Tenth District Seasonal Lending Program

This information is specifically for the Federal Reserve Bank of Kansas City's Seasonal Lending Program. Information regarding your Federal Reserve Bank's Seasonal Lending Program may be available on your District's Contacts & Resources page.

Please Note: We recommend selecting 'save' instead of 'open' when accessing links to documents in Microsoft Word format on this webpage.

• Overview and Guidelines
• Legal Documents
• Applying for a Seasonal Credit Line
• Interest Rate on Seasonal Loans/Fees
• Borrowing and Repayment
• Modifying the Credit Line
• Collateral
• Reporting
• Contact Information

Overview and Guidelines

Seasonal credit is available to institutions with less than $500 million in deposits (as a proxy for reliable access to national money markets) that can demonstrate a clear pattern of recurring intra-yearly swings in funding needs. Under the Seasonal Lending Program ("Program"), borrowers may obtain longer-term funds from the Discount Window during periods of seasonal need so they can carry fewer liquid assets during the rest of the year and make more funds available for local lending. Institutions that experience loan/deposit fluctuations caused by tourism, education, agriculture, municipal financing, and other types of seasonal businesses frequently qualify for the Program.

To qualify for the Program, a need for funds should persist for at least four consecutive weeks and generally no more than nine months. Seasonal qualifications are established each year. An institution is expected to fund a portion of its seasonal need from its own liquidity reserves. Therefore, a graduated deductible based on deposit size is subtracted from the estimated seasonal need to determine the amount of seasonal credit that an institution may borrow under the Program.

Funds obtained through the Program should not be used to increase an institution's net sales of Fed funds; however, the net sale of Fed funds is appropriate as long as it is consistent with an institution's normal operating pattern during the seasonal period. Maximum levels for net sales of Fed funds and investments are established during the Program qualification process. An institution with a seasonal loan should not exceed these levels without prior consultation with Discount Window staff.

Legal Documents

If not already on file, we typically need three basic borrowing documents to establish the borrowing relationship: a Borrowing Resolution, Letter of Agreement, and a Official OC-10 Authorization List. Operating Circular No. 10 sets forth the terms of the lending agreement with the Federal Reserve .

Applying for a Seasonal Credit Line

Step 1:You simply submit the last three years of monthly loans and deposits data on a Data Collection Form. If your institution participated in our Program last year, only last year's data is necessary. (Please wait to submit your "Program Application" until after you have received the calculated projections for your institution, see steps 2 and 3.)

Step 2:Using this data, we will calculate your projected seasonal qualifications (by month) that can be used as a starting point for estimating this year's seasonal needs. We will send you a letter via e-mail outlining the projections we calculate and also include a one page application.

Step 3:Based on your internal analysis and the projected seasonal qualification we provide, you will then submit the Program Application, including your anticipated borrowing needs and other factors affecting your seasonal needs. (An application should be completed well in advance of the anticipated need for funds.)

Step 4:After reviewing your application we will determine eligibility and contact you for further discussion. 

Step 5:A qualification letter will then be sent to you via e-mail to confirm your approved seasonal credit line, and our agreed upon maximum levels of net Fed funds sold and investments while borrowing seasonal credit. 

Program data collection forms and applications can be e-mailed to credit@kc.frb.org or mailed to CRM Department, Federal Reserve Bank of Kansas City, 1 Memorial Drive, Kansas City, MO 64198.

 

We encourage the use of secure e-mail whenever sensitive information is sent electronically to the Federal Reserve.  Our secure e-mail solution uses the ZixCorp eMessaging Security product.  If you have compatible technologies with ZixCorp, you can send and receive e-mails from individual mailboxes.  If your institution does not have compatible technologies, you may still send and receive secure e-mails from the Federal Reserve Message Center, which can be accessed at https://secureemail.federalreserve.com.  Here is the Getting Started Guide:  FRSecure Message Center - Getting Started Guide

 

After your seasonal borrowing qualification is established, requesting an advance simply involves an authorized borrower making a phone call to our Credit and Risk Management staff at 1-800-333-2987.

Interest Rate on Seasonal Loans/Fees

The seasonal credit rate is a market rate computed as the average of the previous two-week average federal funds rate and secondary market rate on 90-day certificates of deposit, rounded to the nearest five basis points. The rate is adjusted, as necessary, at the beginning of each two-week reserve maintenance period and applies to all outstanding seasonal credit loans.

There are no commitment fees, membership requirements, prepayment penalties, collateral safekeeping fees, or other charges associated with setting up and maintaining a seasonal line of credit. Establishing a seasonal line does not obligate an institution to borrow. Eligibility to borrow is not dependent upon or related to the use of Federal Reserve priced services. If the line is unused during the year, there is absolutely no cost involved.

Borrowing and Repayment

Once your application has been approved and the necessary legal agreements and collateral are in place, an authorized individual from your institution may contact our Credit and Risk Management staff at 1-800-333-2987 to request an advance against your institution's monthly seasonal credit line. Loans outstanding under the Seasonal Lending Program are typically made for up to 30 days at a time and are generally scheduled to mature on the last business day of each month. At the close of business on that day, either your account or, in the event you do not have an account with us, the account of the designated correspondent, will be charged for any loans outstanding as well as accrued interest. It is your institution's responsibility to request a new loan if Reserve Bank credit is still necessary for the following month. You may prepay outstanding loans in whole or in part (with associated interest), or re-borrow at any time during the month within the approved seasonal credit line established, without penalty.

Modifying the Credit Line

Although the seasonal credit line is based on historical loan and deposit data, the flexibility exists to modify the amount and/or timing of credit lines when current year seasonal conditions deviate from historical patterns. Reserve Bank staff are available to work with you in determining if your institution qualifies for a modification to its seasonal credit line.

Collateral

All extensions of credit must be secured to the satisfaction of the Federal Reserve. We accept a wide variety of collateral, including, but not limited to, U.S. government and agency obligations, municipals, CMOs, and commercial, consumer, and real estate loans. See the Collateral Eligibility page for acceptable collateral types and the Collateral Valuation page lendable values or call our collateral analysts at 1-800-333-2987.

Reporting

When borrowing under your approved seasonal credit line, your institution will be requested to provide selected balance sheet data weekly (only six balance sheet items) for the two-week maintenance period(s) in which you borrow seasonal credit by completing form FR 2046.

Contact Information

If you have any questions about the Discount Window or the Seasonal Lending Program, just call our Credit and Risk Management staff at 1-800-333-2987 or return to the Federal Reserve System Discount Window website.