§ 26-101. Title.

This act, comprising chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 26, 32, 33, 34, 35 and 36, title 26, Idaho Code, as such chapters may be hereafter amended, shall be known as the “Idaho Bank Act” and shall be applicable to all corporations, copartnerships, cooperative associations and persons engaged in the business of banking in the state of Idaho.

History.

I.C.,§ 26-101, as added by 1979, ch. 41, § 2, p. 62; am. 1995, ch. 99, § 1, p. 299; am. 1997, ch. 310, § 2, p. 917; am. 2000, ch. 288, § 1, p. 970.

§ 26-103. Construction against implicit repeal.

This act being a general act intended as a unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

History.

I.C.,§ 26-103, as added by 1979, ch. 41, § 2, p. 62.

§ 26-104. Severability.

If any provision of this act or the application thereof to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this act which can be given effect without the invalid provision or application, and to this end the provisions of this act are severable.

History.

I.C.,§ 26-104, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 244, § 8, p. 1008.

§ 26-105. Effect of act on existing banks.

The powers, privileges, duties and restrictions heretofore conferred and imposed upon any bank now existing and doing business under the laws of this state, are hereby abridged, enlarged or modified as each particular case may require to conform with the provisions of this chapter.

History.

I.C.,§ 26-105, as added by 1979, ch. 41, § 2, p. 62.

§ 26-106. Definitions.

As used in this act, unless the context or subject matter otherwise requires:

1. “Bank” means any person engaged in soliciting, receiving or accepting money or its equivalent on deposit as a regular business whether or not such deposit, however evidenced, is made subject to check or draft or other order.
2. “Banking business” means the soliciting, receiving or accepting of money or its equivalent on deposit as a regular business whether such deposit is made subject to check or draft or is evidenced by a certificate of deposit, a passbook, a note, a receipt, or other writing; provided, that nothing herein shall apply to or include money or its equivalent left in escrow or left with an agent pending investment in real estate or securities for or on account of his principal.
3. “Bank service corporation” means a corporation organized to perform bank services for two (2) or more banks, each of which owns part of the capital stock of such corporation, and which are subject to examination by either the department of finance of the state of Idaho or a federal bank supervisory agency.
4. “Borrowing” means any nondeposit liability.
5. “Branch” means any location except a loan production office, mobile or temporary facility, customer-bank communication terminal or bank service corporation at which a bank performs any or all functions of a bank.
6. “Capital” means the amount of unimpaired paid-up common stock plus the amount of paid-up preferred stock issued and unimpaired.
7. “Capital note” means a convertible or nonconvertible note of a bank subordinated as to principal and interest to the depositors of the bank and containing such conditions as the director may require.
8. “Capital structure” means the total of the capital, surplus, undivided profits and subordinated capital notes and contingency reserves of the bank or such other account as determined by the director of the department of finance, less intangible assets.
9. “Common stock” means the stock of a banking corporation other than preferred stock.
10. “Commercial paper” means a short-term negotiable instrument arising out of a commercial transaction; provided however, that commercial paper shall not be construed to be a deposit as defined in this act.
11. “Converting bank” means a bank converting from a state to a national bank, or the reverse.
12. “Demand deposit” means all deposits except time deposits.
13. “Deposit” means the act of placing or lodging money in the custody of a person, for safety or convenience whether interest-bearing or not, to be withdrawn at the will of the depositor or under rules, terms and regulations agreed upon by the depositor and the depository. If the context requires, deposit may also mean the money so deposited or the credit the depositor receives for it. (14) “Depositor” means any person who deposits money.
    1. With respect to a state chartered bank, the state from which the bank received the charter under which it operates.
    2. With respect to a national bank, the state in which the main office of the national bank is located.
    3. Upon notice in writing which is actually required to be given not less than thirty (30) days before the date of repayment; and
    4. In all cases only upon presentation and surrender of the instrument.

For the purpose of this definition, “bank services” means services such as check and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of checks, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar functions performed for a bank.

(15) “Director” means the director of the department of finance.

(16) “Dissenting stockholder” means a stockholder dissenting and voting his dissent as provided in this act.

(17) “Executive officer” means each officer of a bank, who by virtue of his position, has both voice in the formulation of the policy of the bank and responsibility for the implementation of such policy.

(18) “Federal funds” means member bank deposits at federal reserve banks.

(19) “Federal reserve act” means and includes the act of congress of the United States approved December 23, 1913, as amended.

(20) “Federal reserve bank” means a federal reserve bank created and organized under the authority of the federal reserve act.

(21) “Federal reserve board” means the board of governors of the federal reserve system created and described in the federal reserve act.

(22) “Federal bank supervisory agency” means the comptroller of the currency, the board of governors of the federal reserve system, or the board of directors of the federal deposit insurance corporation.

(23) “Fiduciary” means trustee, agent, executor, administrator, personal representative, committee, guardian or conservator for a minor or other incompetent person, receiver, trustee in bankruptcy, assignee for creditors or any holder of a similar position of trust.

(24) “Home state” means:

(25) “Host state” means, with respect to any bank, a state other than the home state of the bank in which the bank maintains or seeks to establish and maintain a branch.

(26) “Member bank” means any national bank or state bank which has become or which becomes a member of one (1) of the federal reserve banks created by the federal reserve act.

(27) “Merger” means the union of two (2) or more bank corporations by the transfer of property of all to one (1) of them. As used in this act, “merger” includes a consolidation.

(28) “Merging bank” means a party to a merger.

(29) “Mobile or temporary facility” means a place of business of a bank from which the bank performs limited activities for limited periods of time.

(30) “National bank” means a bank organized under the laws of the United States and issued an organization certificate by the comptroller of the currency.

(31) “Net demand deposits” means the total of the bank’s demand deposits after subtracting from the deposit balance due to any bank the deposit balance due from the same bank (other than trust funds deposited by either bank) and any cash items in the process of collection due from or due to such banks shall be included in determining such net balance, except that balances of time deposits of any bank and any balances standing to the credit of private banks, of banks in foreign countries, of foreign branches of other American banks, and of American branches of foreign banks shall be reported gross without any such subtraction, and excluding any deposits received in any office of the bank for deposits in any other office of the bank. The amount of trust funds held in the bank’s own trust department, which the bank keeps segregated and apart from its general assets and does not use in the conduct of its business, shall not be included as net deposits. (32) “Net profits” means profits remaining after the deduction of all expenses including depreciation, losses, or doubtful assets, as required by the director of the department of finance, interest, and taxes accrued or due.

(33) “Person” means an individual, sole proprietorship, partnership, joint venture, association, trust, estate, business trust, corporation, limited liability company, not-for-profit corporation, sovereign government or agency, instrumentality, or political subdivision thereof, or any similar entity or organization.

(34) “Preferred stock” means a class of the stock of a banking corporation issued in accordance with section 26-206, Idaho Code, which is accorded a preference or priority over the common stock of the corporation.

(35) “Resulting bank” means the bank resulting from a merger or conversion.

(36) “Savings deposit” means a deposit:

(a) That consists of funds deposited to the credit of or in which the entire beneficial interest is held by one (1) or more individuals, or a corporation, association, or other organization operated primarily for religious, philanthropic, charitable, educational, fraternal, or other similar purposes and not operated for profit; or that consists of funds deposited to the credit of or in which the entire beneficial interest is held by the United States, any state of the United States, or any county, municipality, or political subdivision thereof, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or political subdivision thereof; or that consists of funds deposited to the credit of, or in which any beneficial interest is held by a corporation, association, or other organization not qualifying above to the extent such funds do not exceed one hundred fifty thousand dollars ($150,000) per such depositor at a bank; and

(b) With respect to which the depositor is not required by the deposit contract but may at any time be required by the bank to give notice in writing of an intended withdrawal not less than thirty (30) days before such withdrawal is made and which is not payable on a specified date or at the expiration of a specified time after the date of deposit.

(37) “State bank” means any bank chartered by the state of Idaho.

(38) “Time certificate of deposit” means a deposit evidenced by a negotiable or nonnegotiable instrument which provides on its face that the amount of such deposit is payable to bearer or to any specified person or to his order:

(a) On a certain date, specified in the instrument, not less than thirty (30) days after the date of the deposit; or

(b) At the expiration of a certain specified time not less than thirty (30) days after date of the instrument; or

(39) “Time deposit” means time certificates of deposit, time deposits open account, and savings deposits.

(40) “Time deposits open account” means a deposit, other than a time certificate of deposit, with respect to which there is in force a written contract with the depositor that neither the whole nor any part of such deposit may be withdrawn, by check or otherwise, prior to the date of maturity, which shall be not less than thirty (30) days after the date of the deposit, or prior to the expiration of the period of notice which must be given by the depositor in writing not less than thirty (30) days in advance of withdrawal. (41) “Trust department” means the division of a bank which has been granted trust powers by the director of finance.

History.

I.C.,§ 26-106, as added by 1979, ch. 41, § 2, p. 62; am. 2004, ch. 159, § 1, p. 511; am. 2015, ch. 204, § 2, p. 618; am. 2016, ch. 47, § 3, p. 98.

§ 26-107. Sections applicable to national banks.

The provisions of sections 26-215, 26-301 through and including, 26-309, 26-311, 26-712, 26-713, 26-714, 26-1203, 26-1206, 26-1207, 26-1208, and 26-1209, 26-1601 through 26-1605, 26-2601 through 26-2612, Idaho Code, shall also apply to national banks.

History.

I.C.,§ 26-107, as added by 1979, ch. 41, § 2, p. 62; am. 1995, ch. 99, § 2, p. 299; am. 1997, ch. 225, § 1, p. 661; am. 2004, ch. 159, § 17, p. 511.

§ 26-108. Commercial bank as trustee. [Repealed.]

§ 26-201. General corporation laws applicable.

Except as otherwise provided herein, the general business corporation laws of this state shall apply to all corporations organized and operating under the bank act. In the event of any conflict between the provisions of the bank act and the provisions of the general business corporation laws, the laws governing limited liability companies, partnerships and other business associations and entities, or the laws governing entity mergers, acquisitions, conversions, domestications, interest exchanges and divisions, the bank act shall control.

History.

I.C.,§ 26-201, as added by 1979, ch. 41, § 2, p. 62; am. 2008, ch. 140, § 3, p. 404.

§ 26-202. Authorization necessary to do business.

It shall be unlawful for any person to engage in or transact any banking business in this state except by means of a corporation duly organized for that purpose and chartered under the bank act. Corporations organized to engage in and transact banking business shall be formed by five (5) or more natural persons under the general business corporation laws of this state and as provided in the bank act.

Except as specifically authorized by this act, other laws of the state of Idaho, or federal law, no person except a national bank shall engage in or transact any banking business except as is incidental or necessarily preliminary to its organization without the written approval of the director and without his written charter stating that it has complied with the provisions of the bank act and all of the requirements of law and that it is authorized to transact banking business within the state. To obtain a charter the incorporators shall file with the director the following information:

1. Five (5) copies of its articles of incorporation;
2. Satisfactory proof of compliance with section 26-204, Idaho Code;
3. The names and addresses of its officers and directors;
4. The names and addresses of all subscribers to its common stock and the amounts subscribed by each;
5. The oath of each and every director as provided in section 26-213, Idaho Code;
6. The affidavit of its directors to the effect that said corporation has complied with all the provisions of the bank act required to authorize it to commence business; and
7. Such other information as the director may require in the form required by the director.

Upon filing of the foregoing, it shall be the duty of the department to examine and investigate into the condition of the corporation, ascertaining whether or not the capital has been paid in and whether the corporation has complied with all the provisions of the law required to entitle it to engage in the business of banking. The department shall also ascertain from the best sources of information at its command whether the character and general fitness of the persons named as subscribers and officers and directors are such that the bank may be operated in a safe, prudent and profitable manner and as to command the confidence of the community in which such bank is proposed to be located. If upon such examination, and investigation, it appears that the corporation is lawfully entitled to commence banking business, and the directors and officers are competent to engage in banking business, and its subscribers are such as to command the confidence of the community, and if, in the opinion of the director the organization of the bank is justified, the director shall forthwith issue to the corporation a bank charter, under official seal.

If the director has reason to believe that the corporation has been formed for any other business than the legitimate banking business contemplated by the bank act or that the subscribers, officers and directors will not operate the bank in a safe, prudent and profitable manner, or that the bank will not have qualified experienced management with experience commensurate with the area where the bank is proposed to be located, he shall withhold such charter, and he may withhold the issuance of such charter to a corporation seeking to engage in banking business in an area which in his judgment does not justify or warrant a new or additional bank or could not support a profitable banking corporation. History.

I.C.,§ 26-202, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 204, § 3, p. 618.

§ 26-204. Articles of incorporation — Amendment.

Any proposed amendment to the articles of incorporation of a bank shall, before the same is adopted, be submitted to the director for his approval as to form and content. In addition to the articles of amendment to be filed with the secretary of state under the provisions of the general business corporation act, like articles and a copy of the articles of incorporation as amended must be filed in the office of the director and no amendment shall be operative nor effective until such articles be filed in the office of the director and shall have been approved in writing by the director. The articles of incorporation may be amended to include a provision which eliminates or limits the personal liability of the directors of the bank in accordance with section 30-1-202, Idaho Code, provided that such provision shall not eliminate or limit the liability of a director under section 26-213(5), Idaho Code.

History.

I.C.,§ 26-204, as added by 1979, ch. 41, § 2, p. 62; am. 1990, ch. 242, § 2, p. 694; am. 1998, ch. 337, § 2, p. 1082.

§ 26-205. Incorporation — Capital structure required.

1. Every banking corporation hereafter organized must have common stock, surplus and undivided profits paid up in unhypothecated cash of not less than the following amounts:
   1. In cities, and communities the population of which does not exceed six thousand (6,000), a minimum of two hundred fifty thousand dollars ($250,000) in par value of common stock, fifty thousand dollars ($50,000) in surplus, and twenty-five thousand dollars ($25,000) in undivided profits.
   2. In cities, or communities the population of which exceeds six thousand (6,000), but does not exceed fifty thousand (50,000), a minimum of three hundred fifty thousand dollars ($350,000) in par value common stock, seventy thousand dollars ($70,000) in surplus, and thirty-five thousand dollars ($35,000) in undivided profits.
   3. In cities, or communities the population of which exceeds fifty thousand (50,000), a minimum of one million dollars ($1,000,000) in par value of common stock, two hundred thousand dollars ($200,000) in surplus, and one hundred thousand dollars ($100,000) in undivided profits.
   4. The par value of common stock, surplus and undivided profit amounts set out herein are minimum amounts only, and the director may in his discretion require larger amounts of par value of common stock, surplus and undivided profits.
2. No original subscription to the stock of any bank hereafter organized under the laws of this state shall be valid or operative unless the subscriber also subscribes and actually pays in, in cash, at the time he pays such subscription an additional amount equal to twenty percent (20%) of his subscription, for the purpose of constituting surplus funds for such bank and an additional amount equal to ten percent (10%) of his subscription for the purpose of constituting undivided profits for such bank to be used, so far as necessary, in paying the costs of organization and for the general expenses of the bank. No bank shall issue any share of stock until the full par value thereof, plus twenty percent (20%) surplus and ten percent (10%) undivided profits, has been actually paid in, in cash, as above provided.
3. The entire par value of the common stock, plus surplus and undivided profits of every banking corporation hereafter formed shall be paid in, in cash, and deposited in a bank in the state of Idaho before a corporation may be authorized to commence banking business. A subscription for which a subscriber gives the banking corporation his or her note in payment or part payment of the par value of common stock, plus surplus or undivided profits is void. Stock issued pursuant to this section may not be used as security for a loan to purchase stock.
4. For the purpose of this section, the population shown and determined by the last preceding federal census, or any subsequent census compiled and certified under any law of this state, shall be deemed to be the population of any city in which any such bank is to be organized. If the principal place of business of any bank so organized is located outside of the corporate limits of any city or village, then the population within a radius of five (5) miles of its principal place of business, which is not included within the boundaries of any municipal corporation, as such population is shown and determined by such federal or subsequent official census, shall be the basis for classification under the provisions of this section.
5. A bank may not issue preferred stock to meet the capitalization requirements of this section. History.

I.C.,§ 26-205, as added by 1979, ch. 41, § 2, p. 62.

§ 26-206. Preferred stock.

1. Subject to the provisions of the bank act, and by and with the approval and consent of the director, any bank now or hereafter incorporated under the laws of this state may issue such part of its capital as is approved by the director as preferred stock having such special rights, preferences, privileges, immunities, qualifications and restrictions as to voting, dividends, redemption, retirement, participation in corporate assets, not common to other stock, as provided in its articles of incorporation as hereafter adopted or amended, and as are not inconsistent with the provisions of the bank act and the provisions of its articles of incorporation or amendments thereto.
2. Dividends on preferred stock may be declared and paid only from net profits as defined by section 26-106, Idaho Code, but such net profits may be current profits or those accumulated as surplus. No dividend shall be declared nor paid, any retirement or redemption of such stock be made, nor any other distribution or payment of corporate assets made thereon or therefor at any time when the total common stock and surplus is below or will be thereby reduced below the minimum common stock required by law plus a surplus fund equal to ten percent (10%) of such minimum common stock or the amount of common stock required by the director at the time the bank’s charter was issued plus a surplus fund equal to ten percent (10%) of such required common stock.
3. Preferred stock under the provisions of this act must be subscribed and paid for at not less than par value.
4. Except as otherwise provided in the bank’s articles of incorporation or by the bank act, preferred stock authorized by this act is capital and shall be considered as such in computing the capital structure of the bank within the meaning of all provisions of the bank act.

History.

I.C.,§ 26-206, as added by 1979, ch. 41, § 2, p. 62; am. 2020, ch. 82, § 15, p. 174.

§ 26-207. Bylaws.

Every banking corporation formed under the bank act must, within thirty (30) days after the issuance of its certificate of incorporation, adopt a code of bylaws as provided in the Idaho Business Corporations Act. A copy of all bylaws and of any subsequent amendments thereto and a copy of the bylaws as amended must be mailed by certified mail return receipt requested to the department within twenty (20) days after the adoption thereof, and no such bylaw or amendment shall be effective until so mailed.

History.

I.C.,§ 26-207, as added by 1979, ch. 41, § 2, p. 62.

§ 26-209. Time of annual meeting.

An annual meeting of stockholders of a bank shall be held each year at the time and in the manner indicated in the bylaws.

History.

I.C.,§ 26-209, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 204, § 4, p. 618.

§ 26-213. Board of directors — Election, meetings, duties, liabilities, oath, removal — Officers — Election and bond.

1. The affairs, business and property of a bank shall be managed and controlled by a board of not less than five (5) directors, who shall be elected by the stockholders at their regular stated annual meetings. A majority of said directors shall be residents of the state of Idaho.
2. No person shall be eligible to serve as a director of any bank organized or existing under the laws of this state, unless he shall be the owner in his own right of unhypothecated common stock of the bank in the amount of at least five hundred dollars ($500) par value. One (1) or more of the directors of a bank, the majority of the common stock of which is owned by a bank holding company, may satisfy the requirement of this subsection by owning in his own right at least five hundred dollars ($500) of the unhypothecated common stock of the bank holding company, either the par value or the book value.
3. Any vacancy in the board of directors shall be filled by the board, and any directors so appointed shall hold office until the next annual meeting of stockholders. The board of directors shall immediately following each annual meeting of stockholders organize and elect a president, vice-president and cashier, who may also be the secretary and treasurer of the bank, and such other officers as shall be provided for in the bylaws, and shall fix the salary of all officers and employees or delegate such authority to its managing officer or officers. Directors of every bank shall hold at least ten (10) meetings per year; provided, no more than sixty-five (65) days may elapse between board of directors meetings, and complete records of such meetings shall be entered in the minute book and signed by both the chairman and the secretary. The director may approve, upon written application, a reduction in the number and frequency of directors’ meetings.
4. Whenever a vote is taken upon any matter, a record shall be kept and entered in the minutes of those voting in the affirmative and those voting in the negative. At every meeting it shall be the duty of the directors to familiarize themselves with loans and investments made since the previous regular meeting and any director may request a listing of all loans made since the previous regular meeting. It shall be the duty of the president and cashier to furnish such information to the directors. The directors shall familiarize themselves with the existing liabilities to the bank of every officer and director of their bank at least once during each calendar year. The minutes of the meeting shall record the approval or disapproval of loans, investments and liabilities of officers.
5. Any director, officer or person who shall participate in any violation of the laws of this state relative to banks or banking, shall be liable for all damages which said bank, its stockholders, depositors, or creditors shall sustain in consequence of such violation. It shall be the duty of every director of a bank personally to attend all meetings of the board of directors unless unavoidably detained therefrom. Any director who shall habitually absent himself from such meeting shall be deemed to have participated in any violation of law that may have occurred in his absence, and he shall not be permitted to set up such absence as a defense thereto.
6. Every director shall take and subscribe an oath that he will diligently and honestly perform his duty in such office and will not knowingly violate or permit a violation of any provisions of the bank act, and such oath of office shall be transmitted to and filed with the department of finance. A director may be removed from office at any time for violation of his oath of office by the affirmative vote of two-thirds (2/3) of the entire board, exclusive of the director to be removed.
7. Every active officer and employee of any bank in this state shall furnish a surety bond in the penal sum of fifty thousand dollars ($50,000) to the bank by which he is employed for the faithful performance of his duties, executed by a surety company authorized to do business in the state of Idaho as a surety. In lieu of the individual surety bonds required by this section, a bank may provide a bankers blanket or financial institution bond in a minimum amount of two hundred fifty thousand dollars ($250,000). The conditions of such bond, whether the instrument so describes the conditions or not, shall be that the principal shall protect the obligee against any loss or liability that the obligee may suffer or incur by reason of the acts of dishonesty of the principal.
8. In lieu of the bonds required in subsection (7) of this section, a bank may, with the approval of the director of the department of finance, provide to the director a certificate of deposit issued by any other bank in the state of Idaho. The principal amount of the certificate of deposit shall be payable to the director and shall be in an amount to be determined by the director, but not less than two hundred fifty thousand dollars ($250,000). The interest on the certificate of deposit shall be payable to the bank providing the certificate of deposit to the director. The certificate of deposit shall be maintained at all times the bank is authorized to do business under this chapter, and for a period of time thereafter to be determined by the director, but not to exceed three (3) years.
9. Every bank shall provide adequate insurance protection or indemnity against robbery and burglary and other similar insurable losses.
10. All surety bonds shall be approved by and filed with the directors. The directors or the director may require an increase of the amount of any such bond whenever either the directors or the director deem necessary for the better protection of the bank.

History.

I.C.,§ 26-213, as added by 1979, ch. 41, § 2, p. 62; am. 1986, ch. 316, § 1, p. 316; am. 1987, ch. 293, § 1, p. 622; am. 1991, ch. 145, § 1, p. 344; am. 1993, ch. 53, § 1, p. 137; am. 2007, ch. 126, § 1, p. 376.

§ 26-215. Federal reserve — Membership.

Any bank shall have the power to subscribe to the capital stock and become a member of a federal reserve bank.

Any bank incorporated under the laws of this state which is or which becomes a member of a federal reserve bank is, by the bank act, vested with all powers conferred upon member banks of the federal reserve banks by the terms of the Federal Reserve Act as fully and completely as if such powers were specifically enumerated and described herein. All such powers shall be exercised subject to all restrictions and limitations imposed by the Federal Reserve Act, or by regulations of the Federal Reserve Board, made pursuant thereto. The right of the legislature to revoke or to amend the powers herein converted is, however, expressly reserved.

Compliance on the part of any such bank with the reserve requirements of the Federal Reserve Act shall be held to be in full compliance with those provisions of the laws of this state which require banks to maintain cash balances in their vaults or with other banks, and no such bank shall be required to carry or maintain reserve other than such as is required under the terms of the Federal Reserve Act. Any such bank shall continue to be subject to the supervision and examinations required by the laws of this state, except that the Federal Reserve Board shall have the right, if it deems necessary, to make examinations; and the authorities of this state having supervision over such bank may disclose to the Federal Reserve Board or to examiners duly appointed by it, all information in reference to the affairs of any bank which has become or desires to become a member of a federal reserve bank.

History.

I.C.,§ 26-215, as added by 1979, ch. 41, § 2, p. 62.

§ 26-217. Banks empowered to comply with requirements for federal deposit insurance.

Any banking institution now or hereafter organized under the laws of this state is hereby empowered, on the authority of its board of directors, or a majority thereof, to enter into such contracts, incur such obligations and generally to do and perform any and all such acts and things whatsoever as may be necessary or appropriate in order to take advantage of any and all memberships, loans, subscriptions, contracts, grants, rights, or privileges, which may at any time be available or enure to banking institutions or to their depositors, creditors, stockholders, conservators, receivers or liquidators, by virtue of those provisions of section 8 of the federal “Banking Act of 1933” (sec. 12B of the Federal Reserve Act, as amended), which establish the Federal Deposit Insurance Corporation and provide for the insurance of deposits, or of any other provisions of that or of any other act or resolution of congress to aid, regulate or safeguard banking institutions and their depositors, including any amendments of the same or any substitutions therefor; also, to subscribe for and acquire any stock, debentures, bonds or other types of securities of the Federal Deposit Insurance Corporation and to comply with the lawful regulations and requirements from time to time issued or made by such corporation.

History.

I.C.,§ 26-217, as added by 1979, ch. 41, § 2, p. 62.

§ 26-301. Branch — Requirements.

No bank shall maintain any branch except as provided for in this act. Any bank organized and chartered under the laws of Idaho may, upon written application to and with the approval of the director, establish and operate one (1) or more branches for the transaction of its business at any location. Any such bank may establish and operate a branch in a state other than Idaho, provided that the bank shall comply with all applicable provisions of Idaho law, the law of the other state and federal law. Any bank organized and chartered under the laws of another state or under federal law may establish and operate one (1) or more branches in Idaho as permitted by chapter 16, title 26, Idaho Code, and federal law.

History.

I.C.,§ 26-301, as added by 1979, ch. 41, § 2, p. 62; am. 1995, ch. 99, § 3, p. 299; am. 2015, ch. 204, § 6, p. 618.

§ 26-302. Establishment of loan production offices authorized.

A bank may, after providing notice to the director, establish and maintain one (1) or more loan production offices at any location in the state of Idaho.

1. A loan production office when so established may conduct any of the following activities:
   1. Solicit loans on behalf of the bank;
   2. Provide information on loans, rates and terms;
   3. Accept loan applications and supporting documents;
   4. Review and process loan applications for compliance with underwriting standards and completeness of documents;
   5. Approve loan applications;
   6. Conduct loan closing activities, such as the execution of promissory notes and deeds of trust; and
   7. Engage in other loan production office activities that the bank’s primary state or federal regulator has approved for banks subject to its supervision.
2. A loan production office shall not have the power to solicit, receive or accept money or its equivalent on deposit, or disburse loan funds to customers.
3. A bank that desires to establish a loan production office in this state shall provide written notice to the director of its intent to do so no later than thirty (30) days prior to opening the loan production office. The notice to the director shall provide the following information:
   1. The name of the bank and address of the main office;
   2. The city and street address of the loan production office;
   3. The activities proposed to be conducted at the loan production office, including the types of loans to be solicited and originated at the office; and
   4. Any additional relevant information required by the director.
4. Following a bank’s establishment of a loan production office in this state, a bank shall give notice to the director of any relocation or closure of the office, the date of the relocation or closure and the disposition of any records previously maintained at the loan production office.
5. Each loan production office shall be subject to examination and supervision by the director in the same manner and to the same extent as the bank.
6. A state bank may establish and operate a loan production office in a state other than Idaho, provided that the bank shall comply with all applicable provisions of Idaho law, the law of the other state where the loan production office will be located and federal law.
7. Each loan production office operating in Idaho on July 1, 2015, shall provide written notice to the director containing the information required in subsection (3) of this section on or before August 1, 2015.

History.

I.C.,§ 26-302, as added by 2015, ch. 204, § 8, p. 618.

§ 26-303. Section concerning branch banks unaffected.

The sections of this chapter relating to loan production offices and mobile or temporary facilities shall not be construed to modify or repeal section 26-301, Idaho Code, and the terms “loan production office,” “mobile facility” and “temporary facility” as used in the bank act shall not be construed to mean branch bank.

History.

I.C.,§ 26-303, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 204, § 9, p. 618.

§ 26-304. Powers limited. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-304, as added by 1979, ch. 41, § 2, p. 62.

§ 26-305. Responsibilities of bank.

Any bank establishing a loan production office or mobile or temporary facility shall be responsible for all transactions of the loan production office or mobile or temporary facility, and for keeping accounts and books covering all business transactions of the loan production office or mobile or temporary facility.

History.

I.C.,§ 26-305, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 204, § 10, p. 618.

§ 26-306. Mobile or temporary facility.

Mobile facilities or temporary facilities may be established with the approval of the director and under such conditions as the director may establish.

History.

I.C.,§ 26-306, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 204, § 11, p. 618.

§ 26-307. Addition to capital structure of bank. [Repealed.]

§ 26-308. Bank facility to have priority. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-308, as added by 1979, ch. 41, § 2, p. 62.

§ 26-309. Customer-bank communication terminal.

A bank may make available for use by its customers one (1) or more electronic devices or machines through which the customer may communicate to the bank a request to withdraw money either from his account or from a previously authorized line of credit, or an instruction to receive or transfer funds for the customer’s benefit. The device may receive or dispense cash in accordance with such a request or instruction, subject to verification on line or off line by the bank. Any transactions initiated through such a device shall be subject to verification by the bank either by direct wire transmission or otherwise. Such facilities may be unmanned or manned.

A person may perform as would a device so long as the person does not perform any functions not specifically authorized by this section.

These devices shall be designated as a customer-bank communication terminal (CBCT). The use of a CBCT at locations other than the main office or a branch office of the bank does not constitute branch banking. A bank shall provide insurance protection under its bonding program for transactions involving such devices.

1. The establishment and use of a CBCT is subject to the following limitations:
   1. Written notice must be given to the director’s office no less than thirty (30) days before any CBCT is put into operation. Any bank presently utilizing a CBCT shall comply with the notice requirements within thirty (30) days. Such notice shall describe with regard to the communication system:
      1. the location;
      2. a general description of the area where located and the manner of installation;
      3. the manner of operation;
      4. the kinds of functions which will be performed;
      5. whether the CBCT will be shared, and, if so, under what terms and with what other institutions and their location;
      6. the manufacturer and, if owned, the purchase price or, if leased, a copy of the lease;
      7. the distance from the nearest banking office and from the nearest similar CBCT of the reporting bank; and
      8. the distance from the nearest banking office and nearest CBCT of another commercial bank, which will share the facility, and the name of such other bank or banks.
   2. The functions of the CBCT shall be limited to:
      1. the receiving of deposits;
      2. the cashing of checks;
      3. the dispensing of cash;
      4. payment of loan proceeds on a prearranged line of credit;
      5. the communication of other such information directly related to the customer’s account; and
      6. receiving loan payments;
      7. any other function authorized to be performed by national banks and approved by the director. (c) Arrangements may be made at the CBCT for the placing or installation of a receptacle in which a customer may place packaged communication intended for the bank.
2. To the extent consistent with the anti-trust laws, banks are required to share unmanned CBCTs at a reasonable fee with one (1) or more other financial institutions if requested by the other financial institution. A bank may connect CBCTs with a regional or national consumer funds transfer system for the purpose of handling financial transactions of the kind authorized by subsection (1)(b) of this section. An agreement to share CBCT usage may not prohibit, limit or restrict the right of a bank to charge a customer any fee allowed by state or federal law or require the bank to limit or waive its rights or obligations under the provisions of this section. No bank may impose a fee for the use of a CBCT by those using an access device not issued by that bank unless such fee is clearly disclosed to the customer at a time and in a manner that allows the user to terminate or cancel the transaction without incurring the fee. The fee may be in addition to any other charges imposed on the user by the operator of any consumer funds transfer system or by the user’s own financial institution.
3. The director may issue a cease and desist order upon a finding that a bank utilizing a CBCT is doing so in a manner not specifically authorized in this section.
4. This section and regulations adopted pursuant to it shall be deemed to apply to national banks operating customer-bank communication terminals and for the purpose of the bank act a financial institution shall mean any state or federally chartered commercial bank, savings and loan association or credit union authorized by the department of finance or a comparable federal agency to do business in the state of Idaho.

(d) The CBCT shall be a communication service available only to customers of the bank or other financial institution which the management of the bank may approve.

