Calculating Dividends Using DOD/DOW

Related Topics

Date of deposit/date of withdrawal (DOD/DOW) calculates dividends on each day's balance. Portico keeps a separate internal record for every day that a share account balance changes. Before a deposit or withdrawal is processed, Portico calculates the dividend on the current balance. If the account is overdrawn resulting in a negative balance, the balance for that day is considered to be 0.00 for the purpose of dividend and APYE calculations.

If the dividend calculation method is DOD/DOW, zeros (0.00) appear in the January - December fields Shares - Activity tab.

How It Works

If an account has had activity, a rate change or a dividend method change, Portico will calculate the daily dividend amount on the new share balance and update the Accumulated Balance field in the Dividends group box on the Shares - General tab. The Next Calculation Start Date field displays the first day that will be included in the next calculation for the period.

Portico calculates the daily dividend amount using the date in the Next Calculation Start Date field and the effective date of the transaction. The dividend is based on the number of days between the date in the Next Calculation Start Date field and the effective date of the transaction.

Portico uses the following formula to calculate the dividend amount for each different ending balance during the dividend period:

(Number of Days) x (Balance) x (Rate)/(365 or 366) = Dividend Amount for Specified Balance

For example: 2 x 150.00 x .03/365 = .0246575

Portico adds the calculated amount to the Accumulated Balance field and changes the date in the Next Calculation Start Date field to the next processing date. For example, assuming that the dividend rate is 3%, the following table shows the calculation used to arrive at the daily dividend amounts:

Effective Date Transaction Amount Balance Computation Daily Dividend Amount
01/01/16   150.00    
01/03/16 - 25.00 125.00 2 x 150.00 x .03/365 = .0246575 .0246575
01/10/16 + 40.00 165.00 7 x 125.00 x .03/365 = .0719178 .0965753
01/25/16 - 50.00 115.00 15 x 165.00 x .03/365 = .2034246 .2999999
01/29/16 + 100.00 215.00 4 x 115.00 x .03/365 = .0378082 .3378081
01/31/16   215.00 3 x 215.00 x .03/365 = .0530136 .3908217

Portico carries out dividend calculations to seven positions past the decimal point and rounds to the nearest penny (.3908217 becomes .39). Portico will post a dividend of $.39 to the member's account effective 01/31/16 or 02/01/16 depending on the option selected in the Dividend Effective Date field on the Credit Union Profile - Credit Union tab.

While dividend calculations for DOD/DOW and ADB methods with a flat rate differ, the end results are the same. Differences in the calculation only occur if daily compounding or rate option 5 or 6 is used.

Manually Calculating DOD/DOW Dividends

To manually calculate a member's dividend, using the member's statement if the effective date is printed on the statement or the transaction history, collect the following information:

  • The beginning and ending dates of the dividend period.
  • The effective date of each transaction occurring during the dividend period.
  • The different daily ending balances during the dividend period.
  • The dividend rate(s) and plateau balances.
  • The rate option.
  • The number of days in the year.
  • Any special processing options for the share type as specified on the Share Profiles tabs.

Complete the following steps to calculate the dividend:

  1. Determine the last time dividends were paid on the account.
  2. Determine if the account had different daily ending balances during the period.
  3. Determine the number of days from the last time dividends were paid to the first time the activity on the account resulted in a different ending balance.
  4. Determine the number of days between each different daily ending balance.
  5. Calculate a dividend amount for each different daily ending balance.
  6. Add the dividend amounts together to arrive at the total dividend amount for the period.

For example, member 2212003 last received dividends on 12/31/15. The member made several cash deposits and withdrawals during the month of January 2016. The dividend flat rate for the share type is 3%. Dividends are calculated and posted monthly. No special dividend processing options such as minimum daily balance for dividends apply. The activity on the member's account occurred as follows:

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
01/01/16 0   150.00
01/03/16 2 -25.00 125.00
01/10/16 7 +40.00 165.00
01/25/16 15 -50.00 115.00
01/29/16 4 +100.00 215.00
01/31/16 3   215.00

Complete the following calculations to arrive at the total dividend amount of $.39 for the period 01/01/16 through 01/31/16:

  1. 2 x 150.00 x .03/365 = .0246575
  2. 7 x 125.00 x .03/365 = .0719178
  3. 15 x 165.00 x .03/365 = .2034246
  4. 4 x 115.00 x .03/365 = .0378082
  5. 3 x 215.00 x .03/365 = .0530136
  6. .0246575 + .0719178 + .2034246 + .0378082 + .0530136 = .39082017 or .39

DOD/DOW Calculation Examples

Dividend calculations can vary depending on the processing options selected on the Share Profiles tabs for the share type, the type of activity that occurred for the member, and when the activity occurred. The following examples are designed to show you how to calculate dividends based on different dividend processing options and account activity scenarios.

