What is a repurchase agreement and how does it work?
• When funds are swept from your business checking account, those funds are used to make overnight purchases of securities that are direct obligations of the United States, one of its agencies or one of its sponsored enterprises. Your purchase of securities is made in accordance with a repurchase agreement. A repurchase agreement is not itself a security and is not guaranteed by the United States or any of its agencies. A repurchase agreement is a contract under which you purchase securities from Citizens Business Bank. The Bank is obligated to repurchase those securities from you on the next business day for a fixed price that is more that the purchase price you paid. That is, you earn a small profit on each repurchase transaction. This purchase and repurchase process is repeated each business day. The accumulation of your daily repurchase profits is, from your perspective, the same as Citizens Business Bank paying you interest on the swept balances. Are your funds protected when inve
