Question: First Savings of Rainbow Iowa reported transaction deposits of 75
First Savings of Rainbow, Iowa, reported transaction deposits of $75 million (the daily average for the latest two-week reserve computation period). Its nonpersonal time deposits over the most recent reserve computation period averaged $37 million daily, while vault cash averaged $5 million. Assuming that reserve requirements on transaction deposits are 3 percent for deposits over $10.7 million and up to $58.8 million and 10 percent for all transaction deposits over $58.8 million while time deposits carry a 3 percent required reserve, calculate this savings institution’s required daily average reserve balance.
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