Truth-In-savings requires certain disclosures on periodic statements. One of the disclosures required on dividend-bearing accounts is the “annual percentage yield earned,” or APYE. The APYE is an annualized rate that reflects the relationship between the amount of dividends actually paid to the member’s account during the period and the average daily balance in the account for that period.
NOTE: This calculation uses the member's average daily balance for the period, even though the dividend calculation may be simple daily, compound daily, etc.
NOTE: During a leap year, be sure to use the number 366 in place of 365 in the calculations below.
The general formula is as follows (this requires the use of a scientific calculator for the exponent- (365 ¸ days in period):
100 [(1 + (Dividends earned ¸ Balance)) 365 ¸ days in period - 1 ] = APYE
Balance = the average daily balance in the account for the period
Dividends earned = the actual amount of dividends earned for the period
Days in period = the actual number of days over which the dividends disclosed on the statement were earned
Calculate the APY earned for a statement period of 31 days for an account with an average daily balance of $1,436.61 and dividends earned during the period of $3.36:
100 [(1 + (3.36 ¸ 1436.61))^(365¸31) - 1] = 2.78875%
Rounded from the 3rd position, APY Earned = 2.79%