(e) The CBCT shall not be advertised as full service banking or as performing anything other than activities set out in subsection (1)(b) of this section.

History.

I.C.,§ 26-309, as added by 1979, ch. 41, § 2, p. 62; am. 1993, ch. 52, § 1, p. 133; am. 1993, ch. 53, § 2, p. 137.

§ 26-310. Investigation fee. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-310, as added by 1979, ch. 41, § 2, p. 62.

§ 26-311. Branches following relocation.

Notwithstanding any other provision of law, a bank that relocates its main office from another state into Idaho pursuant to 12 U.S.C. 30, 12 U.S.C. 36, and section 26-1101, Idaho Code, shall continue to be authorized to establish and operate branches within this state as provided in section 26-301, Idaho Code, even if, after its relocation into Idaho, its home state as defined by section 26-1603, Idaho Code, becomes a state other than Idaho.

History.

I.C.,§ 26-311, as added by 1997, ch. 225, § 2, p. 661.

§ 26-312 — 26-315. Continuation of corporate entity — Sale of all assets — Dissenting stockholders — Nonconforming assets or business — Book value of assets. [Repealed.]

§ 26-401. Definitions.

As used in this section [chapter]:

“Invest” includes any advance of funds to a bank service corporation, whether by the purchase of stock, the making of a loan, or otherwise, except a payment for rent earned, goods sold and delivered, or services rendered prior to the making of such payment;

“Applying bank” means a bank applying to a bank service corporation for bank services; and

“Stockholding bank” means a bank which owns stock of a bank service corporation.

History.

I.C.,§ 26-401, as added by 1979, ch. 41, § 2, p. 62.

§ 26-402. Investment in service corporation.

No limitation or prohibition otherwise imposed by any provision of the laws of the state of Idaho exclusively relating to banks shall prevent or prohibit any two (2) or more banks from investing not more than ten percent (10%) of the paid-in and unimpaired capital and unimpaired surplus of each of them in a bank service corporation.

History.

I.C.,§ 26-402, as added by 1979, ch. 41, § 2, p. 62.

§ 26-403. Banks jointly holding stock — Effect of withdrawal by one bank.

If stock in a bank service corporation has been held by two (2) banks, and one (1) of such banks ceases to utilize the services of the corporation and ceases to hold stock in it, and leaves the other as the sole stockholding bank, the corporation may nevertheless continue to function as such and the other bank may continue to hold stock in it.

History.

I.C.,§ 26-403, as added by 1979, ch. 41, § 2, p. 62.

§ 26-404. Duty of bank service corporation not to discriminate — Burden of proof.

Whenever a bank, referred to in this section as an “applying bank,” subject to examination by either the department of finance of the state of Idaho, or a federal bank supervisory agency, applies for a type of bank service for itself from a bank service corporation which supplies the same type of bank services to another bank, and the applying bank is competitive with any bank, referred to in this section as a “stockholding bank,” which holds stock in such corporation, the corporation must offer to supply such services by either:

1. issuing stock to the applying bank and furnishing bank services to it on the same basis as to the other banks holding stock in the corporation, or
2. furnishing bank services to the applying bank at rates no higher than necessary to fairly reflect the cost of such services, including the reasonable cost of the capital provided to the corporation by its stockholders, at the corporation’s option, unless comparable services at competitive overall cost are available to the applying bank from another source, or unless the furnishing of the services sought by the applying bank would be beyond the practical capacity of the corporation. In any action or proceeding to enforce the duty imposed by this section, or for damages for the breach thereof, the burden shall be upon the bank service corporation to show such availability.

History.

I.C.,§ 26-404, as added by 1979, ch. 41, § 2, p. 62.

§ 26-405. Prohibited activities.

No bank service corporation may engage in any revenue producing activity other than the performance of bank services for banks and, to an extent not exceeding one-half (½) of its total activity, the performance of similar services for persons or organizations other than banks.

History.

I.C.,§ 26-405, as added by 1979, ch. 41, § 2, p. 62.

§ 26-406 — 26-408. Board of directors — Election, meetings, duties, liabilities, oath — Officers — Election and bond — Removal of directors, officers, or employees — Powers of banks to grant options to purchase or sell shares of its capital stock to its employees. [Repealed.]

§ 26-501. Definitions.

As used in this chapter, unless the context otherwise requires:

1. “Bank” shall mean any bank chartered under this act.
2. “Company” shall mean any corporation, business trust, association, or similar organization but shall not include:
   1. An individual; or
   2. Any corporation the majority of shares of which are owned by the United States or any state.
3. “Business trust” shall mean a business organization wherein a business or other property is conveyed to trustees who manage the business or other property for the benefit of the certificate or shareholders of the trust. Business trust shall not include a voting trust.
4. “Bank holding company” shall mean any company:
   1. Which directly or indirectly owns or controls twenty-four percent (24%) or more of the voting shares of a bank;
   2. Which controls in any manner the election of the majority of the directors of a bank; or
   3. For the benefit of whose shareholders or members twenty-four percent (24%) or more of the voting shares of a bank is held by trustees;
5. Notwithstanding the foregoing:
   1. No estate, trust, guardianship, or conservatorship or fiduciary thereof shall be a bank holding company by virtue of its ownership or control of shares of stock of a bank unless such trust is a business trust or a voting trust which by its terms or by law does not expire within ten (10) years from the effective date of the voting trust;
   2. No company shall be a bank holding company by virtue of its ownership or control of shares acquired by it in connection with its underwriting of bank shares and which are held only for such period of time as will permit the sale thereof on a reasonable basis; and
   3. No company shall be a bank holding company by virtue of its ownership or control of shares acquired and held in the ordinary course of securing or collecting a debt previously contracted in good faith and which are held only for such period of time as will permit the sale thereof on a reasonable basis.
6. “Financial holding company” shall mean a bank holding company that, notwithstanding subsection (4) of this section, may engage in any activity, and may acquire and retain the shares of any company engaged in any activity, that the director determines, by rule or order:
   1. To be financial in nature or incidental to such financial activity; or
   2. Is complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system in general.

For the purposes of any proceeding under subsection (4)(b) of this section, there is a presumption that any company which directly or indirectly owns, controls or has power to vote less than five percent (5%) of the voting shares of a bank does not have control over that bank; and

History.

I.C.,§ 26-501, as added by 1979, ch. 41, § 2, p. 62; am. 2001, ch. 137, § 1, p. 496.

§ 26-503. Approval to acquire a bank — Requirements — Approval to commence action or acquire a company.

1. A bank holding company shall apply to the department of finance and receive the approval of the department of finance prior to acquiring a bank. The application shall include such information with respect to the financial condition and operations, management and intercompany relationships of the bank to be acquired and the holding company as the director may deem necessary or appropriate. In considering an application to acquire a bank, the director shall consider at least:
   1. The financial condition of the bank holding company and any banks already owned by the holding company;
   2. The probable effect of the acquisition on the holding company, any banks already owned by the holding company and the bank which is to be acquired; and
   3. The effect of the acquisition on competition in the providing of banking services.
2. A financial holding company shall apply to the department of finance and receive the approval of the department of finance prior to commencing any activity or acquiring any company as described in section 26-501(6), Idaho Code.

History.

I.C.,§ 26-503, as added by 1979, ch. 41, § 2, p. 62; am. 2001, ch. 137, § 2, p. 496.

§ 26-505. Director of finance — Reports — Requirements.

The director may require reports made under oath to be filed in the department of finance to keep it informed as to the operation of any bank holding company. The director may make examinations of each bank holding company and each subsidiary thereof under the provisions of section 26-1102, Idaho Code, the actual cost of which may be assessed against and paid by such holding company. The director may accept reports of examinations made by the federal reserve board, the comptroller of the currency, or the federal deposit insurance corporation in lieu of making an examination by the department.

History.

I.C.,§ 26-505, as added by 1979, ch. 41, § 2, p. 62; am. 2001, ch. 137, § 3, p. 496.

§ 26-506. Change in control.

All transfers of a major portion of the outstanding stock or trust certificates of a bank holding company by sale, gift, or otherwise shall be approved by the director prior to such transfer. For the purposes of this section, a major portion of the outstanding stock or trust certificates of a bank holding company is any number of any class of shares of a bank holding company the acquisition of which will result in a person acquiring the shares having voting control of the bank holding company. The director shall not approve a transfer of stock if he finds that the transferee has been removed from a position as a director, officer or employee of a bank holding company, a bank or other financial institution pursuant to an order of a state or federal agency. The director may disapprove a transfer of stock if in his opinion the transferee does not meet the requirements of a stockholder, director, or officer as set out in section 26-502, Idaho Code.

History.

I.C.,§ 26-506, as added by 1979, ch. 41, § 2, p. 62.

§ 26-507. Violation — Penalty.

Any person who willfully violates any provision of this chapter shall be guilty of a felony.

History.

I.C.,§ 26-507, as added by 1979, ch. 41, § 2, p. 62.

§ 26-508. Removal of directors, officers, or employees. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-508, as added by 1979, ch. 41, § 2, p. 62.

§ 26-509. Engaging in unsafe or unsound practices — Cease and desist orders

Injunction. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-509, as added by 1979, ch. 41, § 2, p. 62.

§ 26-601. Reserve.

Every bank organized under the laws of this state and authorized to receive deposits shall comply with the reserve requirements of the Federal Reserve act.

History.

I.C.,§ 26-601, as added by 1979, ch. 41, § 2, p. 62; am. 1981, ch. 8, § 1, p. 15; am. 2008, ch. 140, § 5, p. 404.

§ 26-601A. Determination of limits of loans and investments of banks. [Repealed.]

§ 26-602. Diminution of reserve.

1. When the reserve of any bank falls below the amount required by section 26-601, Idaho Code, for any reporting period, the bank shall immediately restore its reserve to the amount required by section 26-601, Idaho Code, and in addition:
   1. If a bank is deficient in reserve for two (2) nonconsecutive reporting periods in a calendar year, the bank shall pay to the department of finance at the end of the second reporting period a fine of three hundred dollars ($300).
   2. If a bank is deficient in reserves for three (3) nonconsecutive reporting periods in a calendar year, the bank shall pay to the department of finance at the end of the third reporting period a fine equal to five percent (5%) of the dollar amount by which it was deficient in reserves for the third reporting period or five hundred dollars ($500), whichever is greater.
   3. If a bank is deficient in reserves for more than three (3) nonconsecutive reporting periods or for two (2) or more consecutive reporting periods in a calendar year, the director shall proceed as provided in section 26-1115, Idaho Code. The bank shall not increase its loans or discounts until its reserve is fully restored and the director may by order set a minimum level of cash reserves which the bank must maintain until such time as the director has reason to believe that the bank will comply with the reserve requirements of section 26-601, Idaho Code.
2. The penalties set out in subsection (1) of this section are not exclusive. The director may in proper cases proceed in his discretion as provided in section 26-1115, Idaho Code, or chapter 10, title 26, Idaho Code.

History.

I.C.,§ 26-602, as added by 1979, ch. 41, § 2, p. 62; am. 2008, ch. 140, § 6, p. 405.

§ 26-602A. Exceptions to the twenty percent limitation on bank loans. [Repealed.]

§ 26-603. Director of the department of finance

Reserve. [Repealed.]

§ 26-604. Dividends — Surplus.

No dividend shall be declared or paid by any bank until a surplus equal to twenty percent (20%) of the paid-in capital stock of such bank has been built up. Thereafter, the board of directors of any bank may declare a dividend of so much of its net profits as it shall deem expedient; but before any such dividend is declared or paid, not less than one-fifth (1/5) of the net profits of the bank for such period as is covered by the dividend shall be carried to the surplus fund until such surplus fund shall amount to fifty percent (50%) of the paid-in common stock. Any loss sustained by any bank in excess of its undivided profits may be charged to its surplus account, provided that its surplus funds shall thereafter be reimbursed from its earnings in the manner above provided. If such surplus fund is reduced below an amount equal to twenty percent (20%) of the common stock, no further dividend shall be declared or paid until such surplus is restored to that amount, and thereafter dividends shall only be declared and paid in the amount and in the manner above provided until such surplus shall be restored to an amount equal to fifty percent (50%) of the common stock.

The directors knowingly voting for any dividend in violation of any of the provisions of this section shall be jointly and severally liable, civilly, for any and all dividends so declared, and in addition thereto, shall be guilty of a misdemeanor.

History.

I.C.,§ 26-604, as added by 1979, ch. 41, § 2, p. 62.

§ 26-701. Investment of funds — Certain loans prohibited.

No bank shall employ its moneys, directly or indirectly, in trade or commerce, by buying and selling goods, chattels, wares and merchandise, except to the extent national banks are so authorized if approved by the director. A bank may hold and sell all kinds of property which may come into its possession as collateral security for loans, or any ordinary collection of debts, as prescribed by law. Any goods, chattels, wares or merchandise coming into the possession of any bank as collateral security or as a result of collection of debts shall be disposed of as soon as possible and shall not be considered as a part of the bank’s assets after the expiration of two (2) years from the date of acquirement. The words “goods and chattels” as used in this section shall not be construed to include bonds and securities.

History.

I.C.,§ 26-701, as added by 1979, ch. 41, § 2, p. 62; am. 1993, ch. 53, § 3, p. 137.

§ 26-702. Bank stock.

1. Except as provided in subsection (2) of this section, no bank shall accept as collateral, nor make any loans or discounts on the security of nor purchase any shares of its own capital stock. No bank shall purchase the shares of any other bank wherever organized, or situated, except stock of federal reserve banks. A bank may acquire a security interest in or purchase its own stock if the acquisition is necessary to prevent loss upon a debt previously contracted in good faith and the stock so purchased or acquired shall within six (6) months from the date of acquirement be sold or disposed of at public or private sale. After the expiration of six (6) months any such stock shall not be considered as a part of the assets of such bank.
2. With the written approval of the director, a bank may redeem or otherwise purchase shares of its own capital stock if the director finds that such redemption or purchase does not impair the capital structure of the bank as required by section 26-205, Idaho Code, is for legitimate corporate purposes and not for speculation, is not for an unreasonable price, does not conflict with the articles of incorporation or the bylaws of the bank, and is not otherwise detrimental to the bank or to the public interest. Legitimate corporate purposes for acquiring and holding of treasury stock may include:
   1. To have shares available for use in connection with employee stock option, bonus, purchase or similar plans;
   2. To sell to a director for the purpose of acquiring qualifying shares;
   3. To purchase a director’s qualifying shares upon cessation of the director’s service in that capacity if there is no ready market for the shares;
   4. To reduce the number of shareholders to qualify as a subchapter S corporation;
   5. To reduce costs associated with shareholder communications and meetings;
   6. To facilitate a bank’s shareholder dividend reinvestment plan; or
   7. Any other legitimate corporate purpose as may be approved by the director.

History.

I.C.,§ 26-702, as added by 1979, ch. 41, § 2, p. 62; am. 1986, ch. 58, § 1, p. 167; am. 2008, ch. 140, § 7, p. 405.

§ 26-703. Real estate loans.

Any bank may make real estate loans secured by liens upon improved real estate, including improved farm land and improved business and residential properties, as are consistent with safe and sound banking practices. A loan secured by real estate within the meaning of this section shall be in the form of an obligation or obligations secured by mortgage, trust deed, or other such instrument which shall constitute a lien upon real estate.

History.

I.C.,§ 26-703, as added by 1979, ch. 41, § 2, p. 62; am. 2004, ch. 159, § 2, p. 511; am. 2007, ch. 126, § 3, p. 376.

§ 26-704. Determination of limits of loans and investments of banks.

For the purpose of determining limitations on loans and investments the following items are to be disregarded:

1. The sale of excess reserve funds by one (1) bank to another bank;
2. The purchase of securities by a bank, under an agreement to resell at the end of a stated period; and
3. The purchase of mortgage loans by a bank, under agreement to resell at the end of a stated period.

The director may, upon application by a bank, approve loans and investments in excess of the limitations provided in this chapter.

History.

I.C.,§ 26-708, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 4, p. 511.

§ 26-705. Loans to one person.

1. The total loans and extensions of credit by a bank to a person outstanding at one (1) time, shall at no time exceed twenty percent (20%) of the capital structure of such bank.
2. “Borrower” means a person who is named as a borrower or debtor in a loan or extension of credit, a counterparty to whom a bank has credit exposure in a derivative transaction entered into by the bank, or any other person including a drawer, endorser or guarantor, who is deemed to be a borrower under the direct benefit and common enterprise tests set forth in this section.
3. “Derivative transaction” includes any transaction that is a contract, agreement, swap, warrant, note or option that is based, in whole or in part, on the value of, any interest in or any quantitative measure or the occurrence of any event relating to, one (1) or more commodities, securities, currencies, interest or other rates, indices or other assets.
4. “Loans and extensions of credit” means a bank’s direct or indirect advance of funds to or on behalf of a borrower based upon an obligation of the borrower to repay the funds, or repayable from specific property pledged by or on behalf of the borrower, and includes, for the purposes of this section:
   1. A contractual commitment to advance funds;
   2. A maker or endorser’s obligation arising from a bank’s discount of commercial paper;
   3. A bank’s purchase of securities subject to an agreement that the seller shall repurchase the securities at the end of a stated period, but not including a bank’s purchase of type I securities, as defined in 12 CFR part 1, subject to a repurchase agreement, where the purchasing bank has assured control over or has established its rights to the type I securities as collateral;
   4. A bank’s purchase of third-party paper subject to an agreement that the seller shall repurchase the paper upon default or at the end of a stated period. The amount of the bank’s loan is the total unpaid balance of the paper owned by the bank less any applicable dealer reserves retained by the bank and held by the bank as collateral security. Where the seller’s obligation to repurchase is limited, the bank’s loan is measured by the total amount of the paper the seller may ultimately be obligated to repurchase. A bank’s purchase of third party paper without direct or indirect recourse to the seller is not a loan or extension of credit to the seller;
   5. An overdraft, whether or not prearranged, but not an intraday overdraft for which payment is received before the close of business of the bank that makes the funds available;
   6. The sale of federal funds with a maturity of more than one (1) business day, but not federal funds with a maturity of one (1) day or less or federal funds sold under a continuing contract;
   7. Loans or extensions of credit that have been charged off on the books of the bank in whole or in part, unless the loan or extension of credit:
      1. Is unenforceable by reason of discharge in bankruptcy;
      2. Is no longer legally enforceable because of expiration of the statute of limitations or a judicial decision; or
      3. Is no longer legally enforceable for other reasons, provided that the bank maintains sufficient records to demonstrate that the loan is unenforceable; and
      4. When an originating bank funds the entire loan, it must receive funding from the participants before the close of business of its next business day. If the participating portions are not received within that period, then the portions funded shall be treated as a loan by the originating bank to the borrower. If the portions so attributed to the borrower exceed the originating bank’s lending limit, the loan may be treated as nonconforming, rather than a violation, if:
         1. The originating bank had a valid and unconditional participation agreement with a participating bank or banks that was sufficient to reduce the loan to within the originating bank’s lending limit;
         2. The participating bank reconfirmed its participation and the originating bank had no knowledge of any information that would permit the participant to withhold its participation; and
         3. The participation was to be funded by close of business of the originating bank’s next business day; and
   8. Any credit exposure in a derivative transaction.
5. The following items do not constitute loans or extensions of credit for purposes of this section: (a) Additional funds advanced for the benefit of a borrower by a bank for payment of taxes, insurance, utilities, security, and maintenance and operating expenses necessary to preserve the value of real property securing the loan, consistent with safe and sound banking practices, but only if the advance is for the protection of the bank’s interest in the collateral, and provided that such amounts must be treated as an extension of credit if a new loan or extension of credit is made to the borrower;
6. The following loans or extensions of credit are not subject to the lending limits of this section:
   1. The discount of bills of exchange drawn in good faith against actual existing values;
   2. The discount of bankers’ acceptances of other banks;
   3. The discount of commercial or business paper actually owned by the person negotiating the same;
   4. The obligations of the United States or general obligations of any state or of any political subdivision thereof, or obligation issued under authority of the federal farm loan act;
   5. Loans made on warehouse receipts and bills of lading, when such warehouse receipts and bills of lading cover nonperishable commodities of the marketable value of at least one hundred twenty percent (120%) of the amount loaned thereon;
   6. Loans and extensions of credit to the extent secured or covered by guaranties, or by commitments or agreements to take over or to purchase, made by any federal reserve bank or by the United States or any department, bureau, board, commission, or establishment of the United States, including any corporation wholly owned directly or indirectly by the United States; or
   7. Loans, including portions thereof, secured by a segregated deposit account in the lending bank, provided a security interest in the deposit has been perfected under applicable law.
7. Combination. Loans or extensions of credit to one (1) borrower shall be attributed to another person and each person shall be deemed a borrower when proceeds of a loan or extension of credit are to be used for the direct benefit of the other person, to the extent of the proceeds so used, or when a common enterprise is deemed to exist between the persons.
   1. Direct benefit. The proceeds of a loan or extension of credit to a borrower shall be deemed to be used for the direct benefit of another person and shall be attributed to the other person when the proceeds, or assets purchased with the proceeds, are transferred to another person, other than in a bona fide arm’s length transaction where the proceeds are used to acquire property, goods or services.
   2. Common enterprise. A common enterprise shall be deemed to exist and loans to separate borrowers shall be aggregated:
      1. When the expected source of repayment for each loan or extension of credit is the same for each borrower and neither borrower has another source of income from which the loan (together with the borrower’s other obligations) may be fully repaid. An employer shall not be treated as a source of repayment under this paragraph because of wages and salaries paid to an employee unless the standards of paragraph (b)(ii) of this subsection are met;
      2. When loans or extensions of credit are made:
         1. To borrowers who are related directly or indirectly through common control, including where one (1) borrower is directly or indirectly controlled by another borrower; and
         2. Substantial financial interdependence exists between or among the borrowers. Substantial financial interdependence is deemed to exist when fifty percent (50%) or more of one (1) borrower’s gross receipts or gross expenditures (on an annual basis) are derived from transactions with the other borrower. Gross receipts and expenditures include gross revenues/expenses, intercompany loans, dividends, capital contributions, and similar receipts or payments;
      3. When separate persons borrow from a bank to acquire a business enterprise of which those borrowers will own more than fifty percent (50%) of the voting securities or voting interests, in which case a common enterprise is deemed to exist between the borrowers for purposes of combining the acquisition loans; or
      4. When the director determines, based upon an evaluation of the facts and circumstances of particular transactions, that a common enterprise exists.
   3. Loans to a corporate group.
      1. Loans or extensions of credit by a bank to a corporate group may not exceed fifty percent (50%) of the bank’s capital and surplus. A corporate group includes a person and all of its subsidiaries. For purposes of this paragraph, a corporation or a limited liability company is a subsidiary of a person if the person owns or beneficially owns directly or indirectly more than fifty percent (50%) of the voting securities or voting interests of the corporation or company. (ii) Except as provided in paragraph (c)(i) of this subsection, loans or extensions of credit to a person and its subsidiary, or to different subsidiaries of a person, are not combined unless either the direct benefit or the common enterprise test is met.
   4. Loans to partnerships, joint ventures, and associations.
      1. Partnership loans. Loans or extensions of credit to a partnership, joint venture or association are deemed to be loans or extensions of credit to each member of the partnership, joint venture or association. This rule does not apply to limited partners in limited partnerships or to members of joint ventures or associations if the partners or members, by the terms of the partnership or membership agreement, are not held generally liable for the debts or actions of the partnership, joint venture or association, and those provisions are valid under applicable law.
      2. Loans to partners.
         1. Loans or extensions of credit to members of a partnership, joint venture or association are not attributed to the partnership, joint venture or association unless either the direct benefit or the common enterprise test is met. Both the direct benefit and common enterprise tests are met between a member of a partnership, joint venture or association and such partnership, joint venture or association, when loans or extensions of credit are made to the member to purchase an interest in the partnership, joint venture or association.
         2. Loans or extensions of credit to members of a partnership, joint venture or association are not attributed to other members of the partnership, joint venture or association unless either the direct benefit or common enterprise test is met.
   5. Loans to foreign governments and their agencies and instrumentalities.
      1. Aggregation. Loans and extensions of credit to foreign governments and their agencies and instrumentalities shall be aggregated with one another only if the loans or extensions of credit fail to meet either the means test or the purpose test at the time the loan or extension of credit is made.
         1. The means test is satisfied if the borrower has resources or revenue of its own sufficient to service its debt obligations. If the government’s support (excluding guarantees by a central government of the borrower’s debt) exceeds the borrower’s annual revenues from other sources, it shall be presumed that the means test has not been satisfied.
         2. The purpose test is satisfied if the purpose of the loan or extension of credit is consistent with the purposes of the borrower’s general business.
         3. Financial statements for each year the loan or extension of credit is outstanding;
         4. The bank’s assessment of the borrower’s means of servicing the loan or extension of credit, including specific reasons in support of that assessment. The assessment shall include an analysis of the borrower’s financial history, its present and projected economic and financial performance, and the significance of any financial support provided to the borrower by third parties, including the borrower’s central government; and 5. A loan agreement or other written statement from the borrower that clearly describes the purpose of the loan or extension of credit. The written representation will ordinarily constitute sufficient evidence that the purpose test has been satisfied. However, when, at the time the funds are disbursed, the bank knows or has reason to know of other information suggesting that the borrower will use the proceeds in a manner inconsistent with the written representation, it may not, without further inquiry, accept the representation.
      2. Documentation. In order to show that the means and purpose tests have been satisfied, a bank must, at a minimum, retain in its files the following items:
8. A bank shall evaluate the credit exposure in a derivative transaction in accordance with a methodology approved by any federal bank supervisory agency. In each type of derivative transaction a bank engages in, a bank shall use the same credit exposure methodology in all derivative transactions of that type.
9. Lending limit calculation. For purposes of determining compliance with this section, a bank shall determine its lending limit as of the last day of the preceding calendar quarter. A bank’s lending limit calculated in accordance with this section shall be effective on the date that the limit is to be calculated. If the director determines for safety and soundness reasons that a bank should calculate its lending limit more frequently than required by this subsection, the director may provide written notice to the bank directing the bank to calculate its lending limit at a more frequent interval, and the bank shall thereafter calculate its lending limit at that interval until further notice from the director.
10. Nonconforming loans and extensions of credit. A loan or extension of credit, within a bank’s legal lending limit when made, shall not be deemed a violation but shall be treated as nonconforming if the loan or extension of credit is no longer in conformity with the bank’s lending limit because:
    1. The bank’s capital has declined, borrowers have subsequently merged or formed a common enterprise, lenders have merged, or the lending limit or capital rules have changed. A bank must use reasonable efforts to bring a loan or extension of credit that is nonconforming under this subsection into conformity with the bank’s lending limit unless to do so would be inconsistent with safe and sound banking practices.
    2. Collateral securing the loan or extension of credit to satisfy the requirements of a lending limit exception has declined in value. A bank must bring a loan or extension of credit that is nonconforming under this subsection into conformity with the bank’s lending limit within thirty (30) calendar days, except when judicial proceedings, regulatory actions or other extraordinary circumstances beyond the bank’s control prevent the bank from taking action.
    3. In the case of credit exposure in a derivative transaction, the credit exposure increases after execution of the transaction. A bank must use reasonable efforts to bring a derivative transaction that is nonconforming under this subsection into conformity with the bank’s lending limit unless to do so would be inconsistent with safe and sound banking practices.
11. When in the judgment of the director the loans and extensions of credit to any person, or the combined loans and extensions of credit to any corporation and one (1) or more of its stockholders are excessive, he shall require the reduction thereof to such limits and within such time as he shall prescribe.

(b) Accrued and discounted interest on an existing loan or extension of credit, including interest that has been capitalized from prior notes and interest that has been advanced under terms and conditions of a loan agreement;

(c) Financed sales of a bank’s own assets, including other real estate owned, if the financing does not put the bank in a worse position than when the bank held title to the assets;

(d) A renewal or restructuring of a loan as a new loan or extension of credit, following the exercise by a bank of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limit, unless new funds are advanced by the bank to the borrower (except as permitted by this section), or a new borrower replaces the original borrower, or unless the director determines that a renewal or restructuring was undertaken as a means to evade the bank’s lending limit;

(e) Amounts paid against uncollected funds in the normal process of collection;

(f)(i) That portion of a loan or extension of credit sold as a participation by a bank on a nonrecourse basis, provided that the participation results in a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. Where a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing shall be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants must share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event.

(g) Intraday credit exposure in a derivative transaction.

1. A statement (accompanied by supporting documentation) describing the legal status and the degree of financial and operational autonomy of the borrowing entity;

2. Financial statements for the borrowing entity for a minimum of three (3) years prior to the date the loan or extension of credit was made or for each year that the borrowing entity has been in existence, if less than three (3) years;

Provided, further, that the director may compel the reduction of any loan or extension of credit which shall in his judgment appear excessive or dangerous.

History.

I.C.,§ 26-709, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 5, p. 511; am. 2013, ch. 55, § 1, p. 124.

§ 26-706. Loans to officers and directors.

Except as authorized under this section, no bank may extend credit in any manner to any of its own executive officers. Any extension of credit under this section must be approved by the board of directors of the bank, and may be made only if such credit extension comports with the principles of safety and soundness and is in compliance with regulation O of the board of governors of the federal reserve system, 12 CFR 215. Each executive officer and director who receives an extension of credit from the bank shall submit a personal financial statement to the chief executive officer of the bank at least once during each calendar year and such financial statement shall be made available to federal or state regulatory agencies upon request by the agency.

History.

I.C.,§ 26-710, as added by 1979, ch. 41, § 2, p. 62; am. 1990, ch. 93, § 1, p. 193; am. 1995, ch. 99, § 4, p. 299; am. and redesig. 2004, ch. 159, § 6, p. 511; am. 2007, ch. 126, § 4, p. 376.

§ 26-707. Real estate holdings.

A bank may purchase, acquire, hold and convey real estate for the following purposes only:

1. Such as shall be necessary for the convenient transaction of its business, including at the same location as its banking offices other property to rent as a source of income; provided however, that no bank shall invest in buildings and lots and furniture, fixtures and equipment in an amount greater than fifty percent (50%) of the capital structure of such bank.
2. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of business.
3. Such as it shall purchase at sale on judgments, decrees, mortgage foreclosure or trustees sale for debts previously contracted, but a bank shall not bid at such sale a larger amount than is necessary to satisfy all debts and costs necessary to obtain clear title. Real estate acquired for debts previously contracted shall be carried on the books of the bank at the lower of cost or market value. Market value shall be determined by:
   1. An appraisal prepared by a state certified or licensed appraiser; or
   2. An appropriate evaluation when the recorded investment is equal to or less than two hundred fifty thousand dollars ($250,000).
4. No real estate acquired under subsections (2) and (3) of this section may be held for a longer period than five (5) years, provided however, that upon application by the bank, the director shall approve the continued holding of any such real estate by the bank for an additional period of five (5) years upon the bank’s showing of its good faith attempt to dispose of the real estate within the first five (5) year period, or that disposal within the first five (5) year period would be detrimental to the bank; and provided further that the bank shall, during the second five (5) year period, at the end of each year beginning at the end of the sixth year in which the property is held, write down the value of such real estate by twenty percent (20%) of the value at which such real estate is carried on its books at the beginning of the second five (5) year period. Value at the beginning of the second five (5) year period shall be the lower of cost or market value as determined pursuant to appraisal as provided in subsection (3) of this section. Nothing in this section shall be construed to prevent a bank from making loans secured by real estate as provided in this act, or a trust department holding and conveying real estate in trust. (5) A bank may, with the approval of the director and the board of governors of the federal reserve system or the federal deposit insurance corporation invest in bank premises or in the stock, bonds, debentures, or other obligations of any corporation holding the banking buildings, lots and furniture, fixtures and equipment of such bank in an amount not to exceed the capital and surplus of the bank.

If a bank has a valid appraisal or an appropriate evaluation that was previously obtained in connection with a real estate loan, a new appraisal or evaluation is not required at the time the bank acquires the property to determine the market value of real estate acquired for debts previously contracted. A bank may defer obtaining an appraisal or evaluation for a period not to exceed three (3) months following acquisition of the real estate if the bank documents a reasonable expectation that a sale of the real estate, other than in a transaction involving an affiliated party, will be consummated during a period of three (3) months following the acquisition of the property. If the property is not sold during the expected three (3) month period, a new appraisal or appropriate evaluation as set forth in paragraphs (a) and (b) of this subsection must be obtained. Thereafter, the director may in his discretion require an appraisal or evaluation if the director believes it is necessary to address safety and soundness concerns. A bank shall develop and maintain prudent real estate appraisal and evaluation policies and procedures to monitor the market value of real estate acquired for debts previously contracted, in accordance with applicable real estate appraisal and evaluation guidelines.