Example 1 - Multiple Transactions on the Same Day

During the month of February member 2212003 made several deposits and withdrawals, some on the same day, to the share type 01 account.

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
02/01/16 0   215.39
02/15/16 14 +4500.00 4715.39
02/15/16 0 -3000.00 1715.39
02/25/16 10 +500.00 2215.39
02/28/16 3 -1000.00 1215.39
02/28/16 1   1215.39

The following processing options were selected on the Share Profiles tabs:

Last Dividend Date Next Dividend Date Dividend Frequency Dividend Method Rate Option Minimum Balance for Dividends Rate 1 Balance 1 Pay Dividends on Closed Accounts
01/31/16 02/28/16 Monthly C O 0.00 3.000 00000 Yes

Complete the following calculations to arrive at the total dividend amount of $2.30 for the period 2/01/16 through 2/28/16.

  1. 14 x 215.39 x .03/365 = .2478460
  2. 10 x 1715.39 x .03/365 = 1.4099095
  3. 3 x 2215.39 x .03/365 = .5462605
  4. 1 x 1215.39 x .03/365 = .0998950
  5. .2478460 + 1.4099095 + .5462605 + .0998950 = 2.3039110 or 2.30

Example 2 - No Activity for the Dividend Period

Member 2212003 had no activity on the share type 01 account during the month of March.

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
03/01/16 0   1217.69
03/31/16 31   1217.69

The following processing options were selected on the Share Profiles tabs:

Last Dividend Date Next Dividend Date Dividend Frequency Dividend Method Rate Option Minimum Balance for Dividends Rate 1 Balance 1 Pay Dividends on Closed Accounts
02/28/16 03/31/16 Monthly C O 0.00 3.000 00000 Yes

Complete the following calculation to arrive at the total dividend amount of $3.10 for the period 3/01/16 through 3/31/16:

31 x 1217.69 x .03/365 = 3.1026073 or 3.10

Example 3 - Plateau Rates and Balances

During the month of January member 2212003 made several deposits and withdrawals to the share type 75 account. Share type 75 has three plateau rates.

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
01/01/16 0   150.00
01/03/16 2 +55.00 205.00
01/10/16 7 -60.00 145.00
01/23/16 13 +200.00 345.00
01/31/16 9   345.00

The following processing options were selected on the Share Profiles tabs:

Last Dividend Date Next Dividend Date Dividend Frequency Dividend Method Rate Option Minimum Balance for Dividends Pay Dividends on Closed Accounts
12/31/15 01/31/16 Monthly C 0 0.00 Yes
Rate 1 Balance 1 Rate 2 Balance 2 Rate 3 Balance 3  
5.000 00200 6.000 00300 7.000 00000  

Complete the following calculations to arrive at the total dividend amount of $1.13 for the period 01/01/16 through 01/31/16:

  1. 2 x 150.00 x .05/365 = .0410958
  2. 7 x 205.00 x .06/365 = .2358904
  3. 13 x 145.00 x .05/365 = .2582191
  4. 9 x 345.00 x .07/365 = .5954794
  5. .0410958 + .2358904 + .2582191 + .5954794 = 1.1306847 or 1.13

Example 4 - Minimum Balance for Dividends

The processing options for share type 05 show that dividends will not be paid for any day in which the member's balance is less than or equal to $100.00. Member 2212003 brought this account below the minimum one time during the month. The activity on the member's account occurred as follows:

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
01/01/16 0   150.00
01/10/16 9 -50.00 100.00
01/12/16 2 +0.50 100.50
01/31/16 19 +200.00 300.50
01/31/16 1   300.50

The following processing options were selected on the Share Profiles tabs:

Last Dividend Date Next Dividend Date Dividend Frequency Dividend Method Rate Option Minimum Balance for Dividends Pay Dividends on Closed Accounts
12/31/15 01/31/16 Monthly C 0 0.00 Yes
Rate 1 Balance 1 Rate 2 Balance 2 Rate 3 Balance 3  
0.000 00100 3.000 00000 0.000 00000  

Complete the following calculations to arrive at the total dividend amount of $.29:

  1. 9 x 150 x .03/365 = .1109589
  2. 2 x 0.00 x .03/365 = .00
  3. 19 x 100.50 x .03/365 = 0.1569452
  4. 1 x 300.50 x .03/365 = .0246986
  5. .1109589 + .1569452 + .0246986 = .2926027 or .29

Example 5 - Quarterly Dividend Calculation

The following table displays the member's activity for the first quarter of 2016:

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
01/01/16 0   215.00
01/15/16 14 +4500.00 4715.00
01/15/16 0 -3000.00 1715.00
01/25/16 10 +500.00 2215.00
01/28/16 3 -1000.00 1215.00
01/31/16 0   1215.00
02/01/16     1215.00
02/10/16 13 -1215.00 0.00
02/12/16 2 -1.00 -1.00
02/28/16 16 +200.00 199.00
02/28/16 0   199.00
03/01/16     199.00
03/12/16 12 +400.00 599.00
03/25/16 13 -499.00 100.00
03/31/16 7   100.00

Note that the member's account went below the minimum balance for dividends in March.

