California Bar Journal
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Interest Rates And Service Charges Attorney Client Trust Accounts
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Bank Net Yield Average Balance December 1999 Interest Rate Average Service Charges
RIVER CITY BANK 2.29% $4.4 Million 3.53% $5.22
CITIBANK 1.65% $39.0 Million 1.00% to 1.75%* $3.99
SAN DIEGO NATIONAL BANK 1.60% $7.0 Million 1.85% $10.00
WELLS FARGO BANK 1.57% $196.8 Million 1.25% to 2.0%* $5.80
MELLON FIRST BUSINESS BANK 1.41% $8.3 Million 1.55% $5.63
MANUFACTURERS BANK 1.39% $6.1 Million 1.00% to 1.50%* 0
COMERICA BANK - CALIFORNIA 1.28% $25.4 Million 1.30% $2.94
UNION BANK OF CALIFORNIA 1.08% $145.7 Million 1.25% $5.00
ELDORADO BANK 1.06% $11.7 Million 1.25% $10.00
IMPERIAL BANK 1.00% $6.0 Million 1.00% $3.29
BANK OF AMERICA 0.94% $172.7 Million 0.75% to 1.50%* $4.60
CALIFORNIA FEDERAL BANK 0.83% $20.9 Million 1.00% $5.81
U.S. BANK OF CALIFORNIA 0.80% $14.7 Million 1.00% $3.43
SANWA BANK 0.75% $21.8 Million 1.00% $5.39
SCRIPPS BANK 0.75% $8.5 Million 1.00% $10.00
WASHINGTON MUTUAL BANK 0.74% $25.7 Million 1.00% to 1.05%* $5.00
CALIFORNIA BANK & TRUST 0.72% $25.5 Million 1.00% $6.00
FIRST SECURITY BANK 0.69% $10.8 Million 1.00% to 1.25%* $3.12
FARMERS & MERCHANTS LONG BCH 0.62% $5.0 Million 0.75% $5.00
FIRST NATIONAL BANK, SAN DIEGO 0.58% $4.7 Million 1.10% $10.00
BANK OF THE WEST 0.57% $22.8 Million 0.75% $2.30
WESTAMERICA BANK 0.46% $12.7 Million 0.50% 0
CITY NATIONAL BANK 0.35% $87.3 Million 0.50% $2.92
CITIZENS BUSINESS BANK 0.24% $7.6 Million 0.50% $8.01
SANTA BARBARA BANK AND TRUST 0.08% $5.4 Million 0.50% $9.00
* Variable rates - higher rates are paid on accounts with high balances
Average balances are based on bank reports for December, 1999
Net Yield is the percent return after service charges are deducted, calculated from the banks' reports to the State Bar.
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Bar launches campaign to urge banks to raise interest rates on IOLTA accounts
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In an effort to boost funding for California’s legal services programs, the State Bar’s Interest on Lawyer Trust Accounts program has launched a campaign seeking to improve the yield of banks’ IOLTA accounts.

While the Federal Reserve has raised the interest rates banks receive on their funds, the interest rates on attorney-client trust accounts (IOLTA accounts) generally are staying at the same low level, said Judy Garlow, director of the bar’s Legal Services Trust Fund Program.

In fact, California’s interest rates on IOLTA accounts are among the lowest in the nation; some banks offer as little as one-half percent, she said. The net yield on many of the accounts, after deducting the service charges, is below 1 percent.

In a letter sent to banks in March, Trust Fund Commission chair Chris Lynch asked that they either raise the interest rates on IOLTA accounts or reduce or waive monthly service charges.

In support of his request, Lynch wrote, “Several banks have decided to pay a higher rate of interest on IOLTA accounts than on other interest-bearing checking accounts, in recognition of the large average balances in the accounts and the special public purpose for which the funds are used.”

Since the majority of banks were not receptive to Lynch’s overtures, the Trust Fund Commission now is encouraging attorneys to contact their banks directly to seek improvements in the yield on their trust accounts.

The interest earnings on IOLTA accounts, which have a total balance of nearly $1 billion in California, are distributed to legal services programs which offer legal assistance to the needy.

The grants reached a high of $22 million in 1990, but declined to a low of $7 million in 1994. Last year, the program awarded $11.3 million in IOLTA grants to 105 programs in the state. This year, the grant totals will be $11 million. The $300,000 decline represents a decline in interest rates, Garlow said.

She noted that the bar’s trust fund commission was designated in the 1999 state budget to adminster a new $10 million Equal Access Fund, which provides additional funding for legal aid offices. “Even with this important new funding, however, we still fall far short of the money needed to provide the legal services low-income people need,” Garlow said.

Lawyers who do not hold any client funds are not required to have a trust account, nor are attorneys required to maintain more than one trust account. Garlow said she hopes attorneys will close any trust account they do not use because service charges are deducted from the interest.

The chart above lists 25 banks in California holding the largest balances in IOLTA accounts, as well as the interest rate, average service charge, and net yield on the accounts.

Garlow lauded Wells Fargo for consistently paying a better rate on IOLTA accounts than it pays on other checking accounts. And she singled out Sacramento-based River City Bank for its 3.53 percent interest rate on IOLTA accounts, the highest in the state. River City has offered the highest rate in California since 1995.

“By publishing this list, we are trying to give lawyers information they need to either seek an increase in the yield on their accounts or to select a bank with an eye to maximizing that yield,” Garlow said. “Some banks have already decided to pay a higher interest rate on IOLTA accounts.”