History.

I.C.,§ 26-711, as added by 1979, ch. 41, § 2, p. 62; am. 1987, ch. 165, § 1, p. 325; am. and redesig. 2004, ch. 159, § 7, p. 511; am. 2015, ch. 204, § 12, p. 618.

§ 26-708. Valuation of assets.

No bank shall enter or at any time carry on its books any of its assets at a valuation exceeding their actual cost to the bank; nor shall the value of any of its assets be increased on the books of the bank without the written consent of the director. Additional charges, delinquency charges and other similar charges on consumer credit transactions permitted by and made in compliance with the Idaho Credit Code and added to the principal balance of the loan, shall not come within the prohibition of this section.

History.

I.C.,§ 26-712, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 8, p. 511; am. 2008, ch. 140, § 8, p. 406.

§ 26-709. Statutory bad debt.

Every bank carrying any bad debt, or a debt of doubtful value, as an asset shall, upon the request or demand of the director, collect the same or put it in good bankable condition or charge it out of its books. Any debt on which interest is past due and unpaid for a period of six (6) months, unless the same is well secured and in process of collection, shall be considered a bad debt within the meaning of this section.

History.

I.C.,§ 26-713, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 9, p. 511.

§ 26-710. Ownership and leasing of property for customers.

A bank may become the owner and lessor of personal property acquired upon the specific request and for the use of a customer and may incur such additional obligations as may be incident to becoming an owner and lessor of such property.

History.

I.C.,§ 26-714, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 10, p. 511.

§ 26-711. Lending of credit — Suretyship and guarantyship.

A bank may lend its credit, bind itself as a surety to indemnify another, or otherwise become a guarantor, only if it has a substantial interest in the performance of the transaction involved or has a segregated deposit sufficient in amount to cover the bank’s total potential liability.

History.

I.C.,§ 26-715, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 11, p. 511.

§ 26-712. Validity of transactions.

Nothing in any law of this state shall in any manner whatsoever affect the validity of, or render void or voidable, the payment, certification or acceptance of a check or other negotiable instrument, or any other transaction by a bank in this state, because done or performed during any time other than regular banking hours.

History.

I.C.,§ 26-716, as added by 1979, ch. 41, § 2, p. 62; am. 1993, ch. 52, § 2, p. 133; am. and redesig. 2004, ch. 159, § 12, p. 511.

§ 26-713. Adverse claim to bank deposit.

Notice to any bank of an adverse claim to a deposit standing on its books to the credit of any person shall not require the bank to recognize the adverse claim unless the adverse claimant shall:

1. Procure a restraining order, injunction or other appropriate process against the bank from a court of competent jurisdiction wherein the person to whose credit the deposit stands is made a party and served with summons; or
2. Execute to said bank, in a form and with sureties acceptable to the bank, a bond indemnifying the bank from any and all liability, loss, damage, costs and expenses for and on account of the payment of such adverse claim or the dishonor of the check or other order of the person to whose credit the deposit stands on the books of the bank.

This section shall not apply in any instance where the person to whose credit the deposit stands is a fiduciary for such adverse claimant, and the facts constituting such relationship and the facts showing reasonable cause for belief on the part of the claimant that the fiduciary is about to misappropriate the deposit, are made to appear by the affidavit of the claimant.

History.

I.C.,§ 26-717, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 13, p. 511.

§ 26-714. Account of person under disability.

Whenever any minor or any person under disability shall become a depositor, as defined in section 26-106, Idaho Code, in any bank in his or her name, such bank may pay such money on the check, order or endorsement of such depositor the same as in cases of depositors not under disability, and such payment shall be in all respects valid in law.

History.

I.C.,§ 26-718, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 14, p. 511.

§ 26-715. Branch or office at which instruments are to be presented must be indicated.

All checks, drafts, bills of exchange or other orders for the payment of money drawn against any bank operating branch banks shall indicate the particular bank and branch at which the same are to be presented for payment or acceptance.

History.

I.C.,§ 26-719, as added by 1979, ch. 41, § 2, p. 62; am. and redesig. 2004, ch. 159, § 15, p. 511.

§ 26-716. Validity of transactions. [Amended and Redesignated.]

§ 26-717. Adverse claim to bank deposit. [Amended and Redesignated.]

§ 26-718. Account of person under disability. [Amended and Redesignated.]

§ 26-719. Branch or office at which instruments are to be presented must be indicated. [Amended and Redesignated.]

§ 26-801. Borrowing money — Limitations.

At no time shall the total borrowings of any bank exceed in the aggregate an amount equal to the capital structure of the bank, except with the consent of the director.

For the purpose of computing total borrowings the following items shall not be included:

1. Federal funds purchased.
2. The sale of securities by a bank, under an agreement to repurchase at the end of a stated period.
3. Borrowings from the federal reserve system.
4. The sale of mortgage loans by a bank, under agreement to repurchase at the end of a stated period.
5. Money borrowed to meet seasonal requirements.
6. Money borrowed to meet unexpected withdrawals.
7. Capital notes issued in accordance with section 26-802, Idaho Code.
8. Borrowing from federal home loan banks.

The total of all borrowings by a bank including those items excluded from the computation of total borrowings may not exceed in the aggregate an amount equal to two and one-half (2 ½) times the capital structure of the bank, except with the consent of the director.

Whenever it shall appear to the director that a bank is borrowing money in excess of the above limitation, or for purposes other than as specified above, he may require it to reduce such borrowings within a time to be fixed by him.

History.

I.C.,§ 26-801, as added by 1979, ch. 41, § 2, p. 62; am. 2004, ch. 159, § 16, p. 511; am. 2007, ch. 126, § 5, p. 376.

§ 26-802. Issuance of convertible or nonconvertible capital debentures and notes.

The issuance of convertible or nonconvertible capital debentures and notes by banks in accordance with normal business considerations is permissible.

With the consent of the director, every bank is, however, authorized to issue and sell its capital notes or debentures, for all capital purposes, in an amount not to exceed one hundred percent (100%) of its unimpaired, paid-in capital stock, plus fifty percent (50%) of its unimpaired surplus fund.

A bank may, with the approval of stockholders owning two-thirds (2/3) of the stock of the bank, entitled to vote, or without such approval if authorized by its articles of incorporation, issue convertible or nonconvertible capital debentures and notes in such amounts and under such terms and conditions as shall be approved by the director.

History.

I.C.,§ 26-802, as added by 1979, ch. 41, § 2, p. 62.

§ 26-803. Borrowing from federal agencies.

With the consent of the director, a bank may borrow from any agency of the United States. The limitations imposed on borrowing by this chapter shall not apply to borrowings under this section.

History.

I.C.,§ 26-803, as added by 1979, ch. 41, § 2, p. 62.

§ 26-804. Borrowing money — Accounting.

No officer or employee of any bank shall issue the note of such corporation for money borrowed or rediscount any of its paper, or pledge or hypothecate any of its assets, except when authorized by resolution of its board of directors, or by an authorized committee thereof.

All borrowings shall be carried on the books of the bank, and in all reports of such bank under liabilities.

All rediscounted paper containing the endorsement of or guarantee of the bank discounting the same, except when endorsed without recourse, shall be carried on the books of the bank and in all reports of such bank under liabilities as “rediscounts,” until the same are actually paid by the makers, other than by renewal, or the rediscounting bank itself takes up the paper.

History.

I.C.,§ 26-804, as added by 1979, ch. 41, § 2, p. 62.

§ 26-805. Extent assets may be pledged.

No bank, banker or bank officer shall, except as otherwise authorized by law, pledge or hypothecate as collateral security for money borrowed, its assets in a ratio exceeding one and one-half (1 ½) times the amount borrowed (except as otherwise authorized by the director).

History.

I.C.,§ 26-805, as added by 1979, ch. 41, § 2, p. 62.

§ 26-806. Giving security for deposit prohibited.

It shall be unlawful for any bank to pledge, mortgage or hypothecate to any depositor any of its real or personal property as security for any deposit except money of the United States, the state of Idaho and its political subdivisions, and deposits for which security is required by any law of the United States, or required or permitted by any other statute of this state. Any pledge, mortgage or hypothecation made in violation hereof shall be unenforceable and void and any person, firm or corporation, holding or receiving any security or securities mortgaged or hypothecated, pledged or attempted to be pledged, shall, upon demand of any officer, director or stockholder of the bank or the director, be required forthwith to make return thereof, and the repayment of any deposit shall not be prerequisite to the recovery of any property so unlawfully pledged, hypothecated or mortgaged.

History.

I.C.,§ 26-806, as added by 1979, ch. 41, § 2, p. 62; am. 1998, ch. 406, § 1, p. 1262.

§ 26-807 — 26-813. Reports — Supplemental reports — Failure to transmit reports — Refusal to submit to examination — Records not public — Penalty for disclosure of confidential information — Impairment of capital. [Repealed.]

§ 26-901. Resulting national bank.

1. Nothing in the law of this state shall restrict the right of a state bank to merge with or convert into a resulting national bank. The action to be taken by such merging or converting state bank and its rights and liabilities and those of its stockholders shall be the same as those prescribed for national banks at the time of the action by the law of the United States and not by the law of this state, except that a vote of the holders of two-thirds (2/3) of each class of voting stock of a state bank, at a meeting called in conformity with the provisions of section 26-904, Idaho Code, shall be required for the merger or conversion, and that on conversion by a state into a national bank the rights of dissenting stockholders shall be those specified in section 26-909, Idaho Code.
2. Upon the completion of the merger or conversion, the franchise of any merging or converting state bank shall automatically terminate.

History.

I.C.,§ 26-901, as added by 1979, ch. 41, § 2, p. 62.

§ 26-902. Resulting state bank.

Upon approval by the director, banks may be merged to result in a state bank or a national bank may convert into a state bank as hereafter prescribed, except that the action by a national bank shall be taken in the manner prescribed by and shall be subject to limitations and requirements imposed by the law of the United States which shall also govern the rights of its dissenting stockholders.

History.

I.C.,§ 26-902, as added by 1979, ch. 41, § 2, p. 62.

§ 26-903. Merger procedure — Resulting state bank.

1. The board of directors of each merging state bank shall, by a majority of the entire board, approve a merger agreement which shall contain:
   1. A statement or recital that the agreement is subject to approval by the director and by the stockholders of each merging bank.
   2. The name of each merging bank and location of each office.
   3. With respect to the resulting bank:
      1. the name and location of the principal and the other offices;
      2. the name and residence of each director to serve until the next annual meeting of the stockholders;
      3. the name and residence of each officer;
      4. the amount of capital, the number of shares and the par value of each share;
      5. the amount, terms, and preferences if preferred stock is to be issued; and
      6. the amendments to its charter and bylaws.
   4. Provisions governing:
      1. the manner of converting the shares of the merging banks into shares of the resulting state bank or into shares of a bank holding company; and
      2. the manner of disposing of the shares of the resulting state bank or of the bank holding company not taken by the dissenting stockholders of each merging bank.
   5. Such other provisions as the director may require to enable him to discharge his duties with respect to the merger.
2. After approval by the board of directors of each merging state bank, the merger agreement shall be submitted to the director for approval, together with certified copies of the authorizing resolutions of each board of directors showing approval by a majority of the entire board of each merging state bank and evidence of proper action by the board of directors of any merging national bank.
3. After receipt by the director of the papers specified in subsection (a), the director shall approve or disapprove the merger agreement. The director shall approve the agreement if it finds that:
   1. The resulting state bank meets the requirements as to the formation of a new state bank.
   2. The agreement provides an adequate capital structure including surplus in relation to the deposit liabilities of the resulting state bank and its other activities which are to continue or are to be undertaken.
   3. The agreement is fair.
   4. The merger is not contrary to the public interest.
4. If the director disapproves an agreement, the objections shall be stated in writing and the merging banks shall be given an opportunity to amend the merger agreement to obviate such objections.

History.

I.C.,§ 26-903, as added by 1979, ch. 41, § 2, p. 62.

§ 26-904. Merger — Approval by stockholders of state banks.

1. To be effective, a merger which is to result in a state bank must be approved by the stockholders of each merging state bank by a vote of two-thirds (2/3) of the outstanding voting stock of each class at a meeting called to consider such action, which vote shall constitute the adoption of the charter and bylaws of the resulting state bank, including the amendments in the merger agreement.
2. Notice of the meeting of stockholders of each state bank shall be given by publication in a newspaper of general circulation in the place where its principal office is located at least once a week for four (4) successive weeks, and by mail at least fifteen (15) days before the date of the meeting, to each stockholder of record of each merging bank at his address on the books of his bank; no notice by publication need be given if written waivers are received from the holders of two-thirds (2/3) of the outstanding shares of each class of stock. The notice shall be accompanied by a copy of section 26-909, Idaho Code, and shall state that the section sets forth the exclusive rights and remedies of dissenting stockholders.

History.

I.C.,§ 26-904, as added by 1979, ch. 41, § 2, p. 62.

§ 26-905. Effective date of merger — Filing of approved agreement — Certificate of merger as evidence.

1. A merger or sale which is to result in a state bank shall, unless a later date is specified in the agreement, become effective upon the filing with the director of the executed agreement together with copies of the resolutions of the stockholders of each merging purchasing and selling bank approving it and a list of the owners of the shares voted against the merger or purchase, certified by the bank’s president or a vice-president and a secretary or cashier. The charters of the merging banks, other than the resulting bank, shall thereupon automatically terminate.
2. The director shall promptly issue to the resulting bank a certificate of merger specifying the name of each merging bank and the name of the resulting state bank. Such certificate shall be conclusive evidence of the merger and of the correctness of all proceedings therefor in all courts and places, and may be recorded in the office of the county recorder of any county wherein property of the merging banks is held, to evidence the new name in which the property of the merging banks is held.

History.

I.C.,§ 26-905, as added by 1979, ch. 41, § 2, p. 62.

§ 26-906. Conversion of national into state bank.

1. A national bank located in this state which follows the procedure prescribed by the laws of the United States to convert into a state bank, shall be granted a charter by the director unless he finds that the bank does not meet the standards as to location of offices, capital structure, and business experience and character of officers and directors for the incorporation of a state bank.
2. The national bank may apply for such charter by filing with the director a certificate signed by its president and cashier and by a majority of the entire board of directors, setting forth the corporate action taken in compliance with the provisions of the laws of the United States governing the conversion of the national to a state bank, and the articles of incorporation, approved by the stockholders, for the government of the bank as a state bank.

History.

I.C.,§ 26-906, as added by 1979, ch. 41, § 2, p. 62.

§ 26-907. Continuation of corporate entity — Use of old name.

1. A resulting state or national bank shall be the same business and corporate entity as each merging bank or as the converting bank with all the property, rights, powers, and duties of each merging bank or the converting bank, except as affected by the law of this state in the case of a resulting state bank or the laws of the United States in the case of a resulting national bank, and by the charter and bylaws of the resulting bank.
2. A resulting bank shall have the right to use the name of any merging bank or of the converting bank whenever it can do any act under such name more conveniently.
3. Any reference to a merging or converting bank in any writing, whether executed or taking effect before or after the merger or conversion, shall be deemed a reference to the resulting bank if not inconsistent with the other provisions of such writing, except when the resulting bank is not authorized to or has not qualified to exercise the powers conferred or required by the writing.

History.

I.C.,§ 26-907, as added by 1979, ch. 41, § 2, p. 62.

§ 26-908. Sale of assets of bank or department.

1. Any state bank may sell to any other bank:
   1. all or substantially all of the selling bank assets and business; or
   2. all or substantially all of the assets and business of any department of the selling bank.
2. Any state bank may, upon assuming the liabilities relating thereto, purchase:
   1. all or substantially all of the assets and business of another bank; or
   2. all or substantially all of the assets and business of any department of another bank.
3. The agreement of purchase and sale shall be authorized, approved by the director, approved by the vote of a majority of the stockholders of the purchasing and selling bank at a meeting called for the purpose in like manner as meetings to approve mergers are called and filed with the director accompanied by evidence of such stockholders’ approval in like manner as agreements of mergers are filed. After such approval is given by the stockholders a notice of such sale shall be published once a week for three (3) successive weeks in a newspaper of large general circulation in the county in which the selling bank has its principal office, and proof of such publication shall be filed with the director.
4. Notwithstanding any term of the agreement, or of his contract of deposit, any depositor whose business is thus sold has the right to withdraw his deposit in full on demand after such sale unless by dealing with [the] purchasing bank with knowledge of the purchase he ratifies the transfer.
5. The agreement of sale may provide for the transfer to the purchasing bank of all fiduciary positions held by the selling bank subject to the right of the court, on petition of any interested party, to appoint another or succeeding fiduciary to the positions so transferred. Until the court appoints another or succeeding fiduciary the purchasing bank shall, if qualified to do so, exercise any fiduciary function vested in the selling bank.
6. No right against or obligation of the selling bank in respect of assets or business sold shall be released or impaired by the sale until one (1) year from the last date of publication of the notice pursuant to subsection (3) of this section, but after the expiration of such year, no action can be brought against the selling bank on account of any deposit, obligation, trust, or asset transferred to or liability assumed by the purchasing bank.
7. A bank may, with the prior approval of the director, purchase assets and the charter of and assume deposit liabilities or [of] a branch office of another bank or sell assets and the charter of a branch and permit the assumption of deposit liabilities by the purchasing bank. The sale or acquisition of a branch office and deposit liabilities shall comply with all capital requirements and other statutory requirements and restrictions relating to the maintenance of branch offices as required by this law. Banks which desire to sell, purchase or exchange branches shall apply to the director and shall provide all information required by the director to properly evaluate the impact upon public need and convenience and the impact upon depositors, stockholders and creditors of both the selling and acquiring banks. The director may in his discretion require a public hearing for the purpose of obtaining public impact and evaluating public need and convenience issues. The department shall make an investigation of the proposed sale, purchase or exchange of branches. The actual cost of an investigation, administrative procedure or hearing, shall be shared equally by the selling and acquiring banks. All fees shall be paid to the department of finance by the applicant banks following the approval or denial by the director. A bank selling a branch shall publish notice of the sale once a week for three (3) successive weeks in a newspaper of general circulation in the county in which the branch is located. History.

I.C.,§ 26-908, as added by 1979, ch. 41, § 2, p. 62.

§ 26-909. Dissenting stockholders.

1. A dissenting stockholder of a state bank shall be entitled to receive the value in cash of only those shares which were voted against a merger to result in a state bank, against the conversion of a state bank into a national bank or against a sale of all or substantially all of the state bank’s assets, and only if written demand thereupon is made to the resulting state or national bank at any time within thirty (30) days after the effective date of the merger or conversion accompanied by the surrender of the stock certificates. The value of such shares will be determined, as of the date of the stockholders’ meeting approving the merger or conversion, by three (3) appraisers, one (1) to be selected by the vote of the owners of two-thirds (2/3) of the shares involved at a meeting called by the director on ten (10) days’ notice, one (1) by the board of directors of the resulting state or national bank, and the third by the two (2) so chosen. The valuation agreed upon by any two (2) appraisers shall govern. If any necessary appraiser is not appointed within sixty (60) days after the effective date of the merger or conversion, the director shall make the necessary appointment, or if the appraisal is not completed within ninety (90) days after the merger or conversion becomes effective, the director shall cause an appraisal to be made.
2. The merger agreement may fix an amount which the merging banks consider to be the fair market value of the shares of a merging or a converting bank at the time of the stockholders’ meeting approving the merger or conversion, which the resulting bank will pay dissenting stockholders of that bank entitled to payment in cash. The amount due under such accepted offer or under the appraisal shall constitute a debt of the resulting state or national bank.
3. The expenses of appraisal shall be paid by the resulting state bank except when the value fixed by the appraiser does not exceed the value fixed by the merger agreement in which case one-half (½) of the expenses shall be paid by the resulting bank and one-half (½) by the dissenting stockholders requesting the appraisal in proportion to their respective holdings.

History.

I.C.,§ 26-909, as added by 1979, ch. 41, § 2, p. 62.

§ 26-910. Nonconforming assets of business.

If a merging, converting or selling bank has assets which do not conform to the requirements of state law for the resulting or purchasing state bank or carries on business activities which are not authorized or permitted for the resulting or purchasing state bank, the director may permit a reasonable time to conform with the law of this state, and, in the case of a resulting or purchasing state bank that is not to exercise trust powers, shall require that prompt application be made to a court of competent jurisdiction for the appointment of successor trustees.

History.

I.C.,§ 26-910, as added by 1979, ch. 41, § 2, p. 62.

§ 26-911. Book value of assets.

Without approval by the director no asset shall be carried on the books of the resulting or purchasing bank at a valuation higher than that on the books of the merging or converting bank at the time of its last examination by a state or national bank examiner before the effective date of the merger or conversion.

History.

I.C.,§ 26-911, as added by 1979, ch. 41, § 2, p. 62.

§ 26-912 — 26-923. Closing and liquidation of banks — Treatment of claims — Disposition of assets — Reopening of bank. [Repealed.]

§ 26-1001. Grounds for closing bank.

Whenever it shall appear to the department of finance that:

1. Any bank has violated its charter or any law of this state; or
2. Has violated any general rule or regulation of the director, made in accordance with law, or any special lawful order, direction or requirement of the director, directed to any particular bank; or
3. That the capital of any bank is impaired or for any reason is below the amount required by law and has not been made good after fifteen (15) days’ notice, as provided by law, or without such notice, in the event a majority of the board of directors of such bank notify the director in writing that the same cannot be made good within fifteen (15) days; or
4. That such bank cannot meet or has failed to meet any of its liabilities as they become due in the regular course of business; or
5. That its reserve has fallen below the amount required by law and it has failed to make good such reserve within fifteen (15) days after being requested to do so by the director, or, without such notice, if a majority of the directors, in writing, notify the director that such reserve cannot be made good within fifteen (15) days, or if it is continually allowing its reserve to fall below the required amount; or
6. That it is conducting business in an unsafe and unauthorized manner, or is in an unsafe or unsound condition; or
7. It has refused to submit its papers, books and records to the inspection of the director or his authorized agent or representative; or
8. That any director or officer of such bank has refused to be examined on oath touching the affairs or business of any bank insofar as such relate to the solvency of the bank or matters having to do with the supervision of the director.

The director himself, or his duly authorized agent upon express authority from the director, may in his discretion, close said bank and take possession of all the books, records, assets and business of every description of such bank, and hold the same and retain possession thereof until such bank shall be authorized by him to resume business, or its operations or liquidation be turned over to the Federal Deposit Insurance Corporation as provided in this chapter, or its affairs be liquidated as herein provided, and he shall do so in cases where a bank comes into his hands voluntarily.

The powers and authority conferred on the director by this section, except in cases of voluntary surrender, shall be considered as discretionary and not as mandatory, and so long as the director acts in good faith in the matter, neither he nor his deputies shall be held liable civilly or criminally or upon their official bonds in any action taken thereunder or for any failure to act thereunder.

History.

I.C.,§ 26-1001, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1002. Penalty for closing bank with criminal intent.

If the director of the department of finance or official in the department of finance, shall, as a result of malice or for personal gain, declare any bank insolvent, he shall, upon conviction thereof be subject to punishment by fine not exceeding one thousand dollars ($1,000), or imprisonment in the county jail not exceeding one (1) year, or both, within the discretion of the court.

History.

I.C.,§ 26-1002, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1003. Receiving deposits when insolvent.

The owners or officers of any bank or trust company who shall receive any deposits, knowing that such bank or trust company is insolvent, shall be guilty of a felony and punished, upon conviction thereof, by a fine not exceeding one thousand dollars ($1,000), or imprisonment in the state penitentiary not exceeding two (2) years, or both such fine and imprisonment, at the discretion of the court.

History.

I.C.,§ 26-1003, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1004. Bank may be placed in director’s possession.

Any bank may place its affairs and assets under the control and in the possession of the director after oral or written notice to the director by posting a notice on the front door of such bank, indicating that said bank is in his hands, which notice shall be signed, in their own handwriting, by a majority of the directors.

History.

I.C.,§ 26-1004, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1006. Taking possession of bank — Notice.

On taking possession of the assets and business of the bank, the director shall, in addition to posting notice thereof, on the front door of such bank, as aforesaid, also notify personally or by telephone or mail or by public announcement through the news media, all correspondent banks, and any and all persons or corporations known to him to be holding or in possession of, any of the estate of such bank.

History.

I.C.,§ 26-1006, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1007. Resumption after closing.

After the director has taken possession of any bank, he may permit such bank to resume business upon such conditions as may be approved by him.

History.

I.C.,§ 26-1007, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1008. Powers of director on closing bank.

Upon taking the assets and business of any bank into his possession, the director is authorized to collect all moneys due to such bank, assess the stock of such bank, and to do such other acts as are necessary to conserve its assets and business, and he shall proceed to liquidate the affairs thereof. He shall have general and inclusive power and authority, except as otherwise limited by the terms of this act, to do any and all acts, to take any and all steps necessary, or, in his discretion, desirable for the protection of the property and assets of such bank and the speedy and economical liquidation of the assets and affairs of such bank and the payment of its creditors, or for the reopening and resumption of business by said bank, where that is in his discretion practicable or desirable.

The director may institute, in his own name as director, or in the name of the bank, such suits and actions and other legal proceedings as he deems expedient for such purposes, and by making application to the district court of the county in which such bank is located, or to the judge thereof, in chambers, may procure an order to sell, compromise or compound any bad or doubtful debt or claim, and to sell and dispose of any or all the assets, which sale may be made to stockholders, officers, directors, or others interested in such bank, on consent of the court. Any such application or petition by the director may be had at any time, either in term or vacation in court, or in chambers, as the court may order.

History.

I.C.,§ 26-1008, as added by 1979, ch. 41, § 2, p. 62; am. 1987, ch. 76, § 1, p. 147.

§ 26-1009. Recourse of aggrieved bank.

Any bank deeming itself aggrieved by the action of the director in taking possession of its assets or closing its doors may, within ten (10) days after such possession shall have been taken, apply to the district court of the county in which its principal place of business is located, or to the judge thereof in chambers, to enjoin further proceedings by the director, and the court or the judge thereof in chambers, after notifying the director to appear at a specified time and place to show cause why further proceedings should not be enjoined, and after hearing the allegations and proofs of the parties, and determining facts, may, on the merits, dismiss such application, or enjoin the director from further proceeding and direct him to surrender the business and assets of said bank. Such application for injunction may be heard at any time after five (5) days’ notice from the time of service on said director in the discretion of the court, or the judge thereof, or at any time prior thereto by the consent of the director. Application therefor shall be made on the verified complaint of the bank, in the ordinary form used in civil actions in district court, and a copy of such complaint shall be served on the director with the order to show cause. The director shall, at least two (2) days before the time set for hearing, file in the cause, and serve upon counsel for plaintiff an answer to the complaint, also in the ordinary form used in civil actions in the district court. Demurrers and motions directed to pleadings are not permissible in proceedings had under this section, but any questions raised by demurrer or motion in other actions may be raised in the answer. On the issues thus made on the complaint and answer, the court, or the judge thereof at chambers, at the time fixed for showing cause, or at such other time to which he, in his discretion, may continue the same, shall try the matter on the merits by hearing the allegations and proofs of the parties in the same manner as on the trial of ordinary civil actions in the district court, and the rules governing the trial of ordinary civil actions and for the production and taking of evidence and hearing the examinations of witnesses and the entry of findings and judgments therein, shall prevail. In the event the director makes no appearance in the time limited, the court shall enter his default and proceed to hear the proofs of the plaintiff in like manner as in civil actions under similar circumstances, and enter judgment accordingly. The judgment entered either after hearing on the merits or by default, shall be final judgment from which either party shall have the right, by notice filed within twenty (20) days after entry, to appeal to the supreme court, in the same manner as from final judgment in a civil action.

History.

I.C.,§ 26-1009, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1010. Director may appoint agents.

The director may, under his hand and seal, appoint and authorize an agent to assist him or act for him in the performance of any powers or duties hereunder, the certificate of appointment to be filed in the office of said director, and a certified copy thereof delivered to such agent. Such agent and other employees hereinafter mentioned, shall receive a salary, to be fixed as hereinafter provided, for the time he is actually engaged in the performance of such duties. The director may also employ such attorneys and procure such expert accountants and other experts, assistants and employees as may be necessary in the liquidation and distribution of the assets of any such bank, and the performance of his duties hereunder, and may retain such of the officers or employees of such bank as he may deem necessary. He shall require from the agent appointed by him and from such of the assistants as will have charge of any of the assets of the bank such security for the faithful discharge of their duties as he may deem proper.

The director may also designate any one of the examiners of the department of finance as a general liquidating agent, with his office in the department of finance, for the purpose of liquidating any one or all state banks in the process of liquidation, and for the purpose of conducting such liquidation under the direction of said director; and may authorize the said liquidating agent to employ such clerical help as may be necessary.

Liquidating agents and experts and clerical assistants shall receive a salary to be fixed by the director and necessary traveling and hotel expenses incurred in the performance of official duties. The salary of the liquidating agent and experts and necessary clerical assistance [assistants] and other expenses incurred by the said liquidating agent shall be borne equally and ratably by the bank or banks in process of liquidation under such agent’s charge in proportion to the total amount of resources of each of such banks. The funds for such expenses shall be raised by assessing each bank in ratio herein set forth and paying such expenses directly to the persons entitled thereto, without depositing any of such funds in the state treasury.

The compensation of the agents appointed by the director and of attorneys, expert accountants and other assistants, and all expenses of liquidation and distribution of a bank whose assets and business shall be taken possession of by the director, shall be fixed by the director, but subject to be approved by the judge of the district court of the county in which the bank is located, on notice to such bank. Except in cases of emergency, the compensation to be paid to attorneys and expert accountants shall be fixed and approved before services are rendered. When the compensation shall have been so fixed and approved and the services rendered, the same shall be paid out of the funds of such bank in the hands of the director, and shall be a proper charge and lien on the assets of such bank as herein provided.

History.

I.C.,§ 26-1010, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1011. Federal Deposit Insurance Corporation — Right to act as receiver or liquidator.

The Federal Deposit Insurance Corporation created by section 8 of the federal “Banking Act of 1933” (section 12B of the Federal Reserve Act, as amended) is hereby authorized and empowered to be and act without bond as receiver or liquidator of any banking institution, the deposits in which are to any extent insured by said corporation, and which shall have been closed on account of inability to meet the demands of its depositors, in lieu of the director of finance, but only if and when requested so to do by said director.

The director of the department of finance may, in his discretion, in the event of such closing tender to said corporation the appointment as receiver or liquidator of such banking institution, in his stead, and if the corporation accepts said appointment, the corporation shall have and possess all the rights, powers and privileges provided by the laws of this state with respect to the director of the department of finance acting as receiver or liquidator of a banking institution, and be subject to all the duties of such receiver or liquidator, except insofar as such rights, powers, privileges or duties are in conflict with the provisions of subsection (1) of section 12B of the Federal Reserve Act, as amended (section 8 of the “Banking Act of 1933”).

The corporation shall not, however, without the consent of the director of the department of finance, continue to act as receiver or liquidator of any banking institution after the amount of the insured deposit liability of such banking institution, paid or assumed by the corporation, and the costs of liquidation paid or assumed by it have been repaid it, or after funds are available therefor.

History.

I.C.,§ 26-1011, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1012. Closed bank — Federal Deposit Insurance Corporation furnishing funds for payment of insured deposit liabilities — Subrogation.

Whenever any banking institution shall have been closed as aforesaid, and said Federal Deposit Insurance Corporation shall pay or make available for payment the insured deposit liabilities of such closed institution, the corporation, whether or not it shall have become receiver or liquidator of such closed banking institution, as herein provided, shall be subrogated to all rights against such closed banking institution, of the owners of such deposits, in the same manner and to the same extent as subrogation of the corporation is provided for in subsection (1) of section 12B of said Federal Reserve Act, as amended (being section 8 of said “Banking Act of 1933”) in the case of the closing of a national bank, provided, that the rights of depositors and other creditors of such closed institution shall be determined in accordance with the applicable provisions of the laws of this state.

History.

I.C.,§ 26-1012, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1013. Closed banks — Pledge or sale of assets by director or liquidator to Federal Deposit Insurance Corporation — Court order.

