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#821470 - 09/24/07 02:56 PM Daylight overdrafts
Reed Offline
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Reed
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West Coast
I'm reviewing correspondant bank accounts and my audit program references "daylight overdrafts". Could someone explain to me what is meant by that term?

Thanks

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Audit
#821534 - 09/24/07 04:10 PM Re: Daylight overdrafts Reed
califgirl Offline
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A daylight overdraft occurs when an institution’s Federal Reserve Bank account is in a negative position during the business day.

http://www.ffiec.gov/ffiecinfobase/booklets/Wholesale/21.html
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#821552 - 09/24/07 04:24 PM Re: Daylight overdrafts califgirl
Kathleen O. Blanchard Offline

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The term is also used when a customer or correspondent bank with accounts at your bank has a negative balance during the business day that is cleared same day by incoming good funds, such as by wire or ACH. The overdraft is cleared by close of books that night, unlike a traditional overdraft that is there at end of day and appears the next morning on the overdraft report.
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#821651 - 09/24/07 05:29 PM Re: Daylight overdrafts Kathleen O. Blanchard
Reed Offline
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Thank you both. That helps a lot.

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#822386 - 09/25/07 03:25 PM Re: Daylight overdrafts Reed
Jokerman Offline
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Some correspondents are very particular about daylight overdrafts, and some are not. What is the audito program asking to you review?

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#823096 - 09/25/07 09:22 PM Re: Daylight overdrafts Jokerman
Reed Offline
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From the ICQ:

Are daylight overdrafts monitored periodically throughout the day?

Is a self-assessment completed annually if the Bank is incurring daylight overdrafts?

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#950962 - 04/28/08 08:57 PM Re: Daylight overdrafts Reed
#Just Jay Offline
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Does any bank restrict or limit the amount of any daylight overdraft at any one time for their commercial customers, specifically those offering ACH orgination services to their commercial customers?
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#951112 - 04/29/08 02:13 AM Re: Daylight overdrafts #Just Jay
rlcarey Online
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You better have approved contingency lines of credit establish for any customer that goes into a daylight overdraft situation or the safety and soundness examiners are going to be all over you.
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#952243 - 04/30/08 04:37 PM Re: Daylight overdrafts rlcarey
#Just Jay Offline
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Whoa!! New area to me and the bank... can you please provide me with any good research resources for this, or some additonal information for me to look into?
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#955479 - 05/07/08 02:45 PM Re: Daylight overdrafts #Just Jay
#Just Jay Offline
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Bump
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#955858 - 05/08/08 05:53 AM Re: Daylight overdrafts #Just Jay
Jokerman Offline
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Are you looking at the issue as the depositor (with your correspondents), or with your depositors (as the depository institution)? One is a safety and soundness issue, the other is a matter of compliance with the terms of your agreement with the upstream correspondent.

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#955869 - 05/08/08 12:05 PM Re: Daylight overdrafts #Just Jay
Kathleen O. Blanchard Offline

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FFIEC info on customer daylight overdrafts:

Customer daylight overdrafts

Federal Reserve info on bank daylight overdrafts

Fed daylight overdrafts
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#955879 - 05/08/08 12:31 PM Re: Daylight overdrafts Kathleen O. Blanchard
#Just Jay Offline
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Cheeseheadland
With depositors we grant ACH origination rights to.
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