Letter of Credit Pledge for Public Deposits

Guidelines

Bank of North Dakota will issue a Letter of Credit (LOC) for public deposits* using the following procedure:

A North Dakota bank submits a written request to BND for a LOC. This request includes the name of pledgor, name of pledgee, term of LOC, and dollar amount of LOC requests.
* LOC also may be pledged to pledge pools.

Documentation Requirements

Before a LOC for public deposits is issued, the following documents must be executed and on file at BND:

• An Irrevocable Standby Letter of Credit Reimbursement Agreement outlining terms and conditions of a LOC is required along with a certified copy of Board of Directors minutes indicating approval of this agreement.
• A 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, also is required.
• 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.

Collateral Requirements

Loans pledged must not exceed 60 days past due. Eligible collateral and coverage requirements are as follows:

• Government Guaranteed Portion Only – 105 percent
• Single Family Conventional and VA – 120 percent
• Commercial, Farm and Multifamily Term Debt – 150 percent

Substitutions are required for paydowns, payoffs, or other changes in eligibility. BND reserves the right to review the collateral prior to acceptance.