With respect to any banking institution, which is now or may hereafter be closed on account of inability to meet the demands of its depositors or by action of the director of the department of finance or of a court or by action of its directors or in the event of its insolvency or suspension, the director of the department of finance and/or the receiver or liquidator of such institution with the permission of said director of finance may borrow from said corporation and furnish any part or all of the assets of said institution to said corporation as security for a loan from same, provided, that where said corporation is acting as such receiver or liquidator, the order of a court of record of competent jurisdiction shall be first obtained approving such loan. Said director upon the order of a court of record of competent jurisdiction, and upon a like order and with the permission of said director, the receiver or liquidator of any such institution may sell to said corporation any part or all of the assets of such institution.

The provisions of this section shall not be construed to limit the power of any banking institution, the director of the department of finance or receivers or liquidators to pledge or sell assets in accordance with any existing law.

History.

I.C.,§ 26-1013, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1014. Federal Deposit Insurance Corporation acting as liquidator — Possession and control of assets and business of bank.

Upon the acceptance of the appointment of receiver or liquidator aforesaid by said corporation, and during its continuance as such receiver or liquidator, the possession and control of all the assets, business and property of such banking institution of every kind and nature shall pass to and vest in said corporation and without the execution of any instruments of conveyance, assignment, transfer or endorsement, with the same force and effect and to the same extent as in the director of the department of finance under like circumstances.

History.

I.C.,§ 26-1014, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1015. Enforcement of individual liability of directors of closed bank.

Among its other powers, said corporation, in the performance of its powers and duties as such receiver or liquidator, when acting as such in lieu of the director of the department of finance, shall have the right and power upon the order of the court of record of competent jurisdiction to enforce any individual liability of the directors of any such banking institution.

History.

I.C.,§ 26-1015, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1016. Notice to creditors of insolvent bank.

The director shall cause notice to be given by advertisement in a newspaper of general circulation in the town or city in which said bank is situated, if there be one, and if not, then in such other newspaper published in the state of Idaho, as the director shall designate, once a week for six (6) consecutive weeks, calling on all persons who have claims against said bank to present the same to the director or his duly authorized agent at a place to be specified in said notice, and to make sworn proof thereof, in form to be fixed by him, within the time specified in said notice, not less than thirty (30) days from the date of the last publication thereof. A copy of such notice shall be mailed to all persons whose names appear as creditors upon the books of the bank.

History.

I.C.,§ 26-1016, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1017. Claims — Allowance and rejection.

The director shall reject or allow all claims in (the) whole or in part, and on each claim allowed shall designate the order of its priority. If a claim is rejected or an order of priority allowed lower than that claimed, notice shall be given the claimant personally or by certified mail with a return receipt requested and an affidavit of the service of such notice, which shall be prima facie evidence thereof, filed in the office of the director. The action of the director shall be final unless an action be brought by the claimant against the bank in the proper court of the county where the bank is located within ninety (90) days after such service to fix the amount of the claim and its order of priority or either. An appeal from the director’s allowance, either as to priority or amount, may also be taken to the district court of such county by any party in interest by serving on the director notice thereof, stating the grounds of objection and filing the same in said court within thirty (30) days after allowance. Within five (5) days after such notice, the director shall file in the court, and serve on the appellant, a copy of the claim and his reasons for allowance. The court or judge shall, after five (5) days’ notice of time and place of hearing on the issues thus made, hear the proof of the parties and enter judgment reversing, affirming or modifying the director’s action.

History.

I.C.,§ 26-1017, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1018. Payment of claims.

Claims presented to the director prior to the expiration of the time fixed in the notice to creditors therefor, and allowed by him, shall be paid in the order of priority hereinafter fixed. Those filed after such expiration and prior to one (1) year thereafter shall be entitled, after they have been allowed by the director, to share in the distribution of the assets of the bank only to the extent of the assets undistributed in the hands of the director and available for the payment of claims of their order of priority at the time such claims are filed, but as against other claims of their same order of priority, on which dividends have been paid, they shall be entitled to payment in a proportionate amount before further payments are made on such other claims. All claims filed after the expiration of one (1) year following the date fixed in the notice to creditors as the time for presentation of claims are not entitled to be allowed or paid unless all other creditors’ claims of any kind or character, except claims of shareholders, based on stock or assessments paid on stock, shall have been fully paid and discharged, and a surplus remains in the hands of the director, and then only from such surplus.

History.

I.C.,§ 26-1018, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1019. Claims — Order of payment — Priorities.

The order of payment of the debts of a bank liquidated by the director shall be as follows:

1. The expense of liquidation, including compensation of agents, employees and attorneys.
2. All funds held by bank in trust.
3. Debts due depositors, holders of cashier’s checks, certified checks, drafts on correspondent banks, including protest fees, paid by them on valid checks or drafts presented after closing of the bank, pro rata. All deposit balances of other banks or trust companies and all deposits of public funds of every kind and character (except those actually placed on special deposit under the statutes providing therefor) including those of the United States, the state of Idaho, and every county, district, municipality, political subdivision or public corporation of this state, whether secured or unsecured, or whether deposited in violation of law or otherwise, are included within the terms of this subdivision and take the same priority as debts due any other depositor, anything in the statutes of the state of Idaho to the contrary notwithstanding.
4. All other contractual liabilities pro rata.
5. Interest on all foregoing classes of claims without regard to the priority of the principal computed as follows:
6. Unliquidated claims for damages and the like.

Savings accounts at the same rate they bore at the time of the closing of the bank; time certificates of deposit at the rate fixed in the certificate; all other contractual obligations bearing interest at the rate they bore at the time of closing until due by their terms; no interest to be compounded.

Provided, however, that the director may, in his discretion, without regard to the priorities herein fixed in subdivisions 3, 4, 5 and 6 of this section, or in preference to the payment of any claims of creditors within these subdivisions, pay off and discharge any lien, claim or charge against the assets or property of the bank in his hands and pay out and expend such sums as he deems necessary for the preservation, maintenance, conservation and protection of any such assets and property, and likewise property on which the bank has liens by mortgage or otherwise; and he may also, in his discretion, create a fund or retain in his hands in preference to the claim of any creditors in the subdivisions above-mentioned moneys for the aforesaid purposes.

Collateral which shall have been put up or pledged as security for the payment of bills payable by any bank, or any loans or discounts which shall have been outstanding as rediscounts of any bank prior to the closing thereof, shall not be available to the other creditors of such bank in whole or in part until such bills payable or rediscounts shall have been retired.

Deposits of any person, firm or corporation in a bank which is in the possession of the director, may be offset against any indebtedness, (subject to the conditions of the preceding paragraph of this section) due to such bank from such person, firm or corporation. All dividends when declared in favor of any creditor of the bank may be applied, in the discretion of the director, in satisfaction of the indebtedness, if any, due the bank from such creditor.

History.

I.C.,§ 26-1019, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1020. Partial payment of claims — Calculation of dividends — Assignment of claims — Checks against closed bank.

The director need not await the expiration of the time allowed for filing claims, as fixed in the notice to the creditors, for the payment of dividends, but he may, in his discretion, and if under the circumstances of the particular case he deems it expedient and safe, at any time after taking possession of said bank and prior to the expiration of such period fixed for filing of claims, if he has on hand in cash sufficient funds over and above the expenses of liquidation, make pro rata distribution to any class of creditors next entitled thereto, in the order of priority heretofore fixed, making such payment to said creditors as they appear on the books and records of the bank and determining the priority and basing his apportionment on the amount shown to be due by such books and records. At any time after the expiration of the date fixed for the presentation of claims against said bank and from time to time thereafter, when, in his discretion there are sufficient funds available therefor, the director shall, after making proper provision for the payment of expenses of liquidation, declare and pay dividends to all creditors of such bank pro rata in the order of their priority. If, after the time fixed for presentation of claims against the bank has expired, it appears that any person, prior to the expiration of said period, or at any other time, has been paid more than the pro rata amount due him as compared with the amounts then paid other creditors, nothing more shall be paid said creditor until such time as the payment made other creditors shall place them on equal footing. In calculating dividends, all disputed claims and deposits shall be taken into account and the amount of dividends upon such disputed claims or deposits shall be held by the director until the justice and validity of such claims or deposits shall have been finally determined. Claims against any bank in process of liquidation may be assigned as a whole, but partial assignments of such claims shall not be valid against the director of the department of finance or his agents in charge of such bank, nor recognized by them. Assignments of claims shall be binding upon the director only after the same have been filed and allowed by the director but not before, and only then subject to the payment of the assignor’s liabilities to the bank. Such assignment shall be made by filing written notice, signed by the original claimant, with the director or person in charge of said bank. No assigned claim may be offset against obligations due the bank. A check or draft drawn against any bank closed or taken possession of by the director, whether issued before or after closing thereof, shall not be recognized as a claim against said bank, or as an assignment of any amount, whether protested or not protested.

History.

I.C.,§ 26-1020, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1021. Statement of condition.

The director of the department of finance shall, within sixty (60) days after taking possession of any bank or trust company under the provisions of this chapter and at intervals of every six (6) months thereafter during the liquidation thereof and until depositors’ claims against said bank or trust company have been fully paid or the assets available for such claims exhausted, make public a statement of the condition of such bank or trust company.

History.

I.C.,§ 26-1021, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1022. Deposit of funds in director’s hands.

All funds in the hands of the director belonging to any bank in process of liquidation shall be deposited in his name as director in such banks within the state as may be selected and designated by him and subject to his checks as director of the department of finance. Provided, that any bank receiving such deposits shall file and keep on file with the director a surety bond, executed by some surety company authorized to transact business in the state of Idaho, in an amount not less than the amount of the sum on deposit, conditioned for the payment on demand of the full amount of such deposit, or in lieu of such bond, shall deposit with the director, securities in like amount to be approved by the director, as security for the payment of such deposits, but only approved securities as defined by the Public Depository Law, shall be accepted by the director. No deposit of such funds shall be made in any bank in excess of the penal amount of such bond or in excess of ninety per cent (90%) of the market value of such approved securities.

History.

I.C.,§ 26-1022, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1023. Disposition of unclaimed funds.

The director shall certify to the treasurer of the state a complete list of funds remaining in his hands uncalled for, which have been left in his hands in his official capacity, in trust for depositors in and creditors of any liquidated bank after they have been held by him for six (6) months from the date of the final liquidation of the institution. Along with this certificate, he shall transmit to the treasurer of the state the funds with accumulated interest thereon which he has so held in trust for six (6) months. A copy of such certificate shall also be filed with the state controller, who shall make a record thereof.

Any depositor or creditor of a liquidated bank who has not been paid the amount standing to his credit as thus certified to the state treasurer, may apply to the director for the amount due him, after it has been certified into the treasury of the state. The depositor or creditor shall make an affidavit and offer proof of his identity and of the amount due him by the liquidated bank. When satisfied as to the correctness of the claim and of the identity of the person, the director shall approve the claim and forward it to the state controller, who shall audit the same and if found correct issue his warrant payable to the depositor or creditor for the amount shown by the records to be due such depositor or creditor which shall be paid by the treasurer.

History.

I.C.,§ 26-1023, as added by 1979, ch. 41, § 2, p. 62; am. 1994, ch. 180, § 43, p. 420.

§ 26-1024. Disposition of assets remaining after payment of claims.

Whenever the director has paid to each and every depositor and creditor of such bank whose claims shall have been duly approved and allowed as herein provided, the full amount thereof, and shall have made provisions for unclaimed and unpaid deposits and disputed claims and deposits, and shall have paid all the expenses of liquidation or, if the assets of said bank be insufficient for making said payments, then, whenever the director has liquidated all available assets and disbursed the same as herein provided, the director shall make application to the district court of the county in which such bank is located, or the judge thereof in chambers for an order authorizing the director, if there be remaining assets on hand, to surrender the same to the directors of said bank in office at the time of closing the same, as trustees for stockholders, or to such other person or persons, if any, as have been designated as trustees by the stockholders at a meeting lawfully called and assembled for such purpose, in like manner as any other stockholders’ meeting. Said order shall also provide that upon the surrender of said assets, as in said order directed, and where there are no remaining assets, then, upon the entry of the order, the director shall be discharged from all further liability or responsibility in connection with the assets and affairs of said bank and that the charter of said bank shall be forfeited. The court may require such trustees to give bond in such amount as the court may fix, conditioned for the faithful performance of their duties. It shall be the duty of the said trustee or trustees to complete the liquidation of any remaining assets as rapidly as may be and to distribute the proceeds of the same among the stockholders according to their respective rights. On application for such order, the bank shall be made a party by notice issued on order of the court or judge, in lieu of summons, but served in like manner, and the hearing of any such application may be had at any time in court or in chambers, as the court may order, after five (5) days’ notice of the hearing.

History.

I.C.,§ 26-1024, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1025. Borrowing money to facilitate liquidation or reopening of bank.

The director of the department of finance, when he deems it to be for the best interest of the depositors of any closed bank, shall be and hereby is authorized and empowered in his official capacity, without personal liability, and under orders of the court, to borrow from any federal agency, or any corporation or person, for the purpose of facilitating the liquidation of such bank and making distribution to depositors, and/or for the purpose of reorganizing or reopening such bank, and as security for the payment of any money so borrowed, the director may pledge or otherwise hypothecate or mortgage all or any part of the assets of such bank and enter into all such contracts or agreements in connection therewith as he may deem prudent and advisable.

History.

I.C.,§ 26-1025, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1026. Reopening of bank — Unsecured depositors and creditors — Acceptance of plan — Certificate of approval.

Whenever the director of the department of finance believes it to be for the best interest of the unsecured depositors and creditors of any bank that any proposed plan for maintaining or restoring the solvency of such bank, or for effecting any merger or reorganization thereof, should be carried out and made effective, the director shall issue his certificate of approval, and thereupon all other unsecured depositors and unsecured creditors of such bank shall be held to be subject to the agreement and plan so approved by the director and all depositors and creditors shall be bound thereby and their deposits and claims shall be subject thereto to the same extent and effect as if they had joined in the execution thereof, and their deposits and claims shall be paid in the manner provided in the plan so approved, as aforesaid, and not otherwise.

History.

I.C.,§ 26-1026, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1027. Public funds on deposit — Joinder of official in plan — Bonds securing deposits unaffected.

Public officers and governing boards having control of public funds on deposit in any such bank are authorized to join in any plan approved as provided in section 26-1026, Idaho Code, if, in the judgment of such officers or boards, the plan is for the best interest of all persons concerned, but no such agreement shall release any surety on any bond securing public deposits or public funds, or waive any security held for any preference given to such public funds under any law of this state, or relieve any officer, or the sureties of his official bond, of the liability, if any, for such deposit, and the time for the repayment of public funds shall in no event be extended for a longer period than six (6) months from the date of said certificate of the director of the department of finance.

History.

I.C.,§ 26-1027, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1101. Administration — Rules and powers.

1. Every bank and bank holding company shall be subject to the inspection and supervision of the director of the department of finance as provided in this act.
2. The director may from time to time promulgate, amend and rescind rules necessary or proper to carry out the provisions of this act. No rule may be adopted unless the director finds that the action is necessary or appropriate for the protection of the interests of bank depositors or for the welfare of banks and consistent with the purpose of this act.
3. Notwithstanding any other provision of the Idaho bank act, but subject to the limitations provided for in this section:
   1. A bank may engage in any activity in which it could engage, exercise any power it could exercise, or make any loan or investment which it could make if it were operating as a national bank or which has been approved by the responsible federal agency for any state-chartered bank in the United States.
   2. Before engaging in any activity or exercising any power afforded under this subsection (3), a bank shall first notify the director of its intent to do so. This notice shall be sent to the director by U.S. mail, postage prepaid, certified or registered, with return receipt requested. Should the director take no action on the request within twenty (20) days of delivery to the director, the right to engage in the action or power so requested shall be deemed granted.
   3. Should the director deny the request, the affected bank shall have the right to request a hearing before the director, which hearing shall be held within thirty (30) days of the date of the denial.
   4. The director shall have the discretion to deny any request which is inconsistent with the purposes of the Idaho bank act.
   5. No such approval shall operate to deny the director of any of his authority under the Idaho bank act and such permitted activity shall be subject to supervision by the director.
   6. The director may, by order, waive or modify any requirement under this act if the corresponding federal requirement for national banks is eliminated or modified.
4. Banks which are subsidiaries of bank holding companies may receive deposits, renew time deposits, close loans, service loans, and receive payments on loans as agent for other depository institutions which are subsidiaries of the same bank holding company.
5. All rules must be promulgated pursuant to the provisions of chapter 52, title 67, Idaho Code. Unless expressly provided in the Idaho bank act, proceedings under the Idaho bank act shall not be considered “contested cases” under chapter 52, title 67, Idaho Code.

History.

I.C.,§ 26-1101, as added by 1979, ch. 41, § 2, p. 62; am. 1995, ch. 99, § 5, p. 299.

§ 26-1102. Examination by department.

1. The director may examine no less often than once in eighteen (18) months, and more frequently whenever he shall deem it necessary, all records and other documents in the possession of or relating to the bank, bank trust department including records in the custody of a data processor or other person or company. For this purpose, the director shall have authority to demand and inspect all books, papers, moneys, notes, bonds, or evidences of debt of such bank and may examine on oath any of the directors, officers, agents, employees, customers, or depositors of such bank. Any willful false swearing in any examination shall be deemed perjury. During examinations, the directors, officers and employees shall give any assistance required by the director, but no examiner shall interfere with the routine duty of such directors, officers and employees.
2. Whenever it shall come to the notice of the director that any bank has failed or refused to comply with any of the provisions of this act, the director is authorized to make a special examination of said bank and to charge and collect for such special examination; and to continue such examinations and charges at intervals of not less than thirty (30) days until such provisions are complied with.
3. The director may in his discretion at any time omit his examination of any bank as above required and accept in lieu thereof the findings or result of an examination of such bank made by any bank regulatory or insuring agency of the United States authorized to make such examination.
4. The director may in his discretion extend the examination period to no less often than once in twenty-four (24) months if:
   1. The bank has total assets of less than one billion dollars ($1,000,000,000);
   2. The bank is well capitalized, as defined in 12 U.S.C. section 1831o, the federal deposit insurance act;
   3. When the bank was most recently examined, it was found to be well-managed and its composite condition was found to be outstanding or good; and
   4. The bank is not currently subject to a formal enforcement proceeding or order by the department or the appropriate federal banking agency.

History.

I.C.,§ 26-1102, as added by 1979, ch. 41, § 2, p. 62; am. 2007, ch. 126, § 6, p. 376.

§ 26-1104. Fees.

1. On January 15 of each year, the director shall fix and collect from each state bank a fee based upon the amount of the total assets of the bank as of December 31 of the preceding calendar year, which fees shall not exceed the amounts set forth in the following schedule:
2. In addition to the foregoing each state bank shall pay to the director an additional sum not to exceed one hundred dollars ($100) for each office and branch office maintained by said bank. The director shall collect from each bank for each special examination of its condition an amount sufficient to reimburse the director for the actual expenses incurred in connection therewith.
3. The director may, in his discretion, assess state banks and state bank holding companies for the review, analysis and investigation of an application to:
   1. Charter or incorporate a bank or bank holding company;
   2. Establish a branch or office;
   3. Merge with, acquire, or be acquired by, another bank or bank holding company located in or outside of Idaho; and
   4. Convert to an entity other than a state bank or bank holding company.
4. For banks operating in Idaho with a home state other than Idaho the director may, in his discretion, enter into a cooperative agreement with the home state supervisor of the bank to assess supervisory fees on the bank. The fees may include assessments, examination fees, branch fees, license fees and all other fees that are levied by the director on state banks. If such agreement has been entered, the director may, in his discretion, assess supervisory fees on banks operating in Idaho with home states other than Idaho.
5. All fees, fines, examination and miscellaneous charges collected by the director pursuant to the Idaho bank act shall be deposited into the finance administrative account pursuant to section 67-2702, Idaho Code.

$0 to $1 million ...............................

$1,500 Flat Fee

$1 million to $10 million ...............................

$2,000 + $.25 per thousand dollars of assets in excess of $1 million

$10 million to $50 million ...............................

$4,250 + $.19 per thousand dollars of assets in excess of $10 million

$50 million to $100 million ...............................

$11,850 + $.12 per thousand dollars of assets in excess of $50 million

$100 million to $500 million ...............................

$17,850 + $.10 per thousand dollars of assets in excess of $100 million

$500 million to $1 billion ...............................

$57,850+ $.09 per thousand dollars of assets in excess of $500 million

$1 billion to $3 billion ...............................

$102,850 + $.08 per thousand dollars of assets in excess of $1 billion

$3 billion to $10 billion ...............................

$262,850 + $.07 per thousand dollars of assets in excess of $3 billion

$10 billion to $20 billion ...............................

$369,425 + $.03 per thousand dollars of assets in excess of $10 billion

$20 billion and over ...............................

$689,425 + $.02 per thousand dollars of assets in excess of $20 billion

History.

I.C.,§ 26-1104, as added by 1979, ch. 41, § 2, p. 62; am. 1980, ch. 169, § 1, p. 361; am. 1984, ch. 47, § 1, p. 76; am. 1995, ch. 99, § 6, p. 299; am. 1997, ch. 225, § 3, p. 661; am. 2015, ch. 204, § 13, p. 618.

§ 26-1105. Directors to be advised of conditions.

The department of finance shall, after each examination, address a letter to the president or chairman of the board of directors, calling attention to the condition of the bank at the time of examination. Such letter from the department shall be read at the first meeting of the board of directors following its receipt and the bank or company’s minute book shall show the receipt of such letter and the reply thereto as approved by the directors.

History.

I.C.,§ 26-1105, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1106. Reports of bank.

Every bank shall make to the department of finance not less than three (3) reports during each calendar year at such times as reports are called for by the director. The department of finance shall prescribe the form of such reports and they shall be signed and verified by the oath or affirmation of one of the officers of such bank and attested by at least two (2) of the directors. They shall be forwarded to the department within fifteen (15) days after the receipt of the call therefor. Such report shall be published in a newspaper in the city or county in which said bank is located, or in a paper published nearest to such town, and in the same form as made to the department. Proof of publication shall be furnished to said department within thirty (30) days after receipt of the aforesaid call.

The department of finance shall also have the power to call for special reports from any bank whenever in its judgment the same is necessary to inform the department fully of the condition of such bank. It shall not be necessary for such bank to publish such special report.

History.

I.C.,§ 26-1106, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1107. Reports — Duties of department of finance.

The department of finance shall receive and place on file in the office of the department the reports to be made by the banks under this act and shall prepare and furnish, on demand, to all the banks required to report blank forms for such statements or reports.

History.

I.C.,§ 26-1107, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1108. Failure to transmit reports. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-1108, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1109. Books and accounts.

Whenever it appears to the department of finance that any bank does not keep books and accounts in such manner as to enable it to readily ascertain the true condition of such bank, or that such books and accounts are not kept in a manner which will minimize, as far as possible, loss through dishonesty of its officers or employees or otherwise, the department shall have power to require the officers of such bank or any of them, to open and keep such books or accounts as the department may, in its discretion, determine and prescribe for the purpose of keeping accurate and convenient records of the transactions and accounts of such bank.

The directors of any bank shall, within ten (10) days from receipt by the bank of a written statement from the department that the bank’s internal auditing procedures are inadequate or deficient in any respect in the opinion of the department, retain, at the bank’s sole expense, an independent licensed certified public accountant, approved by the director, to forthwith make an audit of the bank, and upon completion thereof a certified copy of the audit shall be delivered to the department.

History.

I.C.,§ 26-1109, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1110. Proof that services performed will be subject to regulation and examination.

No bank subject to examination by the department of finance may cause to be performed, by contract or otherwise, any bank services for itself, whether on or off its premises, unless assurances satisfactory to the department of finance are furnished to such department by both the bank and the party performing such services that the performance thereof for any such bank will be subject to regulation and examination by the department of finance to the same extent as if such services were being performed by the bank itself on its own premises.

History.

I.C.,§ 26-1110, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1111. Records not public.

1. The department of finance shall keep proper books and records of all regulatory acts, matters and things done by it under the provisions of chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 18, 21, 26, 32, 33, 34, 35, 36 and 37, title 26, Idaho Code, as records of its office, but the same shall be subject to disclosure according to chapter 1, title 74, Idaho Code, except as otherwise provided in this section and in sections 26-1112 and 67-2743E, Idaho Code.
2. All written communications and copies thereof, between the department, the director, department employees and any bank, bank holding company, trust company, savings and loan association and credit union which relate in any manner to the examination or condition of the financial institution, are the property of the department of finance and, if acquired by any person, shall be returned to the department upon written demand.
3. 1. The director of the department of finance, any federal bank or other financial institution regulatory or supervisory agency, and any bank, bank holding company, trust company, savings and loan association, or credit union incorporated or chartered under title 26, Idaho Code, or under federal law or the law of any state and doing business in the state of Idaho, shall each have a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications, and the contents of any documents relating to any confidential communications, between the financial institution and the department of finance or federal bank or financial institution regulatory or supervisory agency made during the regulatory relationship. (3)(a) The director of the department of finance, any federal bank or other financial institution regulatory or supervisory agency, and any bank, bank holding company, trust company, savings and loan association, or credit union incorporated or chartered under title 26, Idaho Code, or under federal law or the law of any state and doing business in the state of Idaho, shall each have a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications, and the contents of any documents relating to any confidential communications, between the financial institution and the department of finance or federal bank or financial institution regulatory or supervisory agency made during the regulatory relationship.
   2. A communication is confidential if it is made during the regulatory relationship between the department of finance or the federal bank or other financial institution regulatory or supervisory agency and any such bank, bank holding company, trust company, savings and loan association or credit union, and if the communication is not designed or intended for disclosure to any other parties.
   3. The privilege may be claimed by the financial institution or by the department of finance or the federal bank or other financial institution regulatory or supervisory agency, or by the lawyer for either. The privilege may be waived only in accordance with this section and sections 26-1112 and 67-2743E, Idaho Code.
   4. The director of the department of finance or the appropriate officer or employee of the federal bank or other financial institution regulatory or supervisory agency may disclose confidential communications between the department or agency and financial institutions to the court, in camera, in a civil action. Such disclosure shall also be a privileged communication and the privilege may be claimed by the director, officer or employee or his lawyer.
   5. No sanction may be imposed upon any financial institution as a result of the claim of a privilege by the financial institution or the director of the department of finance or the officer or employee of the federal supervisory agency under this section.

History.

I.C.,§ 26-1111, as added by 1979, ch. 41, § 2, p. 62; am. 1990, ch. 213, § 21, p. 480; am. 1993, ch. 187, § 1, p. 477; am. 2000, ch. 288, § 2, p. 970; am. 2005, ch. 265, § 16, p. 810; am. 2015, ch. 141, § 42, p. 379.

§ 26-1112. Penalty for disclosure of confidential information.

1. Neither the department of finance, its director nor its employees shall disclose to any person or agency any fact or information obtained in the course of business of the department under this act, except in the following cases:
   1. When by the terms of this act or chapter 1, title 74, Idaho Code, it is made the duty of the department to make public records and publish the same.
   2. When the department is required by law to take special action regarding the affairs of any bank.
   3. When called as a witness in any criminal proceeding in a court of competent jurisdiction, provided that the court must review such information in chambers to determine the necessity of disclosing such information, and subject to the privilege provided by subsection (3) of section 26-1111, Idaho Code.
   4. When, in the case of a problem bank, it is necessary or advisable, in the discretion of the director, for the good of the public or of the depositors.
   5. When, in the discretion of the department, it is advisable to disclose any such information to a state or federal bank supervisory agency.
2. Any person violating the provisions of this section shall be guilty of a felony and conviction shall subject the offender to a forfeiture of his office or employment.

History.

I.C.,§ 26-1112, as added by 1979, ch. 41, § 2, p. 62; am. 1990, ch. 213, § 22, p. 480; am. 1993, ch. 187, § 2, p. 477; am. 2015, ch. 141, § 43, p. 379.

§ 26-1113. Impairment of capital — Assessment.

Notwithstanding any law of this state to the contrary, the stock of a bank chartered by the state of Idaho shall be assessable. Whenever the director has reason to believe that the capital and surplus of any bank is impaired or reduced below the amount required by the director at the time the bank’s charter was issued or an amount which the director reasonably believes to be necessary for the protection of the depositors of the bank, it shall be the duty of the director to examine said bank and ascertain the facts. In case he finds an impairment or reduction of capital and surplus, he shall order the bank to make good the deficiency within thirty (30) days after the date of the order. The directors of the bank upon which an order shall have been made, shall levy an assessment upon the stock of the bank to repair the capital deficiency. The director shall cause notice of the order and the amount of the assessment to be given to each stockholder of the bank. Notice shall be given by a written notice mailed to each stockholder at his last known address or served personally upon him. If any stockholder shall refuse or neglect to pay the assessment specified in the notice within ten (10) days from the date of mailing or service upon him of the notice, the directors of the bank shall have the right to sell the stock of such stockholder, at public auction. Previous notice of such sale shall be given ten (10) days in advance of the date of the sale in a newspaper of general circulation in the county where the principal place of business of the bank is located. A copy of the notice of sale shall also be served personally on the stockholder or by mailing same to his last known address ten (10) days before the day fixed for the sale. Such stock may be sold at private sale and without such public notice; provided that an offer in writing shall first be obtained and a copy thereof served upon the owner of record of the stock sought to be sold, either personally or by mailing a copy of the offer to his last known address. If, after service of the offer, the owner shall refuse or neglect to pay the assessment within two (2) weeks from the time of the service of the offer, the directors may accept the offer and sell the stock to the person(s) making the offer, or to any other person(s) making a larger offer than the offer submitted to the stockholder. Stock shall in no event be sold for less than the amount of the assessment called for and the expense of the sale.

The stockholder whose shares of stock are to be sold shall return the certificates evidencing such shares to the bank prior to the date the shares will be sold.

Out of the proceeds of the stock so sold, the directors shall pay the amount of assessment levied thereon and the necessary costs of sale, and the balance, if any, shall be paid to the person or persons whose stock has thus been sold. A sale of stock as herein provided shall effect an absolute cancelation of the outstanding certificate or certificates evidencing the stock so sold and shall make the same null and void, and a new certificate shall be issued to the purchaser thereof. History.

I.C.,§ 26-1113, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1114. Suspension or removal of directors, officers or employees — Prohibition of future employment.

1. The director of the department of finance may issue a written order suspending or removing a director, officer or employee of a bank, bank holding company or trust institution, upon finding that the director, officer or employee:
   1. Has been dishonest or reckless in the performance of his official duties;
   2. Has breached his fiduciary duties to the bank, bank holding company or trust institution, in a manner that is likely to cause substantial loss to or seriously weaken the bank, bank holding company or trust institution;
   3. Has violated any provision of this title, any state or federal law or regulation pertaining to the business of the bank, bank holding company, or trust institution, or any order of the director of the department of finance;
   4. Has been convicted of any felony or a misdemeanor involving theft or dishonesty; or
   5. Has engaged or participated in any unsafe or unsound practice in the conduct of the affairs of the bank, bank holding company or trust institution.
2. In the event a director, officer or employee has been removed from office as set forth in this section, and the order has not been modified, rescinded or set aside, or if a person has been removed as a director, officer or employee of a bank, bank holding company or trust institution by a federal financial institution regulator or a financial institution regulator in another state, the person is prohibited from becoming employed by a bank, bank holding company or trust institution supervised by the director of the department of finance in this state, except as specifically permitted by the director of the department of finance.

The order shall be issued pursuant to chapter 52, title 67, Idaho Code.

History.

I.C.,§ 26-1114, as added by 2015, ch. 204, § 15, p. 618.

§ 26-1115. Cease and desist orders — Penalties.