The following processing options were selected on the Share Profiles tabs:

Last Dividend Date Next Dividend Date Dividend Frequency Dividend Method Rate Option Minimum Balance for Dividends Pay Dividends on Closed Accounts
12/31/15 03/31/16 Quarterly C 0 0.00 Yes
Rate 1 Balance 1 Rate 2 Balance 2 Rate 3 Balance 3  
0.000 00100 3.000 00000 0.000 00000  

Remember that the amount specified in the Balance 1 field for the minimum dividend balance is a greater than amount. For example, if $100 appears in this field, and the member's balance is brought to $100 or less, a dividend will not be paid for that day. The member's balance must remain at $100.01 or greater to receive a dividend for that day.

Complete the following calculations to arrive at the total dividend amount of $4.34:

  1. 14 x 215.00 x .03/365 = .2473972
  2. 10 x 1715.00 x .03/365 = 1.409589
  3. 3 x 2215.00 x .03/365 = .5461643
  4. 13 x 1215.00 x .03/365 = 1.2982191
  5. 2 x 0.00 x .03/365 = 0.00
  6. 16 x 0.00 x .03/365 = 0.00
  7. 12 x 199.00 x .03/365 = .1962739
  8. 13 x 599.00 x .03/365 = .6400273
  9. 7 x 0.00 x .03/365 = 0.00
  10. .2473972 + 1.409589 + .5461643 + 1.2982191 + .1962739 + .6400273 = 4.3376708 or 4.34

Example 6 - Share Rate Change - Date of Deposit to Date of Withdrawal window with the Post in Next Back Office Cycle check box selected

During the month of March member 2212003 made a deposit to share type 75. Also, the credit union changed the dividend rate using the Share Rate Change - Date of Deposit to Date of Withdrawal window with the Post in Next Back Office Cycle check box selected.

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
03/01/16 0   300.00
03/12/16 11 +200.00 500.00
03/15/16 4 +0.40 500.40
03/31/16 16   500.40

The following processing options were selected on the Share Rate Change - Date of Deposit to Date of Withdrawal window:

Effective Date Post in Next Back Office Cycle Current Rate 1 New Rate 1 Current Balance 1 Current Rate 2 New Rate 2
03/15/16 Selected 02.750 03.000 5000 03.000 03.250

Complete the following calculations to arrive at the total dividend amount of $1.06 for the period 03/01/16 through 03/31/16:

  1. 11 x 300.00 x .0275/365 = .2486301
  2. 4 x 500.00 x .0275/365 = . 1506849
  3. .2486301 + .1566849 = .399315 or .40 (This is the dividend posted on 03/15/16.)
  4. 16 x 500.40 x .03/365 = .6580602 or .66 (This is the dividend posted on 03/31/16.)

Example 7 - Share Rate Change - Date of Deposit to Date of Withdrawal window with the Post in Next Back Office Cycle check box NOT selected

During the month of March member 2212003 made a deposit to share type 01. Also, the credit union changed the dividend rate using the Share Rate Change - Date of Deposit to Date of Withdrawal window with the Post in Next Back Office Cycle check box NOT selected.

Transaction Effective Date # of Days Since Last Transaction Transaction Amount After Balance
03/01/16 0   300.00
03/12/16 11 +200.00 500.00
03/31/16 20   500.00

The following processing options were selected on the Share Rate Change - Date of Deposit to Date of Withdrawal window:

Effective Date Post in Next Back Office Cycle Current Rate 1 New Rate 1 Current Balance 1 Current Rate 2 New Rate 2
03/15/16 Not Selected 02.750 03.000 5000 03.000 03.250

Complete the following calculations to arrive at the total dividend amount of $ 1.06 for the period 03/01/16 through 03/31/16:

  1. 11 x 300.00 x .0275/365 = .2486301
  2. 4 x 500.00 x .0275/365 = . 1506849
  3. 16 x 500.00 x .03/365 = .6575342
  4. .2486301 + .156849 + .6575342 = 1.0568492 or 1.06