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Letters of Credit: Generate Income with Public Unit Deposits

If your institution is looking for an efficient, low-cost way to secure agreements with third parties, our Letters of Credit (LOCs) may offer the right solution. Our LOCs can help you improve your liquidity management, attract public entity deposits, and participate in community-focused bond deals.

The most common usage of our LOCs is to collateralize public unit deposits (PUDs) that exceed the amount insured by the FDIC. This serves as a valuable alternative to pledging securities, and with a fee of only nine basis points, it is a lot less expensive.

Other benefits include:

  • Increase liquidity ratio – frees up securities to be counted as liquidity 
  • Reduce administrative costs – eliminates costs associated with pledging and releasing securities as collateral for PUDs 
  • Boost revenue – flexibility to invest liquidity in higher yielding investments and lending activities 

In addition to PUDs, our Standby LOC can be used to guarantee other commitments, such as lease deposits, insurance premiums, and MasterCard balances, while our Confirming LOC can help secure improved credit terms for community-focused bonds. These LOCs are flexible and backed by our Aaa/AA+ rating.

For additional information on LOCs, call Patrick Rutledge, Public Finance Relationship Manager at 404.888.8328 or wrutledge@fhlbatl.com.


The Federal Home Loan Bank of Atlanta is not a registered investment advisor. Nothing herein is an offer to sell or a solicitation of an offer to buy any securities or derivative products. You should consult your own legal, financial, and accounting advisors before entering into any transaction.

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