1. If the director of the department of finance finds that any bank, bank holding company or trust institution has engaged or is about to engage in an unsafe or unsound practice in conducting the business of such bank, bank holding company or trust institution, or any person has violated or is about to violate any provision of this act, any rule or order issued under the act, any condition imposed in writing by the director, or any written agreement entered into with the director, the director may order the bank, bank holding company, trust institution or other person to cease and desist from any such violation or practice. The order shall be issued pursuant to chapter 52, title 67, Idaho Code.
2. After providing a notice and an opportunity for a public hearing pursuant to chapter 52, title 67, Idaho Code, the director of the department of finance may assess against and collect a civil money penalty from any bank, bank holding company or trust institution that, or from any executive officer, director, employee, agent or other person participating in the conduct of the affairs of such bank, bank holding company or trust institution who:
   1. Engages or participates in any unsafe or unsound practice in connection with a bank, bank holding company or trust institution; or
   2. Violates or knowingly permits any person to violate any of the provisions of:
      1. The Idaho bank act;
      2. Any rule promulgated pursuant to the Idaho bank act; or
      3. Any lawful order of the director of the department of finance issued pursuant to the Idaho bank act.
3. The civil money penalty shall not exceed one thousand dollars ($1,000) per day for each day such violation continues. No civil money penalty shall be assessed for the same act or practice if another government agency has taken similar action against the bank, bank holding company or trust institution, or person to be assessed such civil money penalty. In determining the amount of the civil money penalty to be assessed, the director of the department of finance shall consider:
   1. The good faith of the bank, bank holding company, trust institution or person to be assessed with such civil money penalty;
   2. The gravity of the violation;
   3. Any previous violations by the bank, bank holding company, trust institution or person to be assessed with such civil money penalty;
   4. The nature and extent of any past violations; and
   5. Such other matters as the director of the department of finance may deem appropriate.
4. Upon waiver by the respondent of the right to a public hearing concerning an assessment of a civil money penalty, the hearing or portions thereof may be closed to the public when concerns arise about prompt withdrawal of moneys from or the safety and soundness of the bank, bank holding company or trust institution.
5. For the purposes of this section, a violation shall include, but is not limited to, any action by any person alone or with another person that causes, brings about, or results in the participation in, counseling of or aiding or abetting of a violation.
6. The director of the department of finance may modify or set aside any order assessing a civil money penalty.
7. Failure by a trust institution to comply with an order issued under this section within a reasonable time as the director prescribes is grounds for suspension or revocation of its charter or license issued under this act.

History.

I.C.,§ 26-1115, as added by 2015, ch. 204, § 17, p. 618.

§ 26-1116. Civil enforcement.

Whenever it appears to the director that any bank, bank holding company or trust institution has engaged or is about to engage in an unsafe or unsound practice in conducting the business of such bank, bank holding company or trust institution, or any person has violated or is about to violate any provision of this act, any rule or order issued under the act, any condition imposed in writing by the director, or any written agreement entered into with the director, the director may, in his discretion, bring an action in any court of competent jurisdiction, and upon a showing of any unsafe or unsound practice, or violation, shall be granted any or all of the following:

1. A writ or order restraining or enjoining, temporarily or permanently, any unsafe or unsound practice, or violation of any provision of this act, any rule or order issued under the act, any condition imposed in writing by the director, or any written agreement entered into with the director;
2. An order granting a declaratory judgment;
3. An order for disgorgement and other equitable remedies;
4. An order appointing a receiver or conservator for the defendant or the defendant’s assets;
5. An order that the person engaged in the unsafe or unsound practice, or violating any provision of this act, any rule or order issued under the act, any condition imposed in writing by the director or any written agreement entered into with the director shall pay a civil penalty to the department in an amount not to exceed twenty-five thousand dollars ($25,000) for each violation;
6. An order allowing the director to recover costs that may include investigative expenses and attorney’s fees.

History.

I.C.,§ 26-1116, as added by 2015, ch. 204, § 19, p. 618.

§ 26-1117. Power of the court to grant relief. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-1117, as added by 1995, ch. 99, § 8, p. 299.

§ 26-1201. Unauthorized banking.

It shall be unlawful for any person to engage in soliciting, receiving or accepting money or its equivalent on deposit as a regular business whether such deposit, however evidenced, is made subject to check or draft or other order unless such activity is specifically authorized by statute. Any person violating any provision of this section shall be guilty of a felony.

History.

I.C.,§ 26-1201, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1202. Unauthorized use of name — Waiver by director.

1. With the exception of the persons defined in subsection (2) of this section, no person may advertise or transact business in this state under a name or title that contains the word “bank,” “banker,” “bancorp,” “savings bank,” “trust company,” or a word or words of similar import, unless the person has been granted a charter to engage in banking or trust business in this state by the director, or unless the director has granted the person a waiver from this prohibition as set forth in this section.
2. The foregoing prohibition shall not apply to a national bank, federal thrift or federal savings bank, bank holding company or a state-chartered bank or trust company located in another state that has obtained all approvals that may be required under the law as a prerequisite to doing business in this state.
3. The director may grant a waiver to allow the use of the word “bank,” “banker,” “bancorp,” “savings bank,” “trust company” or a word or words of similar import if:
   1. The person is not engaged in banking or trust business;
   2. The name or title used is not likely to deceive or mislead an individual to believe that the person is engaged in banking or trust business;
   3. The name or title, or a name or title similar to it, is not already used by another person doing business in this state; and
   4. The name or title does not suggest or imply that the person is engaged in unlawful conduct.
4. Should the director grant a waiver as set forth in subsection (3) of this section, the director may condition or restrict the use of the name or title as he finds necessary in order to protect the public.
5. In the event the use of a name or title is prohibited as set forth in this section and that none of the exceptions set forth in subsection (2) of this section apply, and the director has not granted a waiver to the prohibition as set forth in subsection (3) of this section, the Idaho secretary of state shall not be obligated to file any documents, records, articles or certificates that the person using or desiring to use the prohibited name or title requests the Idaho secretary of state to file.
6. Any person who willfully violates the foregoing prohibition is guilty of a felony.

History.

I.C.,§ 26-1202, as added by 2015, ch. 204, § 21, p. 618.

§ 26-1202A. Regulations of director of the department of finance. [Repealed.]

§ 26-1203. False statements regarding banks and trust companies — Penalty.

Any person who shall willfully and maliciously make, circulate or transmit to another or others any false statement, rumor, or suggestion, written, printed or by word of mouth, which is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of any bank or trust company doing business in this state, or who shall counsel, aid, procure or induce another to start, transmit or circulate any such statement or rumor, shall be guilty of a felony.

History.

I.C.,§ 26-1203, as added by 1979, ch. 41, § 2, p. 62; am. 2000, ch. 288, § 3, p. 970.

§ 26-1204. False statements regarding banks and trust companies — Civil remedies.

1. It is unlawful for any person to make, circulate or transmit to another or others any false statement, rumor, or suggestion, written, printed or by word of mouth, which is directly or by inference derogatory to the financial condition or affects the solvency or financial standing of any bank or trust company doing business in this state, or who shall counsel, aid, procure or induce another to start, transmit or circulate any such statement or rumor.
2. Whenever it appears to the director that any person has engaged in any act constituting a violation of this section, he may in his discretion bring an action in any court of competent jurisdiction to enjoin any such act and to enforce compliance with this section. Upon a showing that a person has engaged or is about to engage in an act constituting a violation of this section, a permanent or temporary injunction, restraining order or writ of mandamus shall be granted. The director shall not be required to furnish a bond. In addition to the foregoing, the director may be granted the following remedies:
   1. An order that the person violating this section pay a civil penalty to the general fund in an amount not to exceed ten thousand dollars ($10,000) for each violation;
   2. An order that the person violating this section pay costs to the department, which may include an amount representing reasonable attorney’s fees and reimbursements for investigative efforts;
   3. An order granting other appropriate remedies upon a proper showing.

History.

I.C.,§ 26-1204, as added by 2000, ch. 288, § 4, p. 970.

§ 26-1205. Burglary of bank. [Repealed.]

§ 26-1206. Penalty for unlawful hypothecation of assets.

Any officer or employee of any bank or the bank holding company owning or controlling the bank, doing business in this state who, except in the manner authorized by law or the contract of the parties, hypothecates, pledges or in any way alienates any notes, stocks, bonds, mortgages, securities or any other property coming into his hands or into the possession of said bank as collateral, for safekeeping or in any other manner, and to which the bank has not acquired full title, shall be guilty of theft, and upon conviction thereof shall be punished as provided in section 18-2408, Idaho Code.

History.

I.C.,§ 26-1206, as added by 1979, ch. 41, § 2, p. 62; am. 1998, ch. 337, § 3, p. 1082.

§ 26-1207. Concealment of loans and discounts.

Any officer or employee of any bank or the bank holding company owning or controlling the bank who intentionally conceals from the director of the department of finance or the directors of the bank or a committee thereof, the purchase of any security, the sale of any of its securities, or any guaranty, repurchase agreement or any other agreement whereby the bank is obligated, shall be guilty of a felony.

History.

I.C.,§ 26-1207, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1208. False reports or entries.

Any director, officer, or employee of any bank or bank holding company who shall willingly and knowingly subscribe to or make or cause to be made any false statement or false entry on the books or in any report or statement of the bank or bank holding company, or shall knowingly make or exhibit any false reports, entries or statements with the intent to deceive any person or persons authorized to examine into the affairs of the bank or bank holding company or the board of directors of the bank or bank holding company or shall knowingly state or publish any false report or statement of any bank or bank holding company, shall be guilty of a felony.

History.

I.C.,§ 26-1208, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1209. Embezzlement. [Repealed.]

§ 26-1210. Bank officers and directors to report felonies.

It shall be the duty of every officer or director of any bank to report promptly every violation or apparent violation of any of the banking laws of this state which is defined as a felony under the laws of this state, of which he has knowledge, to the director of the department of finance or his duly authorized agent or agents, immediately upon the discovery thereof. Every such person who intentionally withholds such a report, or fails to make a prompt report of any such violation with the intent to injure, deceive or defraud such bank or any of its depositors, creditors or stockholders, or the director of the department of finance or his duly authorized agent or agents shall be guilty of a misdemeanor.

History.

I.C.,§ 26-1210, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1211. Misleading advertising.

No bank or bank holding company or any officer thereof shall advertise in any manner which is misleading, false or deceptive. Any bank violating the provisions of this section shall be subject to the provisions of section 26-1115, Idaho Code.

History.

I.C.,§ 26-1211, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1212. Loans to officials of department prohibited.

It shall be unlawful for the department of finance, its director or employees engaged in bank examination or supervision, to borrow money directly or indirectly from any state bank, or director or official of a state bank. Any person violating the provision of this section shall be guilty of a felony.

History.

I.C.,§ 26-1212, as added by 1979, ch. 41, § 2, p. 62; am. 1993, ch. 53, § 4, p. 137.

§ 26-1213. Commission for making loans.

No officer, director or employee of any bank or the bank holding company owning or controlling the bank shall demand, accept or receive, directly or indirectly, any commission or other consideration on account of the making, extension, or renewal by said bank of any loan, or extension of credit, to any person, firm or corporation. This prohibition shall not apply to consideration paid by a bank to its employees.

Any person violating the provisions of this section shall be guilty of a felony.

History.

I.C.,§ 26-1213, as added by 1979, ch. 41, § 2, p. 62; am. 1993, ch. 53, § 5, p. 137.

§ 26-1214. Overdrafts.

Any officer or employee of any bank who shall pay out the funds of any bank upon the check, order or draft of any individual, firm, corporation or association, which has not on deposit with such bank a sum equal to such check, order or draft shall be personally liable to it for the amount so paid, unless the drawer of such check, order or draft has previously arranged with the board of directors for credit sufficient to cover such amount. Provided, that the board of directors may ratify such overdraft and relieve such liability.

Whenever the overdrafts of the depositors of any bank doing business under this chapter are, in the opinion or judgment of the director of the department of finance, excessive or of long standing, he may require such bank to either collect or materially reduce the same or secure notes in lieu (of) thereof.

History.

I.C.,§ 26-1214, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1215. Penalty for officer overdrawing account.

Any director, officer or employee of any bank or the bank holding company owning or controlling the bank who knowingly and consistently overdraws his or her account, or any officer or employee who allows such an overdraft shall be guilty of a misappropriation of the bank’s funds and upon conviction thereof, shall be punished by a fine of not exceeding one thousand dollars ($1,000) or by imprisonment in the county jail for not more than one (1) year, or both such fine and imprisonment, in the discretion of the court.

History.

I.C.,§ 26-1215, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1216. Carrying as asset property not actually owned.

It shall be unlawful for any bank or bank holding company to carry as an asset any note, obligation or security which is not the property of the bank or bank holding company; and any officer or employee of any such bank or bank holding company who places among the assets thereof any note, obligation or security which it does not actually own, or who represents to the director or any examiner appointed by him that any note, obligation or security carried among the assets of the bank or bank holding company is the property of said bank, when in fact such note, obligation or security is not owned by said bank or bank holding company shall be guilty of a misdemeanor.

History.

I.C.,§ 26-1216, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1217. Penalty for neglect to open.

Any bank which fails to open for business within one (1) year after the date from which its charter was issued shall, unless the time is extended by the director of the department of finance, be deemed to have forfeited the charter and its right and authority to do business and to have no further legal existence, and in case the director of the department of finance approves the establishment of any branch of a bank as required by section 26-301, Idaho Code, and such branch or branch office is not established and operating within twelve (12) months after the date the charter is issued, unless the time be extended by the director for good cause shown, such approval shall be of no further force or effect and such branch or branch office shall not be established or operated until the approval of the director is again obtained as required by the statute last mentioned. The director may not extend the time for the establishment and commencement of operations of any such bank or branch office for a longer period than an additional six (6) months.

History.

I.C.,§ 26-1217, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1218. Notes for stock subscription illegal.

It shall be unlawful for the officers or directors of the banking corporation to accept the note of any subscriber or stockholder in payment or part payment of the par value of the common stock, surplus or undivided profits.

History.

I.C.,§ 26-1218, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1219. Advertising branches.

It shall be unlawful for any bank to advertise that a branch office will be established or available for bank customers until a branch charter has been issued by the director for that branch office under the provisions of chapter 3, title 26, Idaho Code. It shall be unlawful for any person or group of persons to advertise that a unit bank will be established until approval for a bank charter has been issued by the director under the provisions of chapter 2, title 26, Idaho Code.

History.

I.C.,§ 26-1219, as added by 1979, ch. 41, § 2, p. 62; am. 2015, ch. 204, § 22, p. 618.

§ 26-1220. Illegal data processing activities.

It shall be unlawful for any person to introduce fraudulent records or data into the computer system of a bank or to use the computer related facilities of a bank without the proper authorization, or to alter or destroy information or files in a bank’s computer system or to obtain without proper authorization, by electronic or other means, money, financial instruments, property, services or valuable data stored in a bank’s computer system. Any person violating the provisions of this section shall be guilty of a felony.

History.

I.C.,§ 26-1220, as added by 1979, ch. 41, § 2, p. 62.

§ 26-1301 — 26-1319. Trust Companies and Trust Departments. [Repealed.]

§ 26-1401. Definitions.

In this chapter:

1. “Affiliated bank,” with respect to a trust company or another bank, means any bank:
   1. That owns, directly or indirectly, eighty percent (80%) or more of the voting stock of such trust company or other bank; or
   2. Eighty percent (80%) or more of the voting stock of which is owned, directly or indirectly, by the same bank holding company that owns, directly or indirectly, eighty percent (80%) or more of the voting stock of such trust company or other bank.
2. “Affiliated trust company” means a trust company with a principal place of business located within the state of Idaho, and eighty percent (80%) or more of the voting stock of which is owned, directly or indirectly, by the same bank or bank holding company that owns, directly or indirectly, eighty percent (80%) or more of the voting stock of a trust company or a bank with respect to which the affiliated trust company is participating in a transfer of fiduciary capacities as provided in this chapter.
3. “Bank” means any state bank or national bank whose operations are principally conducted in this state and which is authorized to engage in trust business.
4. “Bank holding company” means a bank holding company as defined in the United States bank holding company act of 1956, as amended.
5. “Director” means the director of the department of finance.
6. “Fiduciary account,” with respect to an affiliated bank, affiliated trust company, or trust company, means an estate, trust, or other fiduciary relationship, and includes all rights, privileges, duties, obligations, and undertakings thereof, that have been established or provided for by a written instrument or in any other lawful manner with such affiliated bank, affiliated trust company or trust company.
7. “Fiduciary capacity” means a capacity resulting from the undertaking to act alone or jointly with others as a personal representative of a decedent’s estate, a guardian or conservator of an estate, a receiver, a trustee under appointment of any court or under authority of any law, or a trustee for any other purpose permitted by law.
8. “Principal place of business,” with respect to any affiliated bank, affiliated trust company, or trust company means such entity’s principal place of business within the state of Idaho.
9. “Trust company” means a corporation holding a charter to engage in the trust business in this state, issued pursuant to chapters 32 through 36, title 26, Idaho Code, with a principal place of business located within the state of Idaho.

History.

I.C.,§ 26-1401, as added by 1991, ch. 215, § 2, p. 515; am. 1992, ch. 87, § 1, p. 271; am. 2000, ch. 288, § 6, p. 970.

§ 26-1402. Transfer of fiduciary capacities to an affiliated bank or an affiliated trust company.

1. A bank or trust company may transfer some or all of its fiduciary capacities to an affiliated bank or an affiliated trust company. To accomplish such a transfer, the bank or trust company shall file a verified application in the district court of the county in which the bank’s or trust company’s principal place of business is located, requesting that every fiduciary capacity of the bank or trust company, except as may be expressly excluded in such application, be transferred to an affiliated bank or affiliated trust company specified in the application, and the specified affiliated bank or affiliated trust company shall join in such application. The application shall indicate the county in which the principal place of business of the affiliated bank or affiliated trust company joining in the application is located.
2. When any application under subsection (1) of this section has been filed, the clerk of the court where the application is filed shall enter an order fixing a date and time (which date shall not be more than sixty (60) days from the date the application is filed) for a hearing on the application. The bank or trust company filing an application under subsection (1) of this section shall prepare a notice as provided in subsection (3) of this section, and shall cause a copy of such notice to be published at least once a week for three (3) successive weeks preceding the hearing date, the first such publication to be at least thirty (30) days preceding the hearing date. Proof of such publication shall be made by certified copy of the notice or by affidavit, and the same shall be filed with the district court wherein the application was filed. Such publication shall be in a newspaper of general circulation published in each county in which the principal place of business of the bank or trust company is located or, if in any case there is no such newspaper, then in a newspaper of general circulation published in a contiguous county. In addition, at least thirty (30) days preceding the hearing date, the bank or trust company shall cause a copy of such notice to be mailed by first class mail to all persons entitled to and then receiving trust accountings from the bank or trust company.
3. The notice to be published and mailed with respect to each application shall state the time and place of the hearing on the application, the name of the bank or trust company that has filed the application, the name of the affiliated bank or affiliated trust company which has joined in the application, that a transfer is requested of fiduciary capacities to the affiliated bank or affiliated trust company specified in the application, and that any interested person may file with the clerk of the court, on or before the date of the hearing, a written objection to the transfer as provided in subsection (4) of this section.
4. On or before the date and time of the hearing on the application, any interested person, who is authorized by a will or relevant trust instrument to prohibit, challenge, amend or revoke a transfer of a fiduciary capacity otherwise allowed under this chapter and arising from a fiduciary account in which the person is interested, may file an objection to such transfer with the clerk of the court. Failure to file an objection on or before the date and time of the hearing on the application shall constitute a waiver by such interested person of the right to object under this subsection, and waiver of any power under a will or relevant trust instrument to prohibit, challenge, amend, or revoke with respect to any transfer of fiduciary capacity otherwise authorized under this chapter. (5) At the hearing, upon finding that notice has been given as required in this section, and upon finding that the affiliated bank or affiliated trust company has been duly authorized by the director to commence the business for which it is organized, the district court shall enter an order transferring to the affiliated bank or affiliated trust company every fiduciary capacity of the bank or trust company, excepting as may be otherwise specified in the application and excepting fiduciary capacities with respect to which a proper objection has been filed pursuant to subsection (4) of this section. Upon entry of the order, the affiliated bank or affiliated trust company shall, without further act and by operation of law, be substituted in every such fiduciary capacity. The transfer may be made a matter of record in any county of this state by filing a certified copy of the order of transfer in the office of the clerk of any district court in this state or by filing a certified copy of such order in the office of the recorder of any county in this state, to be recorded and indexed by such officer in like manner and with like effect as other orders and decrees of courts are recorded and indexed. Any fiduciary capacities of the bank or trust company excepted from the order of transfer shall remain with such bank or trust company.

(6) Each designation of the bank or trust company as fiduciary in a will or other relevant trust instrument executed before or after the date the order of transfer is entered shall be deemed a designation of the affiliated bank or affiliated trust company substituted for such bank or trust company pursuant to this section, except when such will or other relevant trust instrument is executed after the order of transfer and expressly negates the application of the provisions of this section. Any grant in any such will or other relevant trust instrument of any discretionary power shall be deemed conferred upon the affiliated bank or affiliated trust company deemed designated as the fiduciary pursuant to an order of transfer under the provisions of this section.

(7) Each bank or trust company shall account jointly with the affiliated bank or affiliated trust company which has been substituted as fiduciary pursuant to this section for the accounting period during which the affiliated bank or affiliated trust company is initially so substituted. Upon a transfer of fiduciary capacities pursuant to the provisions of this section, each bank or trust company shall deliver to the affiliated bank or affiliated trust company all related fiduciary accounts and assets held by such bank or trust company (except assets held for accounts with respect to which there has been no transfer of fiduciary capacities pursuant to this section), and upon such transfer the affiliated bank or affiliated trust company shall, without the necessity of any instrument of transfer or conveyance, succeed to all rights, privileges, duties, obligations and undertakings under any fiduciary capacity and fiduciary account transferred in the manner authorized in this chapter.

History.

I.C.,§ 26-1402, as added by 1991, ch. 215, § 2, p. 515; am. 1992, ch. 87, § 2, p. 271.

§ 26-1403. Transfers of fiduciary capacities not prohibited by section 68-107, Idaho Code.

No transfer of fiduciary capacities pursuant to the provisions of this chapter shall be deemed to be a transfer or delegation prohibited by the provisions of section 68-107, Idaho Code.

History.

I.C.,§ 26-1403, as added by 1991, ch. 215, § 2, p. 515.

§ 26-1404. Compliance and approval with financial institution acquisition act required.

No out-of-state financial institution or out-of-state financial institution holding company shall be allowed to join in an application for transfer of fiduciary capacities pursuant to the provisions of this chapter unless such out-of-state financial institution or out-of-state financial institution holding company first complies in full with the provisions of chapter 26, title 26, Idaho Code, and obtains approval of the director as specified in chapter 26, title 26, Idaho Code.

History.

I.C.,§ 26-1404, as added by 1991, ch. 215, § 2, p. 515.

§ 26-1405 — 26-1409. Federal Deposit Insurance. [Repealed.]

§ 26-1501. Office location.

1. Nothing in the laws of this state shall prohibit a bank from maintaining an authorized branch office, customer bank communication terminal or other authorized office at the same location as an authorized office of another bank or a savings and loan association, credit union or supervised lender authorized to do business under the Idaho uniform consumer credit code.
2. Nothing in the laws of this state shall prohibit a savings and loan association from maintaining an authorized branch office or other authorized office at the same location as an authorized office of another savings and loan association or a bank, credit union or supervised lender licensed to do business under the Idaho uniform consumer credit code.
3. Nothing in the laws of this state shall prohibit a credit union from maintaining an authorized branch office, customer credit union communication terminal or other authorized office at the same location as an authorized office of another credit union or a bank, savings and loan association or supervised lender licensed to do business under the Idaho uniform consumer credit code.
4. Nothing in the laws of this state shall prohibit a supervised lender authorized to do business under the Idaho uniform consumer credit code from maintaining an authorized branch office, or other authorized office, at the same location as an authorized office of another supervised lender or a bank, savings and loan association or credit union.

History.

I.C.,§ 26-1501, as added by 1979, ch. 224, § 1, p. 619.

§ 26-1502 — 26-1520. Bank collection code. [Repealed.]

§ 26-1601. Short title.

This chapter shall be known, and may be cited as the “Idaho Interstate Branching Act.”

History.

I.C.,§ 26-1601, as added by 1995, ch. 99, § 9, p. 299.

§ 26-1602. Statement of purpose.

It is the policy of the state of Idaho to allow out-of-state banks, chartered either by other states or by the federal government, to branch within the state of Idaho on the terms and conditions set out in this chapter, chapter 3, title 26, Idaho Code, and federal law; further, it is the policy of the state of Idaho to allow banks chartered by or located in this state to establish, operate, and maintain branches in other states in any manner authorized by this act, the law of such other states, and federal law. It is an express purpose of this chapter to authorize mergers between banks in Idaho and banks located in other states.

History.

I.C.,§ 26-1602, as added by 1995, ch. 99, § 9, p. 299; am. 2015, ch. 204, § 23, p. 618.

§ 26-1603. Definitions.

As used in this chapter, and unless the context otherwise requires:

1. “Home state” means:
   1. With respect to a state chartered bank, the state from which the bank received the charter under which it operates;
   2. With respect to a national bank, the state in which the main office of the national bank is located.
2. “Host state” means, with respect to any bank, a state other than the home state of the bank in which the bank maintains, or seeks to establish and maintain a branch.

History.

I.C.,§ 26-1603, as added by 1995, ch. 99, § 9, p. 299.

§ 26-1604. Merger and branching approval.

1. A bank whose home state is a state other than Idaho may acquire control of, acquire all or part of the assets of, or merge with a bank whose home state is Idaho. Except as authorized in this chapter, chapter 3, title 26, Idaho Code, or federal law, no bank, the home state of which is a state other than Idaho, may establish or maintain an office or branch in this state, or conduct the business of banking in this state.
2. A bank whose home state is Idaho may acquire control of, acquire all or part of the assets of, or merge with a bank whose home state is a state other than Idaho. Except as authorized in this chapter, chapter 3, title 26, Idaho Code, or federal law, no bank, the home state of which is Idaho, may establish or maintain an office or branch in other states.
3. A bank whose home state is a state other than Idaho may establish a branch in Idaho if the bank’s primary federal regulator and home state regulator have approved the bank’s application to do the same. At least thirty (30) days prior to opening a branch in Idaho, a bank whose home state is a state other than Idaho shall:
   1. Provide a copy of its branch application to the director;
   2. File or register with the Idaho secretary of state as a foreign corporation and provide a copy of such registration and any certificate of authority issued by the Idaho secretary of state to the director; and
   3. Appoint a registered agent for service of process in Idaho and provide the director and the Idaho secretary of state with the name and address of such registered agent.
4. A bank with a home state other than Idaho shall apply to and receive the approval of the director prior to any acquisition transaction which, if approved, would result in a bank, the home state of which is Idaho, becoming a branch or branches of the out-of-state bank. The director may accept copies of applications for such transactions made to other state or federal bank supervisory agencies. Without the prior approval of the director pursuant to this chapter, any merger transaction between a bank chartered in this state and any out-of-state bank is unlawful.
5. A bank, the home state of which is Idaho, shall apply to and receive the approval of the director prior to any merger transaction which, if approved, would result in a bank chartered by or located in another state becoming a branch or branches of the bank whose home state is Idaho.

History.

I.C.,§ 26-1604, as added by 1995, ch. 99, § 9, p. 299; am. 1997, ch. 225, § 4, p. 661; am. 2015, ch. 204, § 24, p. 618.

§ 26-1605. Conditions.

1. The director shall not approve the acquisition of a bank, the home state of which is Idaho, if the statutes of the home state of the acquiring bank would not expressly allow a bank chartered in this state to acquire a bank in such state.
2. Upon notification by a bank, the home state of which is Idaho, that such bank intends to operate a branch in another state, the department will have thirty (30) days within which to object or otherwise act upon such an acquisition.
3. If the director finds a violation of Idaho law concerning the activities of a bank which has Idaho as a host state, or that such a bank is operating in an unsafe and unsound condition, the director may take any enforcement or corrective action authorized under the Idaho bank act. The director may limit the authority of any bank operating in Idaho to accept or retain deposits originating in Idaho if the bank is operating in an unsafe or unsound manner.

History.

I.C.,§ 26-1605, as added by 1995, ch. 99, § 9, p. 299; am. 2015, ch. 204, § 25, p. 618.

§ 26-1606. Deposit concentrations.

1. There shall be under the Idaho bank act, including this chapter and chapter 26, title 26, Idaho Code, no deposit cap or concentration limit in Idaho.
2. The director may, by order, waive any federal deposit concentration limit that has the effect of being more limiting than subsection (1) of this section. In determining to waive the federal concentration limit, the director shall apply a standard that does not discriminate against out-of-state banks, out-of-state bank holding companies, or subsidiaries thereof, upon a finding that the waiver promotes:
   1. Availability of financial services;
   2. The marketability of Idaho banks; or
   3. Other public interest.
3. This section is not intended to affect the applicability, if any, of federal or state antitrust laws.

History.

I.C.,§ 26-1606, as added by 1995, ch. 99, § 9, p. 299.

§ 26-1701. Title and scope.

1. This chapter shall be known, and may be cited as the “Idaho International Banking Act.”
2. This chapter is intended to set forth the terms and conditions under which an international banking corporation may enter and do business in Idaho.

History.

I.C.,§ 26-1701, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1702. Definitions.

1. As used in this chapter, unless the context otherwise requires:
   1. “Director” means the director of the department of finance.
   2. “Federal international bank institutions” means a branch, agency, or representative office of an international banking corporation established and operating under the federal international banking act of 1978, 12 U.S.C. sec. 3101 et seq., as amended, and its regulations.
   3. “Foreign country” means a country other than the United States, but including a territory or possession of the United States.
   4. “International bank agency” means a business or any part of a banking business conducted in this state or through an office located in this state, other than a federal international bank institution, which exercises powers as set forth in section 26-1709, Idaho Code, on behalf of an international banking corporation.
   5. “International bank branch” means a business or any part of a banking business conducted in this state, or through an office located in this state, other than a federal international bank institution, which exercises powers as set forth in section 26-1709, Idaho Code, on behalf of an international banking corporation.
   6. “International banking corporation” means a banking corporation organized and licensed under the laws of a foreign country or a political subdivision of a foreign country.
   7. “International representative office” means a business location of a representative of an international banking corporation other than a federal international bank institution, established to act in a liaison capacity with existing and potential customers of the international banking corporation and to generate new loans and other activities for the international banking corporation that is operating outside the state.
2. Legal and financial terms used in this chapter refer to equivalent terms used by the country in which the international banking corporation is organized.

History.

I.C.,§ 26-1702, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1703. Authority for operation of international banking offices.

1. An international banking corporation with a home state other than Idaho may establish and operate, directly or indirectly, a federal international bank institution in this state in accordance with applicable federal law.
2. An international banking corporation with no home state may establish and operate, directly or indirectly, a federal international bank institution in this state in accordance with applicable federal law.
3. An international banking corporation with a home state other than Idaho may establish and operate, directly or indirectly, an international bank branch, an international bank agency, or an international representative office in accordance with this chapter and applicable federal law.
4. An international banking corporation with no home state may establish and operate, directly or indirectly, an international bank branch, an international bank agency, or an international representative office in accordance with this chapter and applicable federal law.
5. For the purposes of this section, the home state of an international banking corporation that has branches, agencies, subsidiary commercial lending companies, or subsidiary banks, or any combination of branches, agencies, subsidiary commercial lending companies, or subsidiary banks in more than one (1) state is whichever of the states is so elected by the international banking corporation. If the international banking corporation does not elect a home state, the board of governors of the federal reserve system or the director, as applicable, shall elect the home state.

History.

I.C.,§ 26-1703, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1704. Application of this chapter.

International banking corporations, other than federal international bank institutions, are subject to this chapter, except where it appears, from the context or otherwise, that a provision is clearly applicable only to banks or trust companies organized under the laws of this state or the United States. An international banking corporation has no greater right under, or by virtue of, this chapter than is granted to banks organized under the laws of this state.

History.

I.C.,§ 26-1704, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1705. Application of the Idaho business corporation act.

Where not inconsistent with this chapter and the Idaho bank act, the provisions of the Idaho business corporation act shall apply to international banking corporations doing business in this state.

History.

I.C.,§ 26-1705, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1706. Requirements for carrying on banking business.

1. No international banking corporation, other than a federal international bank corporation, shall transact a banking business or maintain in this state any office for carrying on a banking business or any part of a banking business unless the corporation:
   1. Is authorized by its articles to carry on a banking business and has complied with the laws of the country under which it is chartered;
   2. Has furnished to the director any proof as to the nature and character of its business and as to its financial condition as the director may require;
   3. Has filed with the director:
      1. A duly executed instrument in writing, by its terms of indefinite duration and irrevocable, appointing the director its true and lawful attorney upon whom all process in any action against it may be served with the same force and effect as if it were a domestic corporation and has been lawfully served with process within the state;
      2. A written certificate of designation, which may be changed from time to time thereafter by the filing of a new certificate of designation, specifying the name and address of the officer, agent, or other person to whom the director shall forward the process; and
      3. A certified copy of any filings required to be made by foreign corporations to the secretary of state by the Idaho business corporation act.
   4. Has paid to the director a fee set by the director to defray the cost of investigation and supervision.
   5. Has received a license duly issued to it by the director.
2. The director shall not issue a license to an international banking corporation unless it is chartered in a foreign country that permits banks chartered by the United States or any of its states to establish similar facilities in that country.

