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Standby Letter of Credit

Give a municipality or state that is depositing funds with your institution peace of mind that their deposits are protected in excess of the maximum FDIC-insured amount with a Standby Letter of Credit (LOC).

Standby Letters of Credit Can be Used for: 
  • Collateralize state, city or municipal deposits
  • Facilitate residential housing finance
  • Support construction lending
  • Facilitate community lending
  • Confirm non-housing, taxable and tax-exempt housing bond issuances
Product Benefits
  • Improved on-balance sheet liquidity by keeping your Treasury and Agency securities unencumbered
  • Eliminate the need to match securities and monitor margin calls 
  • Reduce operational expenses associated with monitoring deposits 
  • Keep your regulator satisfied with your liquidity position and ratios

Available Products:

Direct Standby 

A Direct Standby LOC allows your institution to collateralize public unit deposits and is priced based on the total notional amount at issuance.

Key Features:

  • Available for single and multiple public unit depositors
  • No minimum term requirement for issuance
  • Billed at time of issuance
  • Competitive pricing

Direct Standby Fluctuating Balance

Launched in May 2026, the Direct Standby Fluctuating Balance Letter of Credit allows your institution to collateralize public unit deposits, with charges based on average quarterly utilization rather than the notional amount at issuance.

Key Features:

  • Available for single public unit depositors
  • Issued in notional amounts of at least $5 million
  • Offering maturities starting at 4 months, with longer terms available based on member needs
  • Flexibility to pay as you go on the usage you require, billed quarterly in arrears
  • Competitive pricing

Requesting a Standby Letter of Credit

To get started, member institutions must submit a Letter of Credit application. 

Complete an LOC Application 

Uncertain about how a Standby Letter of Credit can work for your institution? Our experienced Member Strategies team can help evaluate the opportunity for your institution, free of cost

REquest a custom analysis

Learn More About Standby Letters of Credit

Watch the video to learn how a Standby Letter of Credit from FHLB Des Moines can serve as an alternative source of collateral for Public Unit Deposits, helping improve liquidity, income, and efficiency.

  • Aa1-rated
  • Competitive pricing
  • Easy application process
Standby Letters of Credit

Standby Letters of Credit

Educational Resources

The Letter of Credit Opportunity Video/Webinar The Letter of Credit Opportunity Explore the balance sheet benefits and variety of applications for an FHLB Des Moines Letter of Credit in this 60-minute webinar presentation. Coin of the Realm - Episode 16 Podcast Coin of the Realm - Episode 16 In this episode of The Insider, we discuss the features of a FHLB Des Moines Letter of Credit and explore some applications to support performance obligation guarantees. Standby Letters of Credit – A Low-Cost, High-Reward Solution for Procuring Public Deposits Article Standby Letters of Credit – A Low-Cost, High-Reward Solution for Procuring Public Deposits It's no secret that the Federal Home Loan Bank of Des Moines is best known for its Advance products, but did you know we have a lesser known product that is helping our members lower on-balance sheet liquidity costs and attract public funds? We're talking about Standby Letters of Credit (SBLOCs). Expanding Markets, Expanding Letter of Credit Uses White Paper 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.

See all educational resources regarding this topic.