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Business Checking and Sweep Accounts
HSB Repo Accounts (non-FDIC insured)
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The bank will "sweep" collected funds in excess of a pre-determined minimum balance into this account at the close of business each day after checks have been posted. The funds are invested in repurchase agreements with the bank on a daily basis. There are no fees with this account. HSB Repo accounts are not a deposit or other obligation of, or guaranteed by, the depository institution and are subject to investment risks, including possible loss of the prinicipal amount invested.
What is a Repo?
A repurchase agreement, or "repo," is an interest in certain federal securities, which the Bank agrees to repurchase from you on a particular day for a fixed amount. A repo is similar to a loan from you to the Bank, which is secured by an interest in particular government securities. A repo is usually paid by the Bank from its general funds rather than from the collateral..
Rates
The interest rate offered on the Repurchase Agreements will be set each Tuesday by the Bank in its sole discretion and will be announced by the Bank as the "Repurchase Rate." You may obtain current information on these rates by calling the Bank at 712-623-4823.
The rate is not the same rate paid by the issuers of the federal securities and the value of your repurchase agreement will not vary based on the value of these securities.
Maturity
Repurchase Agreements have a maturity of one day.
Collateral: The collateral will consist of securities which are issued by or guaranteed by the United States government or one of its agencies. Your specific collateral will be one of the types listed.
Under certain circumstances, Houghton State Bank can substitute these securities with others. Even if substitutions occur, the pool will only contain securities issued by or guaranteed by the United States government or one of its agencies.
Value of Collateral
The market value of the collateral equals or exceeds the total amount of Repurchase Agreements outstanding in the collateral.
Collateral Trustee
First National Bank of Omaha will act as trustee to hold the federal securities in its name for your benefit so that your interest as a holder of the Bank's Repurchase Agreement constitutes a perfected security interest in the collateral.
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