History.

I.C.,§ 26-1706, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1707. Actions against international banking corporations.

1. A “resident of this state” may maintain an action against an international banking corporation doing business in this state for any cause of action. For purposes of this subsection, the term resident of this state includes any individual domiciled in this state, or any corporation, partnership, or trust formed under the laws of this state.
2. An international banking corporation or a nonresident of this state may maintain an action against an international banking corporation doing business in this state in the following cases only:
   1. Where the action is brought to recover damages for the breach of a contract made or to be performed within this state or relating to property situated within this state at the time of the making of the contract;
   2. Where the subject matter of the litigation is situated within this state;
   3. Where the cause of action arose within this state, except where the object of the action is to affect the title of real property situated outside this state; or
   4. Where the action is based on a liability for acts done within this state by an international banking corporation or its international bank agency, international bank branch, or international representative office.
3. The limitations contained in subsection (2) of this section, do not apply to a corporation formed and existing under the laws of the United States and that maintains an office in this state.

History.

I.C.,§ 26-1707, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1708. Application for license.

1. Every international banking corporation, before being licensed by the director to transact a banking business in this state as an international bank branch or as an international bank agency or before maintaining in this state any office to carry on a banking business or any part of a banking business, shall subscribe and acknowledge and submit to the director, at the director’s office, a separate application, in duplicate, which shall state:
   1. The name of the international banking corporation;
   2. The location by street and post office address and county where its business is to be transacted in this state and the name of the person who is in charge of the business and affairs of the office;
   3. The location where its initial registered office will be located in this state;
   4. The amount of its capital actually paid in and the amount subscribed for and unpaid; and
   5. The actual value of the assets of the international banking corporation, which must be at least fifty million dollars ($50,000,000) in excess of its liabilities, and a complete and detailed statement of its financial condition as of a date within sixty (60) days before the date of the application; except that the director may, when necessary or expedient, accept the statement of financial condition as of a date within one hundred twenty (120) days before the date of the application.
2. When the application is submitted to the director, the international banking corporation shall also submit a duly authenticated copy of its article of incorporation, or equivalent corporate document, and an authenticated copy of its bylaws, or an equivalent of the bylaws that is satisfactory to the director, and pay an investigation and supervision fee to be established by rule or order. The international banking corporation shall also submit to the director a certificate issued by the banking or supervisory authority of the country in which the international banking corporation is organized and licensed stating that the international banking corporation is duly organized and licensed and lawfully existing in good standing, and is empowered to conduct a general banking business.
3. The director may approve or disapprove the application, but the director shall not approve the application unless, in the director’s opinion, the applicant meets every requirement of this chapter and any other applicable provision of this chapter and any rules adopted under this chapter. The director may specify any conditions as the director deems appropriate, considering the public interest, the need to maintain a sound and competitive banking system, and the preservation of an environment conducive to the conduct of an international banking business in this state.
4. An international banking corporation may operate more than one (1) international bank branch in this state, each at a different place of business, provided each branch office is separately licensed to transact a banking business or any part of a banking business under this chapter. An international banking corporation may operate more than one (1) international bank agency in this state, each at a different place of business, provided each agency office is separately licensed to transact a banking business or any part of a banking business under this chapter. (5) Notwithstanding subsection (4) of this section, no international banking corporation licensed to maintain one (1) or more international bank branches in this state shall be licensed to maintain an international bank agency in this state except upon termination of the operation of its international bank branches under section 26-1713(2), Idaho Code[,] and no international banking corporation licensed to maintain one (1) or more international bank agencies in this state shall be licensed to maintain an international bank branch in this state except upon the termination of the operation of its international bank agencies under section 26-1713(2), Idaho Code.

History.

I.C.,§ 26-1708, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1709. Effect, renewal, and revocation of licenses — Permissible activities.

1. When the director has issued a license to an international banking corporation, it may engage in the business authorized in this act at, and only at, the office specified in the license for a period not exceeding one (1) year from the date of the license or until the license is surrendered or revoked. No license is transferable or assignable. Every license shall be, at all times, conspicuously displayed in the place of business specified in the license.
2. The international banking corporation may renew the license annually upon application to the director upon forms to be supplied by the director for that purpose. The application for renewal shall be submitted to the director no later than sixty (60) days before the expiration of the license. The license may be renewed by the director upon a determination, with or without examination, that the international banking corporation is in a safe and satisfactory condition, that it has complied with applicable requirements of law, and that the renewal of the license is proper and has been duly authorized by proper corporate action. Each application for renewal of an international banking corporation license shall be accompanied by an annual renewal fee to be determined by the director by rule.
3. The director may revoke the license, with or without examination, upon a determination that the international banking corporation does not meet the criteria established by subsection (2) of this section for renewal of licenses.
4. If the director refuses to renew the license and, as a result, the license is revoked, all the rights and privileges of the international banking corporation to transact the business for which it was licensed shall immediately cease, and the license shall be surrendered to the director within twenty-four (24) hours after written notice of the decision has been mailed by the director to the registered office of the international banking corporation set forth in its application, as amended, or has been personally delivered to any officer, director, employee, or agent of the international banking corporation who is physically present in this state.
5. An international banking corporation licensed under this act to carry on business in this state as an international bank agency may conduct a general banking business through its international bank agency in the same manner as banks existing under the laws of this state, except that no international banking corporation shall, through its bank agency, exercise fiduciary powers or receive deposits, but may maintain for the account of others credit balances incidental to or arising out of the exercise of its lawful powers.

History.

I.C.,§ 26-1709, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1710. Securities, bonds and other commercial paper to be held in this state.

1. An international banking corporation licensed under this chapter shall hold, at its office in this state, currency, bonds, notes, debentures, drafts, bills of exchange, or other evidence of indebtedness or other obligations payable in the United States or in United States funds or, with the prior approval of the director, in funds freely convertible into United States funds in an amount that is not less than one hundred eight percent (108%) of the aggregate amount of liabilities of the international banking corporation payable at or through its office in this state or as a result of the operations of the international bank branch or international bank agency, including acceptances, but excluding:
   1. Accrued expenses; and
   2. Amounts due and other liabilities to other offices, agencies, or branches of and wholly owned, except for a nominal number of directors’ shares, and subsidiaries of the international banking corporation.
2. For the purpose of this chapter, the director shall value marketable securities at principal amount or market value, whichever is lower, and may determine the value of any nonmarketable bond, note, debenture, draft, bill of exchange, or other evidence of indebtedness or of any other obligation held by or owed to the international banking corporation in this state. In determining the amount of assets for the purpose of computing the above ratio of assets, the director may exclude any particular assets, but may give credit, subject to any rules adopted by the director, to deposits and credit balances with unaffiliated banking institutions outside this state if the deposits or credit balances are payable in United States funds or in currencies freely convertible into United States funds. In no case shall credit given for the deposits and credit balances exceed in aggregate amounts any percentage, but not less than eight percent (8%) as the director may from time to time prescribe, of the aggregate amount of liabilities of the international banking corporations.
3. If, by reason of the existence or the potential occurrence of unusual or extraordinary circumstances, the director considers it necessary or desirable for the maintenance of a sound financial condition, for the protection of creditors and the public interest and to maintain public confidence in the business of the international bank agency of the international banking corporation, the director may reduce the credit to be given as provided in this section for deposits and credit balances with unaffiliated banking institutions outside this state and may require the assets to be held in this state under this chapter with any bank or trust company existing under the laws of this state that the international banking corporation designates and the director approves.
4. An international bank branch and international bank agency shall file any reports with the director as the director may require in order to determine compliance by the international bank branch or international bank agency with this section.

History.

I.C.,§ 26-1710, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1711. Financial certification — Restrictions on investments, loans and acceptances.

1. Before opening an office in this state, and annually thereafter so long as a bank office is maintained in this state, an international banking corporation licensed under this act shall certify to the director the amount of its paid-in capital, its surplus, and its undivided profits, each expressed in the currency of the country of its incorporation. The dollar equivalent of this amount, as determined by the director, is considered to be the amount of its capital, surplus, and undivided profits.
2. Purchases and discounts of bills of exchange, bonds, debentures, and other obligations and extensions of credit and acceptances by an international bank agency within this state are subject to the same limitations as to amount in relation to capital, surplus, and undivided profits as are applicable to banks organized under the laws of this state. With the prior approval of the director, the capital notes and capital debentures of the international banking corporation may be treated as capital in computing the limitations.

History.

I.C.,§ 26-1711, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1712. Reports.

An international banking corporation licensed under this act shall, at the times and in the form prescribed by the director, make written reports in the English language to the director, under the oath of one (1) of its officers, managers, or agents transacting business in this state, showing the amount of its assets and liabilities and containing any other matters required by the director. If an international banking corporation fails to make a report, as directed by the director, or if a report contains a false statement knowingly made, this is grounds for revocation of the license of the international banking corporation.

History.

I.C.,§ 26-1712, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1713. Dissolution.

1. When an international banking corporation licensed to maintain an international bank branch or an international bank agency in this state is dissolved or its authority or existence is otherwise terminated or canceled in the jurisdiction of its incorporation, a certificate of the official responsible for records of banking corporations of the jurisdiction of incorporation of the international banking corporation attesting to the occurrence of this event or a certified copy of an order or decree of a court of the jurisdiction directing the dissolution of the international banking corporation or the termination of its existence or the cancellation of its authority shall be delivered to the director. The filing of the certificate, order, or decree has the same effect as the revocation of the international banking corporation’s license as provided in section 26-1709(4), Idaho Code.
2. An international banking corporation that proposes to terminate the operation in this state of an international bank branch, an international bank agency, or an international representative office shall comply with procedures as the director may prescribe by rule or order to insure an orderly cessation of business in a manner that is not harmful to the public interest and shall surrender its license to the director or shall surrender its right to maintain an office in this state, as applicable.
3. The director shall continue as agent of the international banking corporation upon whom process against it may be served in any action based upon any liability or obligation incurred by the international banking corporation within this state before the filing of the certificate, order, or decree; and the director shall promptly cause a copy of the process to be mailed by registered or certified mail, return receipt requested, to the international banking corporation at the post office address specified for this purpose on file with the director’s office.

History.

I.C.,§ 26-1713, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1714. International representative offices.

1. An international banking corporation that does not transact a banking business or any part of a banking business in or through an office in this state, but maintains an office in this state for other purposes is considered to have an international representative office in this state.
2. An international representative office located in this state shall register with the director annually on forms prescribed by the director. The registration shall be filed before January 31 of each year, shall be accompanied by a registration fee prescribed by rule or order, and shall list the name of the local representative, the street address of the office, and the nature of the business to be transacted in or through the office.
3. The director may review the operations of an international representative office annually or at any greater frequency as is necessary to assure that the office does not transact a banking business.
4. An international banking corporation desiring to convert its existing registered international representative office to a licensed international bank branch or licensed international bank agency shall submit to the director the application required in section 26-1708, Idaho Code, and is required to meet the minimum criteria for licensing of an international bank branch or licensed international bank agency under this chapter.
5. An international representative office may act in a liaison capacity with existing and potential customers of an international banking corporation and in undertaking these activities may, through its employees or agents, without limitation, solicit loans, assemble credit information, make proprietary inspections and appraisals, complete loan applications and other preliminary paperwork in preparation for making a loan, but may not solicit or accept deposits. No international representative office shall conduct any banking business or part of a banking business in this state.

History.

I.C.,§ 26-1714, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1715. Rules.

The department of finance may promulgate administrative rules necessary to implement this chapter.

History.

I.C.,§ 26-1715, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1716. Cease and desist. [Repealed.]

Repealed by S.L. 2015, ch. 204, § 1, effective July 1, 2015.

History.

I.C.,§ 26-1716, as added by 1995, ch. 99, § 10, p. 299.

§ 26-1801. Short title.

This chapter shall be known as the “Idaho Savings Bank Act.”

History.

I.C.,§ 26-1801, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1802. Purpose.

The purpose of this act is to allow any federal savings bank, federal mutual savings bank or federal savings and loan association, located in Idaho to convert its charter to that of an Idaho bank, an Idaho stock savings bank or an Idaho mutual savings bank. Banks and credit unions chartered either under this title or federal law are also allowed to convert to savings banks as provided herein. Once converted, an Idaho stock savings bank or mutual savings bank shall operate and be supervised pursuant to this act. A savings bank operating under this act may convert to a federal charter as a federal savings bank or federal savings and loan association if authorized by federal law. A savings bank under this act may also convert to a bank charter or to a credit union charter. Wherever the term “savings and loan association” is used in the Idaho Code, it shall include savings banks chartered under this act or associations doing business in this state pursuant to section 26-1815, Idaho Code.

History.

I.C.,§ 26-1802, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1803. Definitions.

Unless the context requires otherwise, the terms below have the meaning assigned:

1. “Department” means the Idaho department of finance.
2. “Director” means the director of the Idaho department of finance.
3. “Mutual savings bank” means a savings bank owned by the members of the savings bank and operating under this act.
4. “Savings bank” means a bank converted and operating pursuant to this act whether in stock form or in mutual form.
5. “Stock savings bank” means a savings bank owned by holders of capital stock and operating under this act.

History.

I.C.,§ 26-1803, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1804. Idaho bank act and general business corporation laws.

1. Except as otherwise provided in this chapter, the Idaho bank act shall apply to all corporations converted and operating under this act.
2. Except as otherwise provided herein or in the Idaho bank act, the general business corporation laws of this state shall apply to all savings banks converted and operating under this act.

History.

I.C.,§ 26-1804, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1805. Prohibitions.

Unless chartered under this act or federal law, it shall be unlawful for any person in this state to use in connection with a business name the term “savings bank” or words of similar import that lead the public reasonably to believe that the business so conducted is that of a savings bank.

History.

I.C.,§ 26-1805, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1806. Insurance required.

All savings banks shall obtain and maintain federal deposit insurance through an insurance corporation created by an act of Congress.

History.

I.C.,§ 26-1806, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1807. Qualification as thrift institution.

All savings banks shall qualify for and maintain the status of a thrift institution under the internal revenue code of 1986 and any amendments thereto.

History.

I.C.,§ 26-1807, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1808. Trust powers.

Savings banks which have received a charter from the director authorizing the operation of a trust department may engage in the trust business in accordance with chapters 32 through 36, title 26, Idaho Code.

History.

I.C.,§ 26-1808, as added by 1997, ch. 310, § 3, p. 917; am. 2000, ch. 288, § 7, p. 970.

§ 26-1809. Powers.

In addition to the powers granted to banks under provisions of the Idaho bank act, and specifically section 26-1101, Idaho Code, savings banks may exercise any power or engage in any activity authorized either for federal savings banks or savings and loan associations or state savings banks or savings and loan associations.

History.

I.C.,§ 26-1809, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1810. Demand deposits.

Savings banks may accept deposits subject to withdrawal or to be paid upon checks of the depositor. All such deposits shall be payable on demand, without notice, except when the deposit agreement provides otherwise.

History.

I.C.,§ 26-1810, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1811. Mutual savings banks — Ownership — Membership — Directors — Capital.

1. Members of a mutual savings bank are the owners of the mutual savings bank and shall possess voting rights and any other rights as are provided in the articles of incorporation or bylaws of the mutual savings bank.
2. The membership of a mutual savings bank shall consist of those persons who either:
   1. Hold deposit accounts in the mutual savings bank; or
   2. Borrow funds or become obligated on a loan from the mutual savings bank, for as long as the loan remains unpaid and the debtor remains liable to the mutual savings bank for repayment of the loan.
3. The board of directors of a mutual savings bank shall be elected by the members at the annual meeting required by section 26-213, Idaho Code. Voting for directors by deposit account holders shall be weighted according to the total amount of deposit accounts held by the members, subject to any maximum number of votes per member which a mutual savings bank may provide in its articles of incorporation. Voting rights for borrowers shall be fully described in a detailed manner in the articles of incorporation of the mutual savings bank.
4. Mutual savings banks operating under this chapter shall at all times maintain capital at a level determined by the director to be adequate for the safe and sound operation of the savings bank. In addition to the capital plan required to be submitted to the director by section 26-1812, Idaho Code, each mutual savings bank shall periodically revise its capital plan upon written request by the director. All capital plans are subject to the approval of the director. Either failing to maintain adequate capital or operating without an approved capital plan are both violations of this chapter and grounds for sanctions under chapter 11, title 26, Idaho Code.

History.

I.C.,§ 26-1811, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1812. Conversions.

All conversions from one (1) form of charter to another issued by the department shall be approved in advance in writing by the director. All conversion applications filed with the director involving savings banks, including conversion applications under section 26-1813, Idaho Code, shall include a plan for establishing and maintaining adequate capital to assure the continued safe and sound operation of the bank, savings bank or credit union. Capital plans shall be subject to the approval of the director.

1. A federal savings and loan association or a federal savings bank, if organized on a capital stock basis, may convert its charter to that of an Idaho bank or a savings bank by proceeding in accordance with section 26-906, Idaho Code.
2. A federal savings bank organized on a mutual basis may converts [convert] its charter to that of an Idaho mutual savings bank by filing an application in a form approved by the director.
3. A savings bank may convert its state charter to a federal charter by complying with applicable federal law.
4. A mutual savings bank may convert its form of organization to that of a stock savings bank by complying with section 26-1813, Idaho Code.
5. A mutual savings bank may convert its form of organization to that of a credit union by filing an application in a form approved by the director.
6. A stock savings bank may convert its charter to that of a state bank by proceeding in accordance with section 26-906, Idaho Code.
7. A bank chartered under the Idaho bank act may convert its charter to that of a stock savings bank by filing an application on a form approved by the director.
8. A credit union organized under chapter 21, title 26, Idaho Code, may change its charter to that of a mutual savings bank by filing an application on a form approved by the director.
9. If permitted by federal law, a national bank may convert its charter to that of a stock savings bank by filing an application on a form approved by the director.
10. If permitted by federal law, a federal credit union may convert its charter to that of a mutual savings bank by filing an application on a form approved by the director.

History.

I.C.,§ 26-1812, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1813. Mutual to stock conversions.

A mutual savings bank may change its form of organization to that of a stock savings bank by filing an application with the director.

As part of the application, the savings bank will include a plan of conversion, which the director may approve, with or without amendment, if it appears that:

1. After conversion the savings bank will be in sound financial condition;
2. The conversion will be fair and equitable to the members of the savings bank and no person whether member, employee or otherwise, will receive any inequitable gain or advantage by reason of the conversion;
3. The savings bank services provided to the public by the savings bank will not be adversely affected by the conversion;
4. The plan has been approved by a vote of two-thirds (2/3) of the board of directors of the savings bank;
5. All shares of stock issued in connection with the conversion are offered first to the members of the savings bank;
6. All stock shall be offered to members of the savings bank and others under a formula and procedure that is fair and equitable and will be fairly disclosed to all interested persons; and
7. The plan provides a statement as to whether stockholders shall have preemptive rights to acquire additional or treasury shares of the savings bank.

The plan shall be submitted to the members, but only after it has been approved by the director. After lawful notice to the members of the savings bank and full and fair disclosure, the substance of the plan must be approved by a majority of the total votes that members of the savings bank are eligible and entitled to cast. The vote by the members may be in person or by proxy. Any votes by proxy must be specific to the plan and not a general proxy. Following the vote of the members, the results of the vote certified by an appropriate officer of the savings bank shall be filed with the director. The director shall then either approve or disapprove the requested change in corporate form. After approval, the director shall supervise the conversion process and shall ensure that the process is conducted lawfully and under the approved plan.

History.

I.C.,§ 26-1813, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1814. Acquisitions.

All acquisitions shall be approved in advance in writing by the director.

1. A mutual or stock savings bank may acquire, as defined by section 26-2605, Idaho Code, a savings bank organized in the same form.
2. A stock savings bank may acquire or be acquired by either a state or national bank with the state or national bank being the surviving bank.
3. A mutual savings bank may acquire or be acquired by a credit union, with the mutual savings bank being the surviving entity.
4. A stock savings bank may acquire or be acquired by a national or state bank with the national or state bank being the surviving entity.

History.

I.C.,§ 26-1814, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1815. Foreign savings and loan associations.

A savings and loan association or savings bank chartered and operating under the laws of another state which has received a valid permit from the director of finance to do business as a savings and loan association or savings bank within this state pursuant to an application filed with and approved by the director shall be authorized to conduct such business in this state.

History.

I.C.,§ 26-1815, as added by 1997, ch. 310, § 3, p. 917.

§ 26-1816 — 26-1827. Revocation of approval of branch office or agency — Conversion to federal savings or state-charted association — Voluntary liquidation — Reorganization, merger and consolidation — Sale of capital stock — Board of directors, qualifications, transactions and indemnification — Indemnity bonds — Meeting of shareholders. [Repealed.]

§ 26-1828. Membership charges prohibited. [Repealed.]

§ 26-1829 — 26-1851. Access to books and records — Financial statement — Annual audit and examinations — Fees —Powers of director of department of finance — Conservator, powers and duties — Receivers — Appointment and procedure — Correction of wrongdoings by unimpaired institution — Right to declaratory judgment — Communication from director — Certain practices prohibited — Preference in case of insolvency — Penalty. [Repealed.]

§ 26-1852. Advisory board. [Repealed.]

§ 26-1853, 26-1854. Effect of act on savings and loan associations qualified to do business under prior law — Oaths, subpoenas, punishment and exemption from criminal prosecution. [Repealed.]

§ 26-1855. Validity of transactions. [Repealed.]

§ 26-1856. Customer savings and loan communication terminal. [Repealed.]

§ 26-1901. Operating contracts to be approved by director. [Repealed.]

§ 26-1902. Office to be separate from bank premises. [Repealed.]

§ 26-1903 — 26-1912. Advertising — Promotions — Premiums — Now accounts — Savings accounts. [Repealed.]

§ 26-1913. Accounts in two or more names. [Repealed.]

§ 26-1914. Joint accounts by husband and wife. [Repealed.]

§ 26-1915, 26-1916. Pledge to association of savings accounts in joint tenancy — Accounts of administrators, executors, guardians, custodians, trustees and other fiduciaries. [Repealed.]

§ 26-1917. Trust accounts where trust instrument not disclosed. [Repealed.]

§ 26-1918 — 26-1920. Powers of attorney on savings accounts — Savings accounts as legal investments — Withdrawals. [Repealed.]

§ 26-1921. Redemption. [Repealed.]

§ 26-1922. Lien on savings accounts. [Repealed.]

§ 26-1923. Interest on deposits. [Repealed.]

§ 26-1924, 26-1925. Method of paying interest on deposits — Computation of net income. [Repealed.]

§ 26-1926. Allocation to net worth. [Repealed.]

§ 26-1927 — 26-1935. Dividends on capital stock — Use of undivided profits and expense fund contributions —Investment in securities — Loans, real estate loan plans and other investments — Loan expenses — Dealing with successors in interest — Enlargement of powers — Restrictions on lending transactions. [Repealed.]

§ 26-1936. Restrictions on terms. [Repealed.]

§ 26-1937 — 26-1942. Restrictions on percentage of appraisal — Real estate loans on unimproved land — Participation in real estate loans — Sale and servicing of real estate loans — Valuation of real property on the books of an association — Revaluation of real property by director. [Repealed.]

§ 26-1943. Capital stock and reserve requirements. [Repealed.]

§ 26-1944, 26-1945. Liquidity requirements — Borrowings. [Repealed.]

§ 26-1946. Association as trustee. [Repealed.]

§ 26-2001 — 26-2026. Small money lenders — License requirements — Prohibited conduct — Enforcement — Exceptions — Appeal — Separability. [Repealed.]

§ 26-2027 — 26-2050. Idaho Consumer Finance Act. [Repealed.]

§ 26-2101. Scope.

This chapter shall be known as the “Idaho Credit Union Act” and shall be applicable to all persons except federal credit unions, operating as credit unions in the state of Idaho and to such other persons as shall subject themselves to its provisions, and to such persons who shall by violating any of its provisions become subject to the penalties provided herein.

History.

I.C.,§ 26-2101, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2102. Purpose.

The purpose of this chapter is to allow groups of persons with a common bond as provided in this chapter to form private nonprofit cooperative corporations to be known as credit unions, to provide an opportunity for its members to use and control their own money in order to improve their economic and social condition, to promote thrift at a reasonable rate of return and provide a source of credit at fair and reasonable rates of interest to those persons included in the common bond.

History.

I.C.,§ 26-2102, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2103. Supplementary general principles of law applicable.

Unless displaced by the particular provisions of this chapter, the Uniform Commercial Code, the Uniform Consumer Credit Code, the Idaho Securities Act, the corporation laws of this state and the principles of law and equity, including the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause supplement its provisions.

History.

I.C.,§ 26-2103, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2104. Definition and use of terms.

As used in this chapter unless the context otherwise requires:

1. “Credit union” means a cooperative nonprofit corporation chartered under the provisions of this chapter.
2. “Capital” means the shares of a credit union.
3. “Director” means the director of the department of finance of the state of Idaho.
4. “Federal supervisory agency” means the National Credit Union Administration.
5. “Credit union services” means services such as draft and deposit sorting and posting, computation and posting of interest and other credits and charges, preparation and mailing of drafts, statements, notices, and similar items, or any other clerical, bookkeeping, accounting, statistical, or similar functions performed for a credit union.
6. “Credit union service corporation” means a corporation organized to perform credit union services for two (2) or more credit unions, each of which owns part of the capital stock of such corporations, and which are subject to examination by either the department of finance of the state of Idaho or a federal supervisory agency.
7. “Interstate credit union” means a credit union chartered under the provisions of this chapter or under the authority of the laws of another state and operating both in Idaho and in one (1) or more other states.
8. “Invest” means any advance of funds to a credit union service corporation, whether by the purchase of stock, the making of a loan, or otherwise, except a payment for rent earned, goods sold and delivered, or services rendered prior to the making of such payment.
9. “Surplus funds” means those funds which are not needed to meet a credit union’s members’ loan needs and credit union expenses.
10. “Nonmembers’ certificates of indebtedness” means all funds received from individuals who are not members of the credit union must be called certificates of indebtedness and are to be shown on the books and records of the credit union as a separate and distinct category. The guaranteed rates of interest upon such certificates of indebtedness will be established by the board of directors.

History.

I.C.,§ 26-2104, as added by 1977, ch. 213, § 2, p. 582; am. 1997, ch. 111, § 1, p. 269.

§ 26-2105. Organization.

Any seven (7) or more residents of the jurisdiction of the state of Idaho, of legal age, who have a common bond referred to in section 26-2110, Idaho Code, may organize a credit union and become charter members thereof by:

1. Filing an application furnished by the director.
2. Executing in triplicate, articles of incorporation by the terms of which they agree to be bound, which articles shall state:
   1. The name, which shall include the words “credit union” and which must clearly indicate the common bond from which members will be taken and which is not the same name as that of any other existing credit union. A credit union may, however, do business in a name which includes only the initials of its name as it appears in its articles of incorporation and the words “credit union,” and the city wherein the proposed credit union is to have its principal place of business;
   2. The term of existence of the credit union, which shall be perpetual;
   3. The par value of shares of the credit union, which shall be at least five dollars ($5.00); and
   4. The names and addresses of the subscribers to the articles of incorporation, and the number of shares subscribed by each.
3. Adopting bylaws for the general government of the credit union, consistent with the provisions of this chapter and executing the same in triplicate.
4. Forwarding the required application fee, articles of incorporation and the bylaws to the director. If they conform to the statute, he shall endorse the articles of incorporation and return two (2) copies of the endorsed articles of incorporation and two (2) copies of the bylaws to the applicants of the credit union, one (1) copy of which is to be for the credit union’s permanent files and the other copy to be filed with the county recorder’s office in the county in which the principal place of business is located and with the department of finance. The original copy of the articles of incorporation and bylaws shall be retained by the department of finance. If the director approves or endorses the articles of incorporation, he will issue three (3) charters in original. The director shall have the authority to investigate the application for charter to determine whether the proposed credit union does meet the objectives of this chapter. The determination for the approval of the application for charter shall be under such rules and regulations as shall be adopted by the director. These rules and regulations shall give account to the number of potential members, their stability of employment or membership in the group comprising the common bond of membership and the economic characteristics of the proposed common bond. If, in the opinion of the director, the proposed credit union does not meet these objectives, the charter application shall be denied.
5. The subscribers for a credit union charter shall not transact any business until formal approval of the charter has been received. In order to simplify the organization of credit unions, the director shall cause to be prepared a form of articles of incorporation and a form of bylaws, consistent with this chapter, which shall be used by credit union incorporators for their guidance.
6. The articles of incorporation filed in the department of finance shall be available for inspection and a copy may be provided upon payment of an appropriate fee.

History. I.C.,§ 26-2105, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2106. Amendment to articles of incorporation and bylaws — Approval of director — Procedure.

1. A credit union’s articles of incorporation and bylaws may be amended as provided in the articles of incorporation and bylaws with approval of the director. Amendments to the articles of incorporation or bylaws must be submitted to the director for approval before they are submitted to a vote by the members of the board. Amendments are deemed to be approved by the director if the director does not deny them within thirty (30) days following receipt of the proposed amendments. Amendments to a credit union’s articles of incorporation and bylaws must conform with section 26-2105, Idaho Code.
2. Upon approval by the director and the members of the board, as required, the credit union shall promptly deliver amendments to the articles of incorporation, including any necessary filing fees, to the secretary of state for filing. Amendments to the articles of incorporation or bylaws are effective upon written certification of board approval to the director.

History.

I.C.,§ 26-2106, as added by 2020, ch. 230, § 2, p. 671.

§ 26-2107. Restrictions.

Any person, corporation, copartnership or association, except a credit union organized under the provisions of this chapter, an interstate credit union with a permit issued under section 26-2152, Idaho Code, the federal credit union act, 48 Statute 1216 (1934), 73 Statute (1959), 12 U.S.C. 192, or the Idaho credit union league, a recognized chapter of the Idaho credit union league, using a name or title containing the words “credit union” or any derivation thereof or representing themselves in their advertising or otherwise conducting business as a credit union shall be fined not more than one thousand dollars ($1,000) or imprisoned not more than one (1) year, or both, and may be permanently enjoined from using such words in its name.

History.

I.C.,§ 26-2107, as added by 1977, ch. 213, § 2, p. 582; am. 1997, ch. 111, § 2, p. 269.

§ 26-2108. Corporate powers.

A credit union shall have power to:

1. Make contracts.
2. Sue and be sued in the name of the credit union.
3. Adopt and use a common seal and alter same at pleasure.
4. Own, hold or use any real property or any interest therein as provided in section 26-2109, Idaho Code.
5. May require the payment of an entrance or membership fee, not to exceed one dollar ($1.00), of any applicant admitted to membership.
6. Receive from its members payments on shares and deposits, including the right to conduct Christmas share clubs, vacation clubs, and other such thrift organizations within the membership.
7. Lend its funds to its members as hereinafter provided.
8. Purchase insurance on the lives of its members in an amount equal to their respective share and loan balances.
9. Borrow from any financial institution or individuals in an aggregate amount not to exceed fifty per cent (50%) of its members’ shares and deposits.
10. May invest any surplus funds in such investments as provided for in this chapter.
11. Make deposits in federally insured banks and savings and loan companies in Idaho, in state or federally chartered credit unions in Idaho and in the Idaho Corporate Credit Union.
12. Hold membership in other state or federally chartered credit unions in Idaho, in the Idaho Credit Union League, in the Idaho Corporate Credit Union and in other organizations composed of credit unions approved by the director.
13. Declare dividends on members’ shares and fix the rates on interest paid on members’ certificates of deposit, nonmembers’ certificates of indebtedness, and other thrift accounts as provided for in this chapter.
14. Fine members for failure to meet punctually obligations to such credit union.
15. In the event of default, impress a lien upon the shares and deposits and accumulation of dividends and interest of any member to the extent of any loans made to him directly or indirectly, or on which he is surety and for any dues or charges or fines payable by him; the credit union shall also have the right of setoff with respect to every such account.
16. Relocate its head office or branches and the location of its books and records upon written notice to the director.
17. Collect, receive and disburse monies in connection with sales of travelers’ checks, money orders and for such other purposes as may provide convenience or benefit for its members.
18. Exercise such incidental powers as are necessary to carry on the business for which it is incorporated not inconsistent with the provisions of this chapter.
19. Form and operate a credit union service corporation as provided in section 26-2147, Idaho Code.
20. Provide for its members, share and deposit accounts from which the member may withdraw funds by the use of a negotiable instrument.
21. Participate in systems which allow the transfer of credit union funds or the shares or deposits of members by electronic means and hold membership in automated clearing house associations or corporations. (v) Sell all or part of its assets to another credit union, to purchase all or part of the assets of another credit union and to assume the liabilities of the selling credit union and those of its members subject to the approval of the director.

