Fed Funds Purchased & Sold
Your bank can invest surplus funds in either overnight Fed Funds or in an Excess Balance Account (EBA).
First National Bank purchases Fed Funds on a secured and unsecured basis. With Fed Funds, we act as principal and provide your bank with a very competitive daily rate based on the current market rate. Interest on your account is calculated daily and paid on a weekly basis. Fed Funds can be sold to your bank on an unsecured basis for short-term needs. Or, a line of credit can be opened on a secured basis for a longer term. These lines of credit are based on your bank’s capital level as of the most recent call report date. Qualifying securities are U.S. governments and agencies, state municipal securities, and city, school and county municipal securities. First National Bank is a well-capitalized institution under Regulation F. Required information supporting this is provided to your bank on a quarterly basis.
First National Bank serves as an agent for the Federal Reserve’s EBA program. This program was established by the Federal Reserve Bank to allow eligible institutions to earn interest on their excess balances in an account relationship directly with a Federal Reserve Bank without significantly disrupting established business relationships with their correspondents. If you are eligible to earn interest on balances at the Federal Reserve Bank, you may participate in this program. Interest on your account is calculated daily and paid on a weekly basis.
The First can save you time by automatically sweeping the excess funds from your DDA in or out of Fed Funds or an Excess Balance Account. Just set a peg ending daily balance for your account and we will sweep the excess or deficit in or out of the account at the end of each business day.