Regulatory Alerts1994-01-01
Kansas State Banking Department Memo 1994-22: Overnight Federal Funds
The Kansas State Banking Department has revised its long-standing interpretation to no longer classify overnight federal funds sold to correspondent banks as loans subject to the state's 15 percent legal lending limit. This change aligns with Federal Reserve Regulation F, which establishes correspondent banking standards and caps interday credit exposure at 25 percent of total capital, or 50 percent during the phase-in period ending June 19, 1995. State-chartered banks must now implement board-approved correspondent selection policies, maintain periodic financial reviews of significant correspondent relationships, and retain up-to-date capital ratio documentation to avoid citation or fallback lending limits.
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