Existing Bonus Rates: Highlighting an existing bonus rate allows users to copy, edit, or delete the record.

5. Loan Rates Tab

The “Loan Rates” tab displays all loan types configured within the system.

  • Viewing Only: This tab is for viewing purposes only.
  • No Editing or Maintenance: No editing or maintenance of loan rates can be performed directly on this screen.
  • Loan Type Configuration: If rates need to be assigned to a loan type, this must be done through the Loan Type Configuration module.