StoneCastle Deposit Network Service Agreement

Date Last Updated:

September 10, 2021


Please carefully read this Deposit Network Service Agreement (this “Agreement”). By entering into this Agreement with Middlesex Federal Savings, F.A. (“MFS”, “us” or “we”), you authorize us to offer and provide you a variety of services and products in conjunction with your Novo deposit account held with us (“Deposit Account”). From time-to-time, we may provide you services whereby MFS will deposit your funds into other insured depository institutions through a deposit network program administered by a third-party service provider and held in custody by a third-party custodian (a “Deposit Network Service”). At any given time, all, none or a portion of the funds deposited into your Deposit Account may be placed into the Deposit Network Service and held beneficially in your name at other depository institutions which are insured by the Federal Deposit Insurance Corporation (“FDIC”) and are participants in such Deposit Network Service. MFS utilizes the Deposit Network Service provided by StoneCastle Cash Management, LLC, and StoneCastle Digital Solutions, LLC, each a Delaware limited liability company (collectively, “StoneCastle”). As a part of its Deposit Network Service, StoneCastle has developed a network of FDIC-insured depository institutions located throughout the United States (each a “Network Bank” and together, the “Network Banks”).

How It Works

In the event funds from your Deposit Account are deposited into Network Banks via the Deposit Network Service, MFS will deliver funds as your agent to a custody bank participating in the Deposit Network Service (the “Custodian Bank”). StoneCastle is responsible for directing the Custodian Bank to make deposits, in specific amounts, at one or more of the Network Banks.  In the event MFS requests your funds to be returned from the Deposit Network Service to MFS, it will send notice to the Custodian Bank and StoneCastle. StoneCastle will then direct the Custodian Bank to make withdrawals, in specific amounts, from one or more Network Banks. The Custodian Bank will then return funds to MFS in the amount requested by MFS. You are not required or permitted to take any action with respect to the Deposit Network Services. 

Network Banks

StoneCastle has created, developed and manages a proprietary network of insured depository institutions, also referred to herein as the Network Banks, through which funds deposited by you at MFS may be deposited into accounts at one or more of the Network Banks, along with funds from other persons. The use of the Deposit Network Services will not create a direct relationship between you and: (i) any of the Network Banks, (ii) StoneCastle or (iii) the Custodian Bank. StoneCastle, as agent of MFS, maintains records of the balance of each depositor beneficially held at each Network Bank. 

FDIC Insurance

The FDIC is an independent agency created by the United States Congress that provides deposit insurance to depositors in commercial banks and savings institutions legally chartered to offer banking services in the United States. FDIC deposit insurance is backed by the full faith and credit of the United States government. FDIC deposit insurance covers the depositors of a failed FDIC-insured depository institution dollar-for-dollar, principal plus any interest accrued, through the date of a bank failure, up to at least the then current Standard Maximum Deposit Insurance Amount, or “SMDIA,” as determined by the FDIC. As of September 2021, the SMDIA is $250,000. As a part of the Deposit Network Services, the amount of your funds deposited from your Deposit Account at any Network Bank will not exceed the then applicable SMDIA.  As a result, assuming that you have no funds in any of the Network Banks, your funds would be eligible for extended protection through FDIC insurance once funds arrive at the Network Banks.  

However, the Deposit Network Service allocates funds based solely on data provided to it by MFS. Therefore, if you maintain funds at any of the Network Banks directly or through an intermediary, your funds at such Network Bank may not be fully insured by the FDIC in the event the aggregate balance of all accounts beneficially owned by you at such Network Bank exceeds the then-current SMDIA. In the event you have funds at any of the Network Banks, your deposit insurance coverage may be adversely affected, and your principal and any accrued interest may not be fully insured by the FDIC, even if the total amount deposited in that Network Bank through the Deposit Network Service is less than the SMDIA. Therefore, you may be subject to loss in the event of a failure of a Network Bank if the aggregate amount of your beneficial funds exceeds the SMDIA at such institution. To learn more about FDIC insurance please carefully review the information provided by the FDIC at: 

Funds Availability

The use of the Deposit Network Service will not modify the funds availability disclosure provided to you. Access to funds in your Deposit Account at MFS is governed solely by such funds availability disclosure and MFS’s funds availability policy. 

Interest, Fees and Expenses

You acknowledge that you do not earn any interest on balances beneficially held in Network Banks via the Deposit Network Service. In the event you have an account at MFS that is interest-bearing, interest will be posted to your account by MFS, subject to the then current Truth in Savings Act disclosures and other terms of the applicable Deposit Account. You acknowledge that MFS and StoneCastle may earn fees and other revenues paid by the Network Banks. 

Authorizations and Acknowledgements

By entering into this Agreement, you authorize MFS to utilize the Deposit Network Services with respect to funds deposited into and withdrawn from your Deposit Account. In addition, you acknowledge and authorize MFS to utilize StoneCastle as agent to provide Deposit Network Services. The Custodian Bank is authorized for all purposes to rely on instructions from StoneCastle with respect to the selection of Network Banks in which your funds are deposited. StoneCastle may use the services of one or more qualified Custodian Banks as it deems suitable for the purpose of fulfilling the role of custodian for the Deposit Network Services. In addition, you agree to the deposit of your beneficial funds in any Network Bank and acknowledge that you may not restrict the underlying placement of funds deposited into any particular Network Bank.  You understand that your funds at such Network Bank may not be fully insured by the FDIC in the event the aggregate balance of all accounts beneficially owned by you at such Network Bank exceeds the then current SMDIA, and thus, you may be subject to loss in the event of a failure of a Network Bank.

Novo is a financial technology company, not a bank. Banking services are provided by Middlesex Federal Savings, F.A.; Member FDIC.