Repurchase Agreement
Under a Repurchase Agreement, demand account balances above a predetermined “peg” are automatically swept into a Repurchase (REPO) account and invested excess bank funds in the Overnight Fed Funds market. Customer investments are collateralized by US government/agency securities. Funds are transferred back to demand account to maintain the peg balance.
How it Works
A minimum required balance is established for the demand account to offset all or part of the cost of services.
Excess funds above this amount is automatically swept to a REPO investment account.
Interest is earned based on the targeted Fed Funds rate
REPO interest is credited to the checking account monthly.
Funds are automatically transferred back to the checking account to maintain the minimum balance
What You Need to Know
REPO Investments are collateralized backed by U.S. government/agency issued securities, but covered by FDIC insurance.
