Section 4--208. Security Interest of Collecting Bank in Items,

Accompanying Documents and Proceeds.

(1) A bank has a security interest in an item and any accompanying
documents or the proceeds of either

(a) in case of an item deposited in an account to the extent to

which credit given for the item has been withdrawn or

applied;

(b) in case of an item for which it has given credit available

for withdrawal as of right, to the extent of the credit given

whether or not the credit is drawn upon and whether or not

there is a right of charge-back; or

(c) if it makes an advance on or against the item.

(2) When credit which has been given for several items received at one
time or pursuant to a single agreement is withdrawn or applied in part
the security interest remains upon all the items, any accompanying
documents or the proceeds of either. For the purpose of this section,
credits first given are first withdrawn.

(3) Receipt by a collecting bank of a final settlement for an item is
a realization on its security interest in the item, accompanying
documents and proceeds. To the extent and so long as the bank does not
receive final settlement for the item or give up possession of the item
or accompanying documents for purposes other than collection, the
security interest continues and is subject to the provisions of Article
9 except that

(a) no security agreement is necessary to make the security

interest enforceable ( Section 9--203 (b)(3)(A)); and

(b) no filing is required to perfect the security interest; and

(c) the security interest has priority over conflicting perfected

security interests in the item, accompanying documents or

proceeds.