History.

I.C.,§ 26-2108, as added by 1977, ch. 213, § 2, p. 582; am. 1982, ch. 210, § 1, p. 583; am. 1987, ch. 80, § 1, p. 80.

§ 26-2109. Power to acquire and hold real property.

1. A credit union may invest in fixed assets necessary or related to its operations, subject to the following limitations:
   1. The credit union’s net worth equals at least seven percent (7%) of total assets;
   2. The board approves any investment in real property; and
   3. The aggregate book value of all such investments does not exceed seven and one-half percent (7.5%) of the total of its assets.
2. The director may, upon written application, waive any of the limitations listed in subsection (1) of this section.
3. A credit union may acquire property through foreclosure, deed in lieu of foreclosure, repossession, or other means in connection with protection or enforcement of the credit union’s rights as a secured lender. Property acquired in this manner shall not be subject to the limitations of subsection (1) of this section.
4. For purposes of this section:
   1. “Abandoned premises” means premises previously used to transact credit union business but no longer used for that purpose. It also means premises originally acquired to transact future credit union business but no longer intended for that purpose.
   2. “Fixed assets” means premises and furniture, fixtures, and equipment.
   3. “Immediate family member” means a spouse, domestic partner, or other family member living in the same household.
   4. “Partially occupy” means occupation and use, on a full-time basis, of at least fifty percent (50%)of each of the premises by the credit union.
   5. “Premises” means any office, branch office, suboffice, service center, parking lot, other facility, or real estate where the credit union transacts or will transact business.
   6. “Senior management employee” means the credit union’s chief executive officer, any assistant chief executive officers, and the chief financial officer.
   7. “Unimproved land” or “unimproved real property” means:
      1. Raw land or land without development, significant buildings, structures, or site preparation;
      2. Land that has never had improvements;
      3. Land that was improved at one time but has functionally reverted to its unimproved state; or
      4. Land that has been improved, but the improvements serve no purpose for the credit union’s planned use of the property.
5. Premises not currently used to transact credit union business.
   1. If a credit union acquires premises, including unimproved land or unimproved real property, it must partially occupy each of them within a reasonable period, but no later than six (6) years after the date of acquisition. The director may waive the partial occupation requirements based on economic or business conditions, or other conditions affecting use of the property, subject to a reasonable plan for partial occupancy. To seek a waiver, a credit union must submit a written request to the director and fully explain why it needs the waiver. The director shall provide the credit union a written response, either approving or disapproving the request. The director’s decision shall be based on safety and soundness considerations. (b) A credit union must make diligent efforts to dispose of abandoned premises and property acquired as described in subsection (3) of this section. The credit union must seek fair market value for the premises or property and record its efforts to dispose of the premises or property. The credit union must complete the sale within five (5) years of abandonment of the premises or acquisition of the property. Upon application by the credit union, the director shall approve the continued holding by the credit union for an additional period of five (5) years upon the credit union’s showing of its good faith attempt to dispose of the premises or property, or that disposal within the first five (5) year period would be detrimental to the credit union. The director shall provide the credit union a written response, either approving or disapproving the application. If the director fails to respond within forty-five (45) days of receipt, the application is deemed approved. The director’s decision shall be based on safety and soundness considerations. The credit union shall, during the second five (5) year period, at the end of each year beginning at the end of the sixth year in which it holds the premises or property, write down the value of the premises or property by twenty percent (20%) of the value carried on its books at the beginning of the second five (5) year period. Value at the beginning of the second five (5) year period shall be the lower of cost or market value as determined pursuant to appraisal.
6. A credit union must not acquire, except as allowed in subsection (3) of this section for real property, or lease for one (1) year or longer, premises from any of the following, unless the director waives this prohibition:
   1. A member of the credit union’s board of directors, credit committee, supervisory committee, or senior management, or an immediate family member of such individual;
   2. A corporation in which a member of the credit union’s board of directors, credit committee, supervisory committee, or senior management, or an immediate family member of such individual, is an officer or director or has a stock interest of ten percent (10%) or more; or
   3. A partnership, limited liability company, or other entity in which a member of the credit union’s board of directors, credit committee, supervisory committee, or senior management, or an immediate family member of such individual, is a general partner or a limited partner or entity member with an interest of ten percent (10%) or more.
7. A credit union must not lease for one (1) year or longer premises from any of its employees if the employee is directly involved in acquiring premises, unless the credit union’s board of directors determines the employee’s involvement is not a conflict of interest.
8. All transactions with business associates or family members not specifically prohibited by this section must be conducted at arm’s length and in the interest of the credit union.
9. To seek a waiver of any of the prohibitions in subsections (6) through (8) of this section, a credit union must submit a written request to the director and fully explain why it needs the waiver. Within forty-five (45) days of the receipt of the waiver request or all necessary documentation, whichever is later, the director shall provide the credit union a written response, either approving or disapproving its request. The director’s decision shall be based on safety and soundness considerations and a determination as to whether a conflict of interest exists.

History.

I.C.,§ 26-2109, as added by 2020, ch. 230, § 4, p. 671.

§ 26-2110. Membership.

1. The membership of a credit union shall be limited to and consist of the subscribers to the articles of incorporation and such other persons having the common bond set forth in the articles of incorporation as have been duly admitted members, have paid the entrance fee, if any, as provided in the bylaws, have subscribed and paid for one or more shares, and have complied with such other requirements as the articles of incorporation or bylaws may specify.
2. Credit union organizations shall be limited to groups having a common bond of occupation or association, or to residents within a well-defined neighborhood, community, or rural district, employees of a common employer, or members of a bona fide fraternal, religious, cooperative, labor, rural, educational, or similar organization and members of the immediate family of such persons.
3. Societies and associations composed entirely of individuals who are within the field of membership of the credit union may be admitted to membership in the same manner and under the same conditions as individuals.
4. An individual who leaves the field of membership may be permitted to retain his membership in the credit union at the discretion of the board, and as provided in the bylaws.
5. An employer, including the state and its political subdivisions, may become a member of a credit union, of which its employee is a member, only for the purpose of placing shares or deposits in the credit union pursuant to an employee deferred compensation plan qualified under chapter 400 of the internal revenue code of 1954, as amended, or other retirement plans set out in section 26-2151, Idaho Code.
6. Credit unions may become members of other Idaho credit unions for the purposes provided in section 26-2120, Idaho Code.

History.

I.C.,§ 26-2110, as added by 1977, ch. 213, § 2, p. 582; am. 1980, ch. 69, § 1, p. 144.

§ 26-2111. Expulsion and/or withdrawal from field or membership.

A member of a credit union may be expelled by the board but only after an opportunity has been given him to be heard for the purpose of such expulsion. A written notice of this hearing setting forth the time, place, and date for such meeting shall be forwarded to the member by the board together with the charges which serve as the basis for the expulsion. The member may be expelled for failure to meet the conditions of his membership, failure to carry out his obligations to the credit union, conviction of a felony, neglect or refusal to comply with the provisions of the laws under which this credit union operates and the bylaws of the credit union, and habitual neglect to pay obligations. Upon completion of the hearing, and if the board has voted to expel the member, the member shall remain liable for any sums owed to the credit union for loans or other purposes. The credit union may require twenty (20) days’ written notice to withdraw shares and/or deposits by the member, as funds become available.

History.

I.C.,§ 26-2111, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2112. Fiscal year.

The fiscal year of all credit unions organized under this chapter shall end on the last day of December.

History.

I.C.,§ 26-2112, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2113. Member voting.

1. No member may have more than one (1) vote. A natural person may not hold more than one (1) membership in a credit union on behalf of himself or herself. An organization having membership in a credit union may cast one (1) vote through a natural person agent authorized in accordance with any requirements of the credit union.
2. Members may vote, as prescribed in the credit union’s bylaws, by mail ballot, absentee ballot, or other methods, which may include electronic methods. However, no member may vote by proxy.
3. A member who is not at least eighteen (18) years of age is not eligible to vote as a member unless otherwise provided in the credit union’s bylaws.

History.

I.C.,§ 26-2113, as added by 2018, ch. 165, § 2, p. 328.

§ 26-2113A. Annual membership meetings.

1. A credit union’s annual membership meeting shall be held in one of the communities where it maintains a branch to serve its members at such time as the bylaws prescribe, and shall be conducted according to the rules of procedure approved by the board.
2. Notice of the annual membership meetings of a credit union shall be given as provided in the bylaws of the credit union.

History.

I.C.,§ 26-2113A, as added by 2018, ch. 165, § 3, p. 328; am. 2019, ch. 188, § 1, p. 596.

§ 26-2113B. Special membership meetings.

1. A special membership meeting of a credit union may be called by:
   1. A majority vote of the board;
   2. A majority vote of the supervisory committee to suspend a director for cause; or
   3. A written petition signed or similarly authenticated by at least ten percent (10%) or two thousand (2,000) of the members of a credit union, whichever is less.
2. Call of a special membership meeting of a credit union shall be in writing submitted to the secretary of the credit union by the board, the petitioners or the supervisory committee as applicable and, shall state specifically the purpose or purposes for which the meeting is called and the agenda item or items for consideration by the members at the meeting. If the special membership meeting is called for the removal of one (1) or more directors or supervisory committee members, the call shall state the name of each individual whose removal is sought.
3. 1. On receipt of a call for a special membership meeting, the secretary of the credit union shall determine whether the call satisfies the requirements of this section. If so, the secretary shall determine a reasonable date, time, and place at which the special membership meeting will be held and provide notice of the special membership meeting in accordance with the requirements of this subsection. The special membership meeting must be held at a reasonable location within the county in which the principal place of business of the credit union is located, unless provided otherwise in the bylaws. The special membership meeting must be held no later than sixty (60) days after the date on which the call is received by the secretary. (3)(a) On receipt of a call for a special membership meeting, the secretary of the credit union shall determine whether the call satisfies the requirements of this section. If so, the secretary shall determine a reasonable date, time, and place at which the special membership meeting will be held and provide notice of the special membership meeting in accordance with the requirements of this subsection. The special membership meeting must be held at a reasonable location within the county in which the principal place of business of the credit union is located, unless provided otherwise in the bylaws. The special membership meeting must be held no later than sixty (60) days after the date on which the call is received by the secretary.
   2. The secretary shall give notice of the special membership meeting at least thirty (30) days before the date of the meeting, or within such other reasonable time period as may be provided in the bylaws. The notice must state the purpose or purposes for which the special membership meeting is called and the agenda items for the meeting. If the special membership meeting is called for the removal of one (1) or more directors or supervisory committee members, the notice must state the name of each individual whose removal is sought.
4. Except as provided in this subsection, the chairperson of the board shall preside over special membership meetings. If the purpose of the special membership meeting includes the removal of the chairperson, the next highest-ranking board officer whose removal is not sought shall preside over the meeting. If the removal of all board officers is sought, the chairperson of the supervisory committee shall preside over the special membership meeting.
5. At the special membership meeting, only those agenda items that are stated in the notice for the meeting may be considered.
6. Special membership meetings shall be conducted according to the rules of procedure set forth in the bylaws. If the bylaws do not specify the rules of procedure that shall govern a special membership meeting, the special membership meeting shall be conducted according to the rules of procedure approved by the board.

History.

I.C.,§ 26-2113B, as added by 2018, ch. 165, § 4, p. 328.

§ 26-2114. Board of directors — Election of directors — Terms — Vacancies — Meetings — Rules.

1. The business and affairs of a credit union shall be managed by a board of no fewer than five (5) and no more than fifteen (15) directors.
2. The directors must be elected by and from the membership in conjunction with the credit union’s annual membership meeting. They shall hold their offices until their successors are elected or appointed.
3. Directors shall be elected to terms of between one (1) and three (3) years, as provided in the bylaws. If the terms are longer than one (1) year, the directors must be divided into classes, and an equal number of directors, as nearly as possible, must be elected each year.
4. Except as provided in subsection (5) of this section, any vacancy on the board must be filled by an interim director appointed by the board, unless the interim director would serve a term of fewer than ninety (90) days. Interim directors appointed to fill vacancies created by expansion of the board will serve until the next annual meeting of members. Other interim directors will serve out the unexpired term of the former director, unless provided otherwise in the credit union’s bylaws.
5. In the case of a merger between two (2) credit unions pursuant to section 26-2132, Idaho Code, a board member of the merging credit union may continue to serve as a board member of the continuing credit union for a period not to exceed the equivalent of the duration of his or her unexpired term on the board of the merging credit union, provided that the approved plan of merger or other agreement approved by the director provides for such service on the continuing credit union’s board, with a corresponding expansion in the size of the continuing credit union’s board not to exceed the limits under subsection (1) of this section.
6. 1. The board must have at least six (6) regular meetings each year, with at least one (1) of these meetings held in each calendar quarter. The board meetings must be held in the community of the credit union’s principal place of business within this state. The director may, upon written request of a credit union’s board of directors, authorize a credit union’s board meetings to be held at another location. Written requests from the credit union’s board of directors shall not include holding the credit union’s board meeting outside the state of Idaho unless a majority of the credit union’s membership resides in another state. (6)(a) The board must have at least six (6) regular meetings each year, with at least one (1) of these meetings held in each calendar quarter. The board meetings must be held in the community of the credit union’s principal place of business within this state. The director may, upon written request of a credit union’s board of directors, authorize a credit union’s board meetings to be held at another location. Written requests from the credit union’s board of directors shall not include holding the credit union’s board meeting outside the state of Idaho unless a majority of the credit union’s membership resides in another state.
   2. The director may require the board to meet more frequently than six (6) times per year if the director finds it necessary in order to address matters the director determines necessitate more frequent meetings including, without limitation, evidence of any of the following:
      1. The credit union’s current composite capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk (CAMELS) rating issued by the director is a “3,” “4” or “5”;
      2. The credit union’s current management component CAMELS rating issued by the director is a “3,” “4” or “5”;
      3. The credit union’s net worth ratio is less than seven percent (7%);
      4. The credit union is currently in a troubled condition;
      5. In the judgment of the director, the credit union has committed an unsafe or unsound practice that has not been corrected to the satisfaction of the director and that continues to be a concern to the director, or the credit union is about to commit an unsafe or unsound practice; or (vi) The credit union has been notified in writing by the director of a significant supervisory or financial concern.
   3. If the director determines, as set forth in paragraph (b) of this subsection, that a board of directors must meet more frequently than as set forth in paragraph (a) of this subsection, the director will send written notice to the board chair, with a copy to the credit union’s manager, setting forth the director’s findings underlying the determination and the required frequency of the board of directors meetings. This notice will remain in effect until rescinded in writing by the director.

History.

I.C.,§ 26-2114, as added by 2018, ch. 165, § 6, p. 328; am. 2019, ch. 188, § 2, p. 596.

§ 26-2114A. Board members — Qualifications.

1. A member of the board of directors must be a natural person and a member of the credit union. If a member of the board of directors ceases to be a member of the credit union, that person’s service as a member of the board of directors shall terminate effective on termination of membership in the credit union.
2. 1. If a member of the board of directors is absent from more than one-fourth (¼) of the regular board meetings in any twelve (12) month period without being reasonably excused by the board, the member shall no longer serve on the board of directors. (2)(a) If a member of the board of directors is absent from more than one-fourth (¼) of the regular board meetings in any twelve (12) month period without being reasonably excused by the board, the member shall no longer serve on the board of directors.
   2. The board shall determine whether a member of the board is excluded from service pursuant to paragraph (a) of this subsection. After such determination has been made, the board secretary shall promptly notify the member of the board that such member shall no longer serve on the board. Failure to provide notice does not affect the termination of the member’s service under paragraph (a) of this subsection.
3. A member of the board of directors must meet any qualification requirements set forth in the credit union’s bylaws. If the board determines that a member fails to meet such requirements, the member shall no longer serve on the board.
4. The operating officers and employees of the credit union may not serve as members of the board of directors of the credit union.

History.

I.C.,§ 26-2114A, as added by 2018, ch. 165, § 7, p. 328.

§ 26-2114B. Officials — Fiduciary duty — Reliance on information.

1. Officials owe a fiduciary duty to the credit union and must discharge the duties of their respective positions:
   1. In good faith;
   2. With the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
   3. In a manner the official reasonably believes to be in the best interests of the credit union.
2. In discharging the duties of an official, the official is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
   1. One (1) or more officers or employees of the credit union whom the official reasonably believes to be reliable and competent in the matters presented;
   2. Legal counsel, public accountants or other persons as to matters the official reasonably believes are within the person’s professional or expert competence; or
   3. A committee of the board of directors or supervisory committee of which the official is not a member if the official reasonably believes the committee merits confidence.
3. An official is not acting in good faith if the official has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (2) of this section unwarranted.
4. An official is not liable for any action taken as a director, or any failure to take any action, if the director performed the duties of the director’s office in compliance with this section.
5. As used in this section, “official” means a member of the board of directors, board officer, supervisory committee member or senior operating officer of the credit union.

History.

I.C.,§ 26-2114B, as added by 2018, ch. 165, § 8, p. 328.

§ 26-2115. Officers.

1. Within ten (10) days following the organizational meeting and after each annual membership meeting, the board shall elect from among its members a chair of the board, one (1) or more than one (1) vice-chair and a secretary. The board shall also elect other board officers as provided for in the credit union’s bylaws for transacting the business of the board of the credit union. The terms of the board officers shall be one (1) year or until their successors are qualified and elected, unless sooner removed as provided in this chapter. All board officers must be elected members of the board.
2. The chair and secretary shall execute a certificate of election on a form approved by the department of finance, which certificate shall set forth the names and addresses of the officers, members of the board of directors and committee members elected or appointed. One (1) copy of the certificate of election shall be filed with the department of finance within ten (10) days after such election or appointment.
3. The board may designate as many operating officers as it deems necessary for conducting the business of the credit union including, but not limited to, a president or chief executive officer who shall be in charge of the credit union’s day-to-day operations.
4. A credit union may use any titles it chooses for the officials holding the positions described in this section as long as such titles are not misleading.

History.

I.C.,§ 26-2115, as added by 2018, ch. 165, § 10, p. 328.

§ 26-2116. Board of directors — Powers and duties.

1. The business and affairs of a credit union shall be managed by the board of directors of the credit union. The duties of the board include, but are not limited to, the duties enumerated in this section. The duties listed in subsection (2) of this section may not be delegated by the credit union’s board of directors. The duties listed in subsection (3) of this section may be delegated to a committee, officer or employee, with appropriate reporting to the board.
2. The board shall:
   1. Retain the chief executive officer, or equivalent officer as specified in the bylaws, and set the chief executive officer’s compensation;
   2. Set the minimum amount of funds in a share account, if any, required for membership;
   3. Establish policies governing the operation of the credit union;
   4. Establish the conditions under which a member may be expelled for cause;
   5. Approve an annual operating budget for the credit union;
   6. Designate those persons or positions authorized to execute or certify documents or records on behalf of the credit union;
   7. Review the supervisory committee’s annual report; and
   8. Authorize the conveyance of real property and buildings.
3. In addition, unless delegated, the board shall:
   1. Determine the maximum amount of shares and deposits that a member may hold in the credit union;
   2. Set the rate of interest on deposits, including nonmember deposits, and the rate of dividends on shares and authorize the payment of dividends on shares;
   3. Approve the charge-off of credit union losses;
   4. Determine the investment of surplus funds of the credit union in investments permitted by this chapter;
   5. Fill vacancies on all committees; and
   6. Authorize the credit union to borrow or lend money as needed to carry on the functions of the credit union.

History.

I.C.,§ 26-2116, as added by 2018, ch. 165, § 12, p. 328.

§ 26-2117. Penalties for official misconduct.

Any officer, director, or committee member or loan officer of a credit union who knowingly permits a loan to be made or participates in a loan to a nonmember is guilty of a misdemeanor and shall be primarily liable to the credit union for the amount thus illegally loaned and the illegality of such a loan shall be no defense in any action of the credit union to recover on the loan.

Any officer, director, committee member, agent or employee who knowingly makes or subscribes to false entries or exhibits a false or fictitious paper, instrument, or security to a person authorized to examine the credit union books and records shall be guilty of a felony.

Any officer, director, committee member, agent or employee who receives payments on shares knowing the credit union is insolvent shall be guilty of a misdemeanor.

History.

I.C.,§ 26-2117, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2118. Credit committee — Appointment — Duties.

1. The board may appoint a credit committee. The credit committee shall have the general supervision of all loans to members. It shall be the duty of the credit committee to review all applications for loans, to ascertain whether the loan would be for a provident or productive purpose, to determine whether the applicant qualifies for the loan under the credit union’s loan and underwriting policies, and to determine whether the security offered, in the credit committee’s judgment, is sufficient, and whether the requested terms of the loan are in accordance with the credit union’s loan and underwriting policies.
2. The credit committee shall meet as often as necessary and at least once each month to review delinquent loans. The credit committee shall keep a record of all actions taken at each meeting and shall submit a written report to the members at the annual meetings and to the board monthly.
3. The credit committee, upon approval by the board, may appoint one (1) or more loan officers to act under the supervision of the credit committee, and a loan officer, when appointed, may make loans without the necessity for a meeting or of approval by any members of the credit committee, as provided in the bylaws. No more than one (1) member of the credit committee may serve in the position of loan officer. No individual shall have authority to disburse funds of the credit union for any loan that has been approved by him in his capacity as loan officer, except that the loan officer may disburse loans approved by him that are fully secured by shares or that do not exceed the credit union’s unsecured loan limit set by the board of directors.
4. No member of the credit committee may serve as a member of the board of directors or supervisory committee while serving as a member of the credit committee.

History.

I.C.,§ 26-2118, as added by 2018, ch. 165, § 14, p. 328.

§ 26-2119. Loans.

1. A credit union may make secured and unsecured loans to its members under policies established by the board. A person that is not a member of the credit union may serve as a co-borrower or guarantor on a loan to a member of the credit union. Each loan must be evidenced by records adequate to support enforcement or collection of the loan and any review of the loan by the director.
2. A credit union may not extend credit to a director, executive officer, supervisory committee member, or credit committee member unless the extension of credit is made on substantially the same terms as those prevailing at the time for comparable transactions by the credit union with members generally.
   1. For the purposes of this section, “executive officer” means a person who participates or has authority to participate in policymaking functions of the credit union.
   2. A director, executive officer, supervisory committee member, or credit committee member may not participate in approving or disbursing a loan in which the director, executive officer, supervisory committee member, or credit committee member has a direct or indirect financial interest.
   3. This section shall not prohibit any extension of credit made pursuant to a benefit or compensation program adopted by the board of directors that:
      1. Is widely available to employees of the credit union; and
      2. Does not give preference to any director, executive officer, supervisory committee member, or credit committee member over other employees of the credit union.
      3. Establish a limit on the aggregate amount of loan participations that may be purchased from any one (1) originating lender, not to exceed the greater of five million dollars ($5,000,000) or one hundred percent (100%) of the credit union’s net worth, unless this amount is waived by the director;
      4. Establish limits on the amount of loan participations that may be purchased by each loan type, not to exceed a specified percentage of the credit union’s net worth; and
      5. Establish a limit on the aggregate amount of loan participations that may be purchased with respect to a single borrower, or group of associated borrowers, not to exceed fifteen percent (15%) of the credit union’s net worth, unless waived by the director;
3. A credit union may make loans to another credit union, federal credit union, or out-of-state credit union.
4. A credit union may purchase loans made to its members if the credit union’s underwriting policies would have permitted it to originate the loans.
5. A credit union may purchase, in whole or in part, within the limitations of the board of directors’ written purchase policies:
   1. A loan or group of loans of its members from any source, if they are loans the credit union is empowered to grant or the loan or loans are refinanced with the consent of the borrowers within sixty (60) days after they are purchased, so that they are loans it is empowered to grant;
   2. A loan or group of loans of a liquidating credit union’s individual members from the liquidating credit union;
   3. Student loans from any source if the purchaser is granting student loans on an ongoing basis and if the purchase will facilitate the purchasing credit union’s packaging of a pool of such loans to be sold or pledged on the secondary market. A pool must include a substantial portion of the credit union’s members’ loans and must be sold promptly; and
   4. Real estate-secured loans, from any source, if the purchaser is granting real estate-secured loans on an ongoing basis and if the purchase will facilitate the purchasing credit union’s packaging of a pool of such loans to be sold or pledged on the secondary mortgage market. A pool must include a substantial portion of the credit union’s members’ loans and must be sold promptly. (6) A credit union may sell in whole or in part, to any source, a loan to its members within the limitations of the board of directors’ written sale policies, provided:
   5. The purchase complies with the purchasing credit union’s internal written loan participation policy, which, at a minimum, must:
   6. Establish underwriting standards for loan participations;
   7. A loan participation agreement must:
      1. Be properly executed by authorized representatives of all parties under applicable law;
      2. Be properly authorized by the credit union’s board of directors or, if the board has so delegated in its policy, a designated committee or senior management official under the credit union’s bylaws and all applicable law;
      3. Be retained, either in original or copied form, in the credit union’s office; and
      4. Include provisions that, at a minimum, address the following: 1. Prior to purchase, the identification of the specific loan participation or participations being purchased, either directly in the agreement or through a document that is incorporated by reference into the agreement;

(a) The board of directors or investment committee approves the sale; and

(b) A written agreement and a schedule of the eligible obligations covered by the agreement are retained in the credit union’s office.

(7) A credit union may purchase a participation interest in a loan from a credit union, credit union service organization, federally insured financial institution, and any state or federal government agency and its subdivision only if the loan is one the purchasing credit union is empowered to grant and the following additional conditions are satisfied:

(a) The purchase complies with all requirements to the same extent as if the purchasing credit union had originated the loan;

(b) The purchasing credit union has executed a written loan participation agreement with the originating lender and the agreement meets the minimum requirements for a loan participation agreement as described in paragraph (g) of this subsection;

(c) The originating lender retains an interest in each participated loan of at least ten percent (10%) of the outstanding balance of the loan through the life of the loan, unless a higher percentage is required under applicable state law;

(d) The borrower becomes a member of one of the participating credit unions before the purchasing credit union purchases a participation interest in the loan;

(f) To seek a waiver from any of the limitations in subsection (7) of this section, a credit union must submit a written request to the director with a full and detailed explanation of why it is requesting the waiver. Within forty-five (45) days of receipt of a completed waiver request, including all necessary supporting documentation and, if appropriate, any written concurrence, the director shall provide the credit union a written response. The director’s decision shall be based on safety and soundness and other considerations. A credit union may request the director to reconsider a denied waiver request or to file an appeal under the administrative procedures rules, or both; and

2. The interest that the originating lender will retain in the loan to be participated through the life of the loan;

3. The location and custodian for original loan documents;

4. An explanation of the conditions under which parties to the agreement can gain access to financial and other performance information about a loan, the borrower, and the servicer so the parties can monitor the loan;

5. An explanation of the duties and responsibilities of the originating lender, servicer, and participants with respect to all aspects of the participation, including servicing, default, foreclosure, collection, and other matters involving the ongoing administration of the loan; and

6. Circumstances and conditions under which participants may replace the servicer.

(8) Any real estate-secured loans granted by a nonfederally insured credit union shall comply with the appraisal requirements for federally insured credit unions. The director may require any credit union to obtain an appraisal on any real estate-secured loan whenever the director believes it necessary to address safety and soundness concerns.

(9) Any officer, director, supervisory committee member, or credit committee member who knowingly permits a loan to be made or participates in a loan to a nonmember of the credit union, unless the loan to the nonmember is otherwise allowed in this chapter or by a rule pursuant to this chapter, shall be primarily liable to the credit union for the amount illegally loaned. The illegality of such loan shall not be a defense in any action by the credit union to recover the amount loaned.

History.

I.C.,§ 26-2119, as added by 2020, ch. 230, § 6, p. 671.

§ 26-2120. Limit on loan amount — Loans to one borrower.

1. Unless otherwise provided in this chapter or by a rule pursuant to this chapter, no loan may be made to any borrower if the loan would cause the borrower and any associated borrowers to be indebted to the credit union on all types of loans in an aggregated amount exceeding one hundred thousand dollars ($100,000) or fifteen percent (15%) of the net worth of the credit union, whichever is greater, without the approval of the director.
   1. This section does not apply to a corporate credit union.
   2. Two (two) borrowers are “associated” for the purposes of this section if any of the following factors are present:
      1. One (1) of them will derive a direct benefit from the credit union’s loan to the other. For this purpose, the term “direct benefit” means that the loan proceeds or assets purchased with those proceeds will be transferred to the other party other than in a bona fide arm’s length transaction where the proceeds are used to acquire property, goods, or services;
      2. Loan proceeds for each of them are used to purchase interests in the same enterprise, and the borrowers will in the aggregate own more than fifty percent (50%) of the ownership interests in such enterprise. In such case, the borrowers are considered associated only to the extent of the loans made to purchase interests in the same enterprise;
      3. The borrowers are related directly or indirectly through common control and either borrower derives fifty percent (50%) or more of its income from the other. For this purpose, “control” means that a person directly or indirectly owns or has the power to vote twenty-five percent (25%) or more of the ownership interest of an organization, controls the election of a majority of the directors, managers, trustees, or other persons exercising similar functions of an organization, or has the power to exercise a controlling influence over the management or policies of the organization;
      4. The expected source of repayment is the same for each borrower, and no individual borrower has a separate source of income from which the loan may be paid, taking into account the borrower’s other obligations; or
      5. One (1) borrower is generally liable for the obligations or actions of the other.
2. The limit on a loan amount in this section does not apply to any loan that is fully secured by shares or deposits.

History.

I.C.,§ 26-2120, as added by 2020, ch. 230, § 8, p. 671.

§ 26-2120A. Limit on loan maturity.

The maturity of a loan to a member may not exceed fifteen (15) years except as follows:

1. A credit union may make loans with maturities not to exceed twenty (20) years in the case of:
   1. A loan to finance the purchase of a manufactured home if the manufactured home will be used as the member’s residence and the loan is secured by a first lien on the manufactured home, and the manufactured home meets the requirements for the deductibility of residential mortgage interest for income tax under the Internal Revenue Code;
   2. A second mortgage loan or a nonpurchase money first mortgage loan in the case of a residence on which there is no existing first mortgage, if the loan is secured by a residential dwelling that is the residence of the member; and
   3. A loan to finance the repair, alteration, or improvement of a residential dwelling that is the residence of the member.
2. A credit union may make residential real estate loans on one-to-four family dwellings used as second or vacation residences, including an individual cooperative unit, and that are secured by a first lien upon such dwelling, with maturities not to exceed thirty (30) years.
3. A credit union may make residential real estate loans to members, including loans secured by manufactured homes permanently affixed to the land, with maturities not to exceed forty (40) years, subject to the following conditions:
   1. The loan shall be made on a one-to-four family dwelling that is or will be the principal residence of the member, and the loan shall be secured by a perfected first lien in favor of the credit union on such dwelling, or a perfected first security interest in the case of either a residential cooperative or a leasehold or ground rent estate;
   2. The loan application shall be a completed standard federal housing administration, veterans administration, federal home loan mortgage corporation, federal national mortgage association, or federal home loan mortgage corporation/federal national mortgage association application form. In lieu of use of a standard application, the credit union may have a current attorney’s opinion on file stating that the forms in use meet the requirements of applicable federal, state, and local laws;
   3. The security instrument and note shall be executed on the most current version of the federal housing administration, veterans administration, federal home loan mortgage corporation, federal national mortgage association, or federal home loan mortgage corporation/federal national mortgage association uniform instruments for the jurisdiction in which the property is located. In lieu of use of a standard security instrument and note, the credit union may have a current attorney’s opinion on file stating that the security instrument and note in use meet the requirements of applicable federal, state, and local laws; and
   4. The loan shall be secured by a perfected first lien or first security interest in favor of the credit union supported by a properly executed and recorded security instrument.
4. Lines of credit are not subject to a maturity limit except as determined by contract between the credit union and the member.

