An association may issue commercial and standby letters of credit in conformance with the Uniform Commercial Code or the Uniform Customs and Practice for Documentary Credits Act and may pledge collateral to secure its obligations thereunder. Except as otherwise provided by regulations of the commissioner, such issuance shall be 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 non-performance 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.
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 an applicable provision of this division.
(Added by Stats. 1983, Ch. 1091, Sec. 2.)
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