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Letters of Credit

Leverage the strength and security of FHLB Des Moines credit rating.

Letter of Credit Application

A Letter of Credit (LOC) from FHLB Des Moines is a product issued to guarantee payment for a member institution.

Letters of Credit are used for a variety of purposes, most commonly as an attractive alternative to pledging securities for public unit deposits. LOCs can also be used on other qualifying transactions -- bond issuances for community improvement projects, for example -- to improve the credit rating, thus lowering the cost of the project. The Bank's credit standing and capital market access substitutes for that of the member which helps to ensure a wide acceptance of our LOCs.

Confirming Letters of Credit

Used to provide credit enhancement and support for bonds, in turn lowering costs and encouraging growth in your community

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Standby Letters of Credit

An irrevocable agreement issued in favor of a public unit as an alternative to pledging securities to secure public unit deposits.

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Please contact the Money Desk with questions about Letters of Credit or for additional assistance and details.

Educational Resources

Expanding Markets, Expanding Letter of Credit Uses Whitepaper Expanding Markets, Expanding Letter of Credit Uses Whether it's an opportunity to drive fee income and enhance ROE by backing a bond, supporting a self-insurance program, or covering a customer's performance obligation; it may be worth your while to explore some of these expanded uses of letters of credit. Decreasing Securities Eligibility Case Study Decreasing Securities Eligibility A financial institution has historically supported a portfolio with a high percentage of agency mortgage-backed and callable agency securities. Interest rates have dropped and many of these securities have paid down quickly or have been called. The Forgotten Security Call Case Study The Forgotten Security Call Historically, a financial institution has collateralized a public unit deposit with a pledge of callable agency securities. A member subsequently receives notification that the callable bond will be called in five days, the next scheduled call date. Diminishing Securities Availability for Collateralization Case Study Diminishing Securities Availability for Collateralization With a recovering economy, a member is sustaining strong loan growth and has been decreasing its securities portfolio in order to fund a portion of that growth. An increasing percentage of the securities position has already been pledged to multiple public unit depositors.

See all educational resources regarding this topic.