Diminishing Securities Availability for Collateralization

posted on Monday, March 12, 2018 in Letters of Credit

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. The options: A) Continue to pledge securities and suppress further loan growth due to liquidity constraints. B) Procure a letter of credit and pledge the growing amount of loans, if eligible, as collateral with FHLB Des Moines. Continue to fund the loan growth.  

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