3 CCR 703-1-11 - LETTERS OF CREDIT
11-1. An
association may issue commercial and standby letters of credit in conformance
with the Uniform Commercial Code and may pledge collateral to secure its
obligations thereunder, subject to the following requirements:
(a) Each letter of credit must conspicuously
state that it is a letter of credit.
(b) The issuer's undertaking must contain a
specified expiration date or be for a definite term and must be limited in
amount.
(c) The issuer's obligation
to pay must be solely dependent upon the presentation of conforming documents
as specified in the letter of credit, and not upon the factual performance or
nonperformance by the parties to the underlying transaction.
(d) The account party must have an
unqualified obligation to reimburse the issuer for payments made under the
letter of credit.
11-2.
To the extent funds are advanced under a letter of credit without compensation
from the account party, the amount shall be treated as an extension of credit
subject to percentage-of-assets limits and other requirements under applicable
provisions of state law.
Notes
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