Evaluating the New Direct Standby Fluctuating Balance Letter of Credit
last updated on Tuesday, June 30, 2026 in Letters of Credit
Two Standby Letter of Credit Options
Which one is right for my institution?
In May 2026, the Federal Home Loan Bank of Des Moines introduced the Direct Standby Fluctuating Balance Letter of Credit (LOC), offering member institutions a new way to collateralize public unit deposits while maintaining liquidity and keeping investments unencumbered.
Unlike the Traditional Standby LOC, this option ties fees to actual usage, which can benefit institutions with larger, more variable balances. However, the Traditional structure remains a strong fit for more stable or shorter-term needs due to its simplicity and lower constraints. Selecting the right approach depends on each institution’s balance trends, timing and overall liquidity strategy.
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We encourage you to contact your relationship manager or the FHLB Des Moines Strategies team to evaluate your institution’s specific needs. We are available to help you assess these options and determine the most effective approach for your balance sheet and liquidity strategy.
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- Letters of Credit
- Strategies