This excerpt taken from the PBNY 10-Q filed Feb 8, 2008.
10. Guarantors Obligations Under Guarantees
Nearly all letters of credit issued by, or on behalf of the Company are standby letters of credit. Standby letters of credit are commitments issued by the Company on behalf of its customer/obligor in favor of a beneficiary that specify an amount the Company can be called upon to pay upon the beneficiarys compliance with the terms of the letter of credit. These commitments are primarily issued in favor of local municipalities to support the obligors completion of real estate development projects. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.
As of December 31, 2007, the Company had $15.2 million in outstanding letters of credit, of which $9.0 million were secured by cash collateral.