Letters of Credit

Our Standby Letters of Credit (LOCs) provide Seattle Bank members with an efficient and low-cost way to secure contractual agreements with third parties and guarantee their financial strength to perform as agreed in a contract.

Seattle Bank Standby LOCs may be issued or confirmed to facilitate residential housing finance, support affordable housing and economic development initiatives, assist with asset/liability management, and provide liquidity or other funding.

Our Standby LOCs have been used to:

  • Facilitate the purchase of (or commitment to purchase) mortgage loans
  • Collateralize public deposits and interest rate swaps
  • Support the issuance of commercial paper and medium-term notes
  • Support other transactions that promote affordable housing or economic development, including projects funded with advances from the Community Investment Program (CIP) and Economic Development Fund (EDF).

Terms are individually structured to meet your needs. Our Standby LOCs can be issued for up to 10 years for most commercial purposes—or up to 20 years when used to finance housing or to support an interest-rate swap.

Our Variable Amount Letter of Credit (VLOC) is customizable and can be flexible to accommodate variable balances in the case of public deposits. The VLOC allows members to:

  • Collateralize valuable public deposits to satisfy state regulations, while maintaining key customer relationships.
  • Report daily public deposit balances unique to a particular public depositor, and pay a fee based on the amount of the VLOC used, rather than a fixed amount (as is the case with a Standby LOC).

Our fees are competitive, and you'll benefit from our excellent credit rating with lower transaction costs. Borrowers must pledge sufficient collateral to support their LOCs.

Read the What Counts strategy "Using Standby Letters of Credit to Collateralize Your Public Deposits"

Special Considerations for Community Investment

Standby LOCs issued to support housing or economic development may be secured on a case-by-case basis with the following collateral:

  • Investment grade obligations of state and local governments
  • Secured or federally guaranteed loans to small businesses or securities representing interests in such loans
  • Second mortgage loans and commercial real estate loans

Borrowers must provide documentation to validate that the letter of credit is supporting an affordable housing or economic development initiative.

To learn more about our Standby Letters of Credit and how they can work for you: