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The Bank of North Dakota ("BND") will issue a Letter of Credit (LOC) for public deposits* using the following procedure:
A North Dakota bank ("bank") submits a written request to BND for an LOC. This request includes the name of pledgor, name of pledgee, term of LOC, and dollar amount of LOC requests.
* LOC may also be pledged to pledge pools.
Before an LOC for public deposits is issued, the following documents must be executed and on file at BND:
- Irrevocable Standby Letter of Credit Reimbursement Agreement outlining terms and conditions of LOC. Certified copy of Board of Director's minutes indicating approval of this agreement.
- Certificate of Available Eligible Collateral - signed by authorized bank officer certifying that all loans pledged are not encumbered by prior lien, pledge, participation, or any other form of encumbrance.
- A current list of collateral pledged is required to be sent to BND every 60 days along with an executed copy of the Certificate of Available Eligible Collateral, during the term of the LOC. Substitutions also require this certificate.
Loans pledged must not exceed 60 days past due. Eligible collateral and coverage requirements are as follows:
- Government Guaranteed Portion Only - 105%
- Single Family Conventional and VA - 120%
- Commercial, Farm and Multifamily Term Debt - 150%
Substitutions are required for paydowns, payoffs, or other changes in eligibility. BND reserves the right to review the collateral prior to acceptance.
BND will issue an LOC not to exceed one year. Total LOC's outstanding per bank will be limited to the bank's total equity.
One-eighth of one percent ($125 minimum, actual/360) per year of the LOC amount. Lien search fees may also be charged. All fees are payable up front and are non-refundable.
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