Public Unit Deposits



Use LCs to Secure Public Unit Deposits

To retain your securities for liquidity and other purposes and to attract public unit deposits that exceed the amount covered by FDIC insurance, you can use a low-cost FHLB Chicago letter of credit for public unit deposits (PUD LC) to collateralize a public entity's deposits.

For public units whose deposit balances frequently fluctuate, members can now request the Fluctuating Balance PUD LC. The FHLB Chicago can issue Fluctuating Balance PUD LCs for the benefit of a single public unit depositor or to a third-party trustee as beneficiary, acting as an agent on behalf of multiple public unit depositors. Alternatively, the FHLB Chicago can issue standard PUD LCs for one-month terms to manage fluctuations.


PUD LCs Under Illinois and Wisconsin Statutes

The PUD LC is acceptable collateral under both Illinois and Wisconsin law, although the depositor's legal counsel must confirm eligibility. Further information is provided in the Collateralize Your Deposits with Letters of Credit brochure​. Please consult your own legal advisor regarding any information provided by the FHLB Chicago.


Benefits to the Public Entity

The benefits of a PUD LC from the FHLB Chicago to a public agency include:

  • Immediate payout. In the unlikely event of a default, the FHLB Chicago pays out under the LC immediately; there is no delay with selling securities in the market to make payment.

  • Convenient. The FHLB Chic​ago can issue a standard PUD LC within 24 hours and, in many circumstances, within several hours.

  • Secure and irrevocable. The LC carries the FHLB Chicago's Aaa/AA+ rating.



For more information about letters of credit please contact one of our LC Specialists or email

Hunter Kennedy                                                                                   (312) 565-5781

Brian Liu                                                                                               (312) 552-2667

Mike Palumbo                                                                                      (312) 552-1241​

Jay Rutherford                                                                                      (312) 552-1285

To execute a letter of credit please contact the Member Transaction Desk at 855-FHLB-CHI (855-345-2244), Option 1, or contact your sales director.