History.

I.C.,§ 26-2120A, as added by 2020, ch. 230, § 9, p. 671.

§ 26-2121. Supervisory committee — Membership — Terms — Vacancies.

1. A supervisory committee of at least three (3) members must be appointed by the board as provided in the bylaws. Members of the supervisory committee shall serve a term of one (1) to three (3) years, unless sooner removed under this chapter or until their successors are qualified and elected or appointed. The members of the supervisory committee shall be divided into classes so that as equal a number as is possible is appointed each year.
2. At least one (1) supervisory committee member may attend each regular meeting of the board. However, supervisory committee members may be excluded from executive sessions of board meetings.
3. 1. If a supervisory committee member is absent from more than one-fourth (¼) of the committee meetings in any twelve (12) month period without being reasonably excused by the committee, the member shall no longer serve as a member of the committee. (3)(a) If a supervisory committee member is absent from more than one-fourth (¼) of the committee meetings in any twelve (12) month period without being reasonably excused by the committee, the member shall no longer serve as a member of the committee.
   2. The supervisory committee shall promptly notify the member that such member shall no longer serve as a committee member. Failure to provide notice does not affect the termination of the member’s service under paragraph (a) of this subsection.
4. A supervisory committee member must be a natural person and a member of the credit union. If a member of the supervisory committee ceases to be a member of the credit union, the member shall no longer serve as a committee member.
5. Any vacancy on the committee must be filled by an interim member appointed by the board.
6. No operating officer or employee of a credit union may serve on the credit union’s supervisory committee. No more than one (1) director may be a member of the supervisory committee at the same time. No member of the supervisory committee may serve on the credit committee or investment committee of the credit union while serving on the supervisory committee. No board officer of a credit union may serve as the chairperson of the supervisory committee.

History.

I.C.,§ 26-2121, as added by 2018, ch. 165, § 16, p. 328.

§ 26-2121A. Supervisory committee duties.

1. The supervisory committee of a credit union shall:
   1. Meet at least quarterly;
   2. Keep fully informed as to the financial condition of the credit union and the decisions of the credit union’s board;
   3. Perform or arrange for an annual audit of the credit union’s financial statements and provide any related findings and recommendations to the board;
   4. Make or cause to be made a verification of member accounts as follows:
      1. At least annually by statistical sampling, with the sampling method to provide for:
         1. Random selection;
         2. A sample that is representative of the population from which it was selected;
         3. An equal chance of selecting each dollar in the population;
         4. Sufficient accounts in both number and scope on which to base conclusions concerning management’s financial reporting objectives; and
         5. Additional procedures to be performed if evidence provided by confirmation alone is not sufficient; or
      2. At least annually by nonstatistical sampling conducted by an independent person licensed as an accountant in the state of Idaho, using nonstatistical sampling methods consistent with generally accepted auditing standards if such methods provide for:
      3. At least every two (2) years by controlled verification of all member accounts;
   5. Review or arrange to have reviewed annually the effectiveness of the credit union’s internal controls;
   6. Report its findings and recommendations to the board;
   7. Provide an annual written report to members at each annual membership meeting on the credit union’s financial condition;
   8. Perform or arrange for additional audits as requested by the board or management or as deemed necessary by the supervisory committee and provide any related findings and recommendations to management or the board as deemed appropriate by the supervisory committee;
   9. Monitor the implementation of management responses to material adverse findings in audits and regulatory examinations;
   10. Implement a process for the supervisory committee to receive and respond to whistleblower complaints; and
   11. Perform any additional duties as specified by the board or in the credit union’s bylaws.
2. The supervisory committee may in its sole discretion retain, at the credit union’s expense, independent counsel or other professional advisors or consultants as necessary to perform the duties under this section. History.

1. Sufficient accounts in both number and scope on which to base conclusions concerning management’s financial reporting objectives to provide assurance that the general ledger accounts are fairly stated in relation to the financial statements taken as a whole;

2. Additional procedures to be performed by the accountant if evidence provided by confirmations alone is not sufficient; and

3. Documentation of the sampling procedures used and of their consistency with generally accepted auditing standards, to be provided to the department upon request; or

I.C.,§ 26-2121A, as added by 2018, ch. 165, § 17, p. 328; am. 2019, ch. 188, § 3, p. 596.

§ 26-2121B. Suspension of members of the board by supervisory committee — For cause.

1. The supervisory committee may, for cause, suspend a member of the board, until a special membership meeting called for that purpose is held in accordance with the requirements of section 26-2113B, Idaho Code. The members participating in that meeting shall vote whether to remove the suspended person or persons.
2. For purposes of this section, “cause” means demonstrated financial irresponsibility, a breach of fiduciary duty to the credit union, or activities which, in the judgment of the supervisory committee, create a material risk to the credit union.

History.

I.C.,§ 26-2121B, as added by 2018, ch. 165, § 18, p. 328.

§ 26-2121C. Suspension of members of the board of supervisory committee by board — For cause.

1. The board may, for cause, suspend a member of the board or a member of the supervisory committee until a special membership meeting, called for that purpose, is held. The membership meeting must be held within ninety (90) days after the suspension. The members attending the meeting shall vote whether to remove a suspended party.
2. For purposes of this section, “cause” means demonstrated financial irresponsibility, a breach of fiduciary duty to the credit union, or activities which, in the judgment of the board, create a material risk to the credit union.

History.

I.C.,§ 26-2121C, as added by 2018, ch. 165, § 19, p. 328.

§ 26-2121D. Removal of director or supervisory committee member.

1. The members of a credit union may remove a director of the credit union at a special membership meeting held in accordance with section 26-2113B, Idaho Code, and called for that purpose. If the members remove a director, the members may at the same special membership meeting elect an interim director to complete the remainder of the former director’s term of office or authorize the board to appoint an interim director as provided in section 26-2114, Idaho Code.
2. If at any time, because of the removal of one (1) or more credit union directors under this chapter, the board of directors of a credit union has less than a quorum of directors, all powers and functions vested in or exercisable by the board vest in and are exercisable by the director or directors remaining until such a time as there is a quorum on the board of directors. If all of the directors of a credit union are removed under this chapter, the director of the department of finance shall appoint persons to serve temporarily as directors of the credit union until such a time as their respective successors take office.
3. The members of a credit union may remove a supervisory committee member at a special membership meeting held in accordance with section 26-2113B, Idaho Code, and called for that purpose. If the members remove a supervisory committee member, the members may at the same special membership meeting elect an interim supervisory committee member to complete the remainder of the former supervisory committee member’s term of office or authorize the supervisory committee to appoint an interim supervisory committee member as provided in section 26-2121, Idaho Code.

History.

I.C.,§ 26-2121D, as added by 2018, ch. 165, § 20, p. 328.

§ 26-2122. Compensation — Credit union manager, employment.

No officer, director, or committee member may be compensated, directly or indirectly, for his services as such; provided, however, an elected member of the board of directors may serve as a part-time treasurer and receive a salary for his services. This shall not be construed to prevent reimbursement of directors and committee members for actual expenses they may incur in carrying out the duties of their office. The board may authorize the employment of a credit union manager and other employees as needed to conduct the business of the credit union. The board shall establish the compensation to be paid to the manager and any other employees of the credit union which shall be charged as an expense of the credit union. In the event the board of directors authorizes the employment of a manager of the credit union, the manager may not be a member of the board of directors. The credit union may provide group hospitalization and group health and accident insurance for the directors, officers and committee members which will not be considered compensation.

History.

I.C.,§ 26-2122, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2123. Shares and certificates of deposit.

A share may be in increments of five dollars ($5.00) with a minimum of five dollars ($5.00) and a maximum of twenty-five dollars ($25.00) as the board of directors shall establish. The shares of a credit union shall all be common shares of one (1) class and have a par value as established by the board and bylaws. A member may purchase shares which will earn dividends as duly established by the board pursuant to section 26-2130, Idaho Code. Members may also purchase certificates of deposit which will be for a specified length of time and earn interest with a guaranteed rate to be established by the board of directors pursuant to section 26-2130, Idaho Code. No certificate shall be issued to denote ownership of a share of the credit union. Shares paid for may be transferred in such manner as the bylaws may prescribe.

In the event of default the credit union shall have and may exercise a lien on the shares and deposits of any member for any sum due the credit union from said member or for any loan made to, cosigned or endorsed by him. Christmas clubs, vacation clubs, travel clubs and other thrift organizations within the membership, which shall have the prior approval of the director of finance, may be established by the board of directors.

History.

I.C.,§ 26-2123, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2124. Joint accounts.

A member may designate any person or persons to hold shares, deposits, and thrift club accounts with him in joint tenancy with the right of survivorship; but no joint tenant, unless a member in his own right, shall be permitted to vote, obtain loans, or hold office. Payment of part or all of such accounts to any of the joint tenants shall, to the extent of such payment, discharge the liability to all.

No credit union organized under the laws of this state shall be required to recognize the claim of any third party of any of the above such accounts or withhold payment of any such accounts to the depositor or to his order, unless and until the credit union is served with citation or other appropriate process issuing out of a court of competent jurisdiction in connection with a suit instituted by such third party for the purpose of recovering or establishing an interest in such above accounts.

Such above accounts issued by any credit union organized under the laws of this state in the name of two (2) or more persons or to two (2) or more persons or the survivor of either, may be withdrawn on the signature of either party of whom such accounts were issued, or in whose name such accounts were made, and no recovery shall be had against such credit union for amounts so paid. When such accounts are issued in the name of two (2) or more persons or in the name of their survivor, the survivor of either party shall have power to act in all matters relating to such accounts whether the other person or persons named in such accounts be living or dead. The repurchase or withdrawal value of such accounts issued in joint names and dividends thereon, or other rights relating thereto, may be paid or delivered, in whole or in part, to any such person who shall make requests therefor, whether the other person or persons be living or dead. The payment or delivery to any such person, on a receipt or acquittance signed by any such person, to whom any such payment or any such delivery of rights be made, shall be valid and sufficient release and discharge of any such credit union for the payment or delivery so made.

History.

I.C.,§ 26-2124, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2125. Minors.

Shares, deposits or thrift club accounts may be issued in the name of a minor and such above accounts may be withdrawn by such minor and payments made on such withdrawals shall be valid.

History.

I.C.,§ 26-2125, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2126. Trust accounts.

Share [Shares] may be issued in the name of a member in trust for a beneficiary, including a minor, but no beneficiary, unless a member in his own right, may be permitted to vote, obtain loans, hold office or be required to pay an entrance fee. Payment of part or all of such shares to such member shall, to the extent of such payment, discharge the liability of the credit union to the member and the beneficiary, and the credit union shall be under no obligation to see the application of such payment. In the event of the death of the member, and if shares are so issued or held and the credit union has been given no other written evidence of the existence or terms of any trust, such shares and any dividends or interest thereon shall be paid to the beneficiary.

History.

I.C.,§ 26-2126, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2127. Investment of funds.

1. A credit union’s board of directors must establish a written investment policy consistent with this chapter and other applicable laws and regulations.
2. A credit union may invest its funds in any of the following, as long as the investments are deemed prudent by the board:
   1. 1. Loans held by credit unions, out-of-state credit unions, or federal credit unions; and (a)(i) Loans held by credit unions, out-of-state credit unions, or federal credit unions; and
      2. Loans to members held by other lenders, with approval of the director;
   2. Bonds, securities, or other investments that are fully guaranteed as to principal and interest by the United States government;
   3. General obligations of this state and its political subdivisions;
   4. Obligations issued by corporations designated under 31 U.S.C. 9101, or obligations, participations, or other instruments issued and guaranteed by the federal housing administration, veterans administration, federal home loan mortgage corporation, federal national mortgage association, or federal home loan mortgage corporation/federal national mortgage association, or other government-sponsored enterprise;
   5. Share or deposit accounts of other financial institutions, the accounts of which are federally insured or insured or guaranteed by another insurer or guarantor approved by the director. The shares and deposits made by a credit union under this subsection may exceed the insurance or guarantee limits established by the organization insuring or guaranteeing the institution into which the shares or deposits are made;
   6. Common trust or mutual funds whose investment portfolios consist of securities issued or guaranteed by the federal government or an agency of the government;
   7. Shares or other interests offered by a registered investment company or collective investment fund, if the company or fund restricts the investment portfolio to investments and investment transactions that are permissible for credit unions, as evidenced by its prospectus or other appropriate documentation;
   8. Debt or equity issued by an organization owned by a credit union trade association whose members include Idaho credit unions, in an aggregate amount not to exceed one percent (1%) of the net worth of the credit union;
   9. Stocks, shares, membership units, or other ownership interests in corporations, limited liability companies, or mutual associations, in an aggregate amount not to exceed one percent (1%) of assets, and loans to such organizations in an aggregate amount not to exceed one percent (1%) of assets if:
      1. The ownership of such organizations or membership of such mutual associations, as applicable, is primarily confined to credit unions or organizations of credit unions; and
      2. The purposes for which the corporation, limited liability company, or mutual association is formed are primarily to service credit unions or their members or otherwise to assist credit union operations.
3. The director may authorize credit unions to purchase investments not listed above by rule or upon written application.
4. If a credit union has lawfully made an investment that later becomes impermissible because of a change in circumstances or law, and the director finds that this investment will have an adverse effect on the safety and soundness of the credit union, then the director may require that the credit union develop a reasonable plan for the divestiture of the investment.
5. A credit union other than a corporate credit union shall not invest an amount that exceeds twenty-five percent (25%) of its net worth in an obligor or affiliate of the obligor. This subsection does not apply to the extent that the investment is insured or guaranteed by the United States government or an agency of the United States government or a state or local government or that the investment is in a corporate credit union.
6. A credit union shall maintain files containing credit and other information adequate to demonstrate evidence of prudent business judgment in exercising the investment powers granted under this act or by rule, order, or declaratory ruling of the director.

History.

I.C.,§ 26-2127, as added by 2020, ch. 230, § 11, p. 671.

§ 26-2128. Liquidity requirements.

1. Every credit union shall have on hand as a liquidity reserve an amount equal to four percent (4%) of its outstanding shares, certificates of deposit, and certificates of indebtedness. Share or deposit accounts from which a member may withdraw funds by the use of a negotiable instrument shall be subject to the liquidity reserve requirements of subsection (b) of this section and not to the liquidity reserve requirements of this subsection. Said liquidity reserves, except as hereinafter otherwise provided, shall be kept in cash on hand or on deposit subject to check or draft, with any bank or banks or corporate credit union located in the state of Idaho, which shall have been approved by the director as liquidity reserve depositories and shall be computed monthly as follows: on the basis of average daily bank deposits and average daily cash on hand.
2. Every credit union which provides for its member’s share or deposit accounts from which the member may withdraw funds by the use of negotiable instrument shall have on hand as a liquidity reserve in addition to the liquidity reserve required by subsection (a) of this section an amount equal to ten percent (10%) of its share and deposit accounts which are subject to withdrawal by the use of negotiable instrument. Said liquidity reserves shall be kept in cash on hand or on deposit subject to check or draft, with any bank or banks or corporate credit union located in the state of Idaho which shall have been approved by the director as liquidity reserve depositories and shall be computed monthly as follows: on the basis of average daily bank or corporate credit union deposits, and average daily cash on hand.
3. Certificates of deposit issued by the Idaho Corporate Credit Union may be included in meeting the requirements of this section. To the extent a credit union is required to maintain reserves pursuant to the monetary control act of 1980 and the implementing regulations of the board of governors of the federal reserve system, as the same is presently enacted and as it may be amended in the future, the reserves required to be so maintained shall be considered as a part of, and not in addition to, the liquidity reserves required by this section.

History.

I.C.,§ 26-2128, as added by 1977, ch. 213, § 2, p. 582; am. 1979, ch. 230, § 1, p. 629; am. 1981, ch. 260, § 1, p. 550; am. 1991, ch. 236, § 3, p. 566.

§ 26-2129. Reserve requirements.

1. At the end of each accounting period the gross income shall be determined. From this amount there shall be set aside, as a regular reserve against losses on loans and against such other losses as may be specified in rules prescribed under this chapter, sums in accordance with the following:
   1. A credit union in operation for more than four (4) years and having assets of five hundred thousand dollars ($500,000) or more shall set aside: (i) ten per cent (10%) of gross income until the regular reserve plus the allowance for loan loss account shall equal four per cent (4%) of the total of outstanding loans and risk assets, then (ii) five per cent (5%) of gross income until the regular reserve plus the allowance for loan loss account shall equal six per cent (6%) of the total of outstanding loans and risk assets.
   2. A credit union in operation less than four (4) years or having assets of less than five hundred thousand dollars ($500,000) shall set aside: (i) ten per cent (10%) of gross income until the regular reserve plus the allowance for loan loss account shall equal seven and one-half per cent (7.5%) of the total of outstanding loans and risk assets, then (ii) five per cent (5%) of gross income until the regular reserve plus the allowance for loan loss account shall equal ten per cent (10%) of the total of outstanding loans and risk assets.
   3. Risk assets do not include loans fully secured by member savings and loans guaranteed by an agency of the state or federal government, to the extent of such guarantee.
   4. Whenever the regular reserve plus the allowance for loan loss account falls below the stated per cent of the total outstanding loans and risk assets, it shall be replenished by regular contributions in such amounts as may be needed to maintain the stated reserve goals.
2. The director, in his discretion, may decrease the reserve requirements set forth in subsection (a) of this section when in his opinion such a decrease is necessary or desirable. The director may also require special reserves to protect the interests of members either by rule if it is to be generally applied, or by order for an individual credit union in a particular case.

History.

I.C.,§ 26-2129, as added by 1991, ch. 236, § 5, p. 566.

§ 26-2130. Dividends.

1. After allocation to required reserves, the board of directors may, at the end of any dividend period duly established, declare a dividend to be paid on shares or share certificates from undivided earnings as the bylaws may provide. Dividends may be paid at various rates, or not paid at all, with due regard to the conditions that pertain to each class of share.
2. Subject to the approval of the board of directors, accounts closed between dividend periods may be credited with dividends at the rate set by the board of directors.
3. Extraordinary dividends must be calculated on a rational means determined by the board of directors. For purposes of this section, “extraordinary dividends” means all irregularly scheduled and declared dividends.

History.

I.C.,§ 26-2130, as added by 2020, ch. 230, § 13, p. 671.

§ 26-2131. Share reduction.

Whenever the losses of any credit union, resulting from a depreciating in value of its loans or investments or otherwise, exceed its undivided earnings and reserve fund so that the estimated value of its assets is less than the total amount due the shareholders, the credit union may, by a majority vote of the entire membership, order a reduction in the shares of each of its shareholders to divide the loss proportionately among the members. If thereafter the credit union shall realize from such assets a greater amount than was fixed by the order of reduction, such excess shall be divided among the shareholders whose assets were reduced, but only to the extent of such reduction.

History.

I.C.,§ 26-2131, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2132. Merger.

Any credit union may, with the approval of the director, merge with another credit union under the existing charter of such other credit union. The director shall not approve a merger if the effect of the merger would be to provide a broader common bond than allowable under section 26-2110, Idaho Code. The merger may be based upon any plan agreed to by the majority of the board of directors of each credit union joining in the merger, and approved by the affirmative vote of the majority of the members of each such credit union at meetings of the members called for such purpose. Any member not present at the meeting may, within the next twenty (20) days, vote by signing a statement on a form prescribed by the board of directors and such vote shall have as full force and effect as if cast at the meeting. If any such member does not vote within the twenty (20) day period, he shall be deemed to be in favor of the merger. After such agreement by the directors and approval by the members of each credit union, the president and secretary of each credit union shall execute a certificate of merger which shall set forth at least all of the following:

1. The time and place of the meeting of the board of directors at which the plan was agreed upon.
2. The vote in favor of adoption of the plan.
3. A copy of the resolution or other action by which the plan was agreed upon.
4. The time and place of the meeting of the members at which the plan agreed upon was approved.
5. The vote by which the plan was approved by the members.

Such certificates and a copy of the plan of the merger shall be forwarded to the director and if approved, a copy of the certificate shall be filed with the county clerk of the county in which each credit union participating in the merger has its principal place of business, and then filed with the director, whereupon the charter of the merged credit union as a legal entity separate from the surviving credit union shall terminate.

Upon any such merger so affected, all property, property rights, and interests of the merged credit union, shall vest in the surviving credit union without deed, endorsement or other instrument of transfer, and all debts, obligations and liabilities of the merged credit union shall be deemed to have been assumed by the surviving credit union whose charter the merger has affected.

This section shall be construed, when possible, to permit a credit union chartered under the Federal Credit Union Act to merge with one chartered under this chapter, or to permit one chartered under this chapter to merge with one chartered under the Federal Credit Union Act.

History.

I.C.,§ 26-2132, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2133. Reports — Financial and statistical data.

Each credit union shall timely file with the director any financial and statistical report or other information that a federally insured state-chartered credit union is required to file with the national credit union administration. Each report must be certified by the principal operating officer of the credit union. In addition, a credit union shall file reports as may be required by the director.

History.

I.C.,§ 26-2133, as added by 2020, ch. 230, § 15, p. 671.

§ 26-2134. Application fees.

For the purpose of paying the costs incident to the ascertainment of whether articles of incorporation should be issued, the subscribers to any such articles of incorporation shall pay, at the time of filing their articles of incorporation with the director, a fee as fixed by the director, but not to exceed twenty-five dollars ($25.00), for the purpose of paying costs incident to the investigation of the application. All such fees shall be deposited with the state treasurer for the credit in the finance administrative account in the state dedicated fund.

History.

I.C.,§ 26-2134, as added by 1977, ch. 213, § 2, p. 582; am. 1984, ch. 47, § 4, p. 76.

§ 26-2135. Books and records.

The books and records of a credit union shall be kept in accordance with generally accepted accounting principles and by procedures approved by the director. Every credit union shall keep correct and complete books of accounts, minutes of meetings of members and directors and shall make such books and records and accounts available for examination. The books of account and records shall not be removed from the principal place of business without the consent of the director.

If a credit union utilizes the data processing services of another company the providing of such services by the other corporation shall be subject to the approval of the director and the director shall have the power to require the servicing company to provide such information as the director requires in a form required by the director. Any company providing data processing services for credit unions must agree to provide the director with information for purposes of examination which the director may by rule or regulation require in a form required by the director.

History.

I.C.,§ 26-2135, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2136. Fees.

1. On or before February 15 of each calendar year, the director shall fix and collect from each credit union an assessment fee based upon the total assets of the credit union as of December 31 of the previous calendar year, which fees shall not exceed the amounts set forth in the following schedule:
2. All fees, fines, examination and miscellaneous charges collected by the director pursuant to the Idaho credit union act shall be deposited into the finance administrative account pursuant to section 67-2702, Idaho Code.

$50,000 or less ...............................

$50.00 + $1.00 per thousand dollars of assets

Over $50,000 and not over

$100,000 ...............................

$100.00 + $.99 per thousand dollars of assets in excess of $50,000

Over $100,000 and not over

$250,000 ...............................

$149.00 + $.94 per thousand dollars of assets in excess of $100,000

Over $250,000 and not over

$1 million ...............................

$291.00 + $.89 per thousand dollars of assets in excess of $250,000

Over $1 million and not over

$2 million ...............................

$958.00 + $.80 per thousand dollars of assets in excess of $1 million

Over $2 million and not over

$5 million ...............................

$1,758.00 + $.61 per thousand dollars of assets in excess of $2 million

Over $5 million and not over

$8 million ...............................

$3,588.00 + $.48 per thousand dollars of assets in excess of $5 million

Over $8 million ...............................

$5,028.00 + $.35 per thousand dollars of assets in excess of $8 million

History.

I.C.,§ 26-2136, as added by 1977, ch. 213, § 2, p. 582; am. 1980, ch. 168, § 1, p. 360; am. 1984, ch. 47, § 5, p. 76; am. 1999, ch. 202, § 1, p. 545; am. 2020, ch. 214, § 1, p. 625.

§ 26-2136A. Examinations and investigations reports — Access to records — Oaths — Subpoenas.

1. The director shall examine each credit union at least once every eighteen (18) months, unless the director determines with respect to a credit union that a less frequent examination schedule will satisfactorily protect the financial stability of the credit union and will satisfactorily assure compliance with the provisions of this chapter. The director shall examine a credit union more frequently whenever the director shall deem it necessary.
2. A report of examination conducted pursuant to subsection (1) of this section shall be forwarded to the chairman of the board of directors and the president or chief executive officer after the completion of the examination. The report shall be considered at the first meeting of the board of directors following its receipt. A reply to the director of finance shall be forwarded by the board of directors within fifteen (15) days of the meeting.
3. Each credit union, including out-of-state and foreign credit unions permitted to operate in Idaho, and all of its officers and agents shall be required to give to representatives of the department of finance full access to review all books, papers, files, records, and other sources of information under their control, and retain copies of the same, and full access to personnel.
4. Upon examination or investigation of a credit union, the director:
   1. May appraise and revalue the credit union’s investments; and
   2. May require the credit union to charge off or set up a special reserve for loans and investments and other assets.
5. The director may make an examination and investigation into the affairs of:
   1. An out-of-state or foreign credit union permitted to operate in Idaho;
   2. A nonpublicly held organization, or its subsidiary, in which a credit union has a material investment;
   3. A publicly held organization in which the capital stock or equity is controlled by a credit union;
   4. A credit union service organization, or any subsidiary of a credit union service organization, in which a credit union has an interest;
   5. An organization that is not a credit union, out-of-state credit union, federal credit union, or foreign credit union and that has a majority interest in a credit union service organization in which a credit union has an interest;
   6. A sole proprietorship or organization primarily in the business of managing one (1) or more credit unions;
   7. A person or business providing any of the following services to a credit union or to a credit union service organization:
      1. Data processing services;
      2. Activities that support financial services, including but not limited to lending funds transfer, fiduciary activities, trading activities, and deposit-taking; and
      3. Internet-related services, including but not limited to web services and electronic bill payments, mobile applications, system and software development and maintenance, and security monitoring; or (h) A corporation or other business entity that provides alternative share insurance in accordance with section 26-2153, Idaho Code.
6. In connection with examinations and investigations, the director may:
   1. Administer oaths and examine under oath any person concerning the affairs of any credit union or of any person described in subsection (5) of this section; and
   2. Issue subpoenas to and require the attendance and testimony of any person at any place within this state and require witnesses to produce books, papers, files, records, and other sources of information.
7. The director may accept in lieu of an examination under this section:
   1. The report of an examiner authorized to examine a credit union or an out-of-state, federal, or foreign credit union or other financial institution; or
   2. The report of an accountant, satisfactory to the director, who has made and submitted a report of the condition of the affairs of a credit union or an out-of-state, federal, or foreign credit union or other financial institution. The director may accept all or part of such a report in lieu of all or part of an examination. The accepted report or accepted part of the report has the same force and effect as an examination under this section.

The director shall have full access to all books, papers, files, records, personnel, and other sources of information under the control of persons described in this subsection.

History.

I.C.,§ 26-2136A, as added by 2020, ch. 214, § 2, p. 625.

§ 26-2136B. Examination reports and specified other information confidential — Exceptions — Penalty.

1. The following shall be confidential and privileged and not subject to public disclosure under chapter 1, title 74, Idaho Code, and shall be subject to the provisions of section 26-1111, Idaho Code:
   1. Examination reports and information obtained by the department of finance in conducting examinations and investigations under this chapter;
   2. All written communications between the department of finance and any credit union that relate in any manner to the examination or condition of the credit union;
   3. Examination reports and related information from other financial institution regulators obtained by the department of finance;
   4. Reports or parts of reports accepted in lieu of an examination under section 26-2136A, Idaho Code; and
   5. Business plans and other proprietary information obtained by the department of finance in connection with a credit union’s application or notice to the department.
2. 1. The director, any federal or other financial institution regulatory or supervisory agency, a private insurer authorized pursuant to section 26-2153, Idaho Code, and any credit union incorporated or chartered under title 26, Idaho Code, or under federal law or the law of any state and doing business in the state of Idaho shall each have a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications, and the contents of any documents relating to any confidential communications, between the credit union and the department of finance or federal financial institution regulatory or supervisory agency or private insurer made during the regulatory relationship. (2)(a) The director, any federal or other financial institution regulatory or supervisory agency, a private insurer authorized pursuant to section 26-2153, Idaho Code, and any credit union incorporated or chartered under title 26, Idaho Code, or under federal law or the law of any state and doing business in the state of Idaho shall each have a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications, and the contents of any documents relating to any confidential communications, between the credit union and the department of finance or federal financial institution regulatory or supervisory agency or private insurer made during the regulatory relationship.
   2. A communication is confidential if it is made during the regulatory relationship between the department of finance or the federal financial institution regulatory or supervisory agency or private insurer and any such credit union, and if the communication is not designed or intended for disclosure to any other parties.
   3. The privilege may be claimed by the credit union or by the department of finance or the federal financial institution regulatory or supervisory agency, or by the lawyer for either. The privilege may be waived only in accordance with this section and section 26-1111, Idaho Code.
   4. The director or the appropriate officer or employee of the federal financial institution regulatory or supervisory agency or private insurer may disclose confidential communications between the department of finance or agency or private insurer and credit union to the court, in camera, in a civil action. Such disclosure shall also be a privileged communication and the privilege may be claimed by the director, officer, or employee, or his lawyer.
   5. No sanction may be imposed upon any credit union as a result of the claim of a privilege by the credit union or the director or the officer or employee of the federal supervisory agency under this section.
3. Notwithstanding subsection (1) of this section, the director may furnish examination reports, work papers, final orders, or other information obtained in the conduct of an examination or investigation prepared by the director to:
   1. Federal agencies empowered to examine credit unions or other financial institutions;
   2. Officials empowered to investigate criminal charges. The director may furnish only that part of the report that is necessary and pertinent to the investigation, and only after notifying the affected credit union and members of the credit union who are named in that part of the examination report, or other person examined, that the report is being furnished to the officials, unless the officials requesting the report obtain a waiver of the notice requirement for good cause from a court of competent jurisdiction;
   3. The examined credit union or other person examined, solely for its confidential use or for the confidential use of the credit union’s attorney, auditor, accountant, independent attorney, independent auditor, or independent accountant;
   4. The attorney general in his role as legal advisor to the director;
   5. Prospective merger partners or conservators, receivers, or liquidating agents of a troubled credit union;
   6. Credit union regulators in other states or foreign jurisdictions regarding an out-of-state or foreign credit union conducting business in this state under this chapter, or regarding a credit union conducting business in the other state or jurisdiction;
   7. A person officially connected with the credit union or other person examined, as officer, director, supervisory committee member, attorney, auditor, accountant, independent attorney, independent auditor, or independent accountant;
   8. Organizations that have bonded the credit union to the extent that information is relevant to the renewal of the bond coverage or to a claim under the bond coverage;
   9. Organizations insuring or guaranteeing the shares of, or deposits in, the credit union;
   10. The federal home loan bank of which the credit union is a member or to which the credit union has applied for membership; or
   11. Other persons as the director may determine necessary to protect the public interest and confidence.
4. Examination reports, work papers, temporary and final orders, consent orders, other information obtained in the conduct of an examination or investigation furnished under subsection (3) of this section, and all written communication between the department of finance and any credit union that relate in any manner to the condition of the credit union remain the property of the director and, if acquired by any person, shall be returned to the department of finance upon written demand. No person to whom reports are furnished or any officer, director, or employee thereof may disclose or make public the reports or information contained in the reports except in published statistical information that does not disclose the affairs of a person, except that nothing prevents the use in a criminal prosecution of reports furnished under subsection (3)(b) of this section.
5. In a civil action in which the reports or information are sought to be discovered or used as evidence, they may be disclosed only in accordance with subsection (2) of this section and section 26-1111, Idaho Code. After in-camera review of the reports or information in accordance with subsection (2) of this section and section 26-1111(3)(d), Idaho Code, the court may permit discovery and introduction of only those portions of the report or information that are relevant and otherwise unobtainable by the requesting party. To the extent the court permits discovery and introduction of relevant portions of the report or information, the court shall attach any limitations and restrictions necessary to ensure that the portions of the report or information discovered and introduced shall not be disclosed to the public. This subsection does not apply to an action brought or defended by the director.
6. Any person who knowingly violates a provision of this section shall be guilty of a misdemeanor.

History. I.C.,§ 26-2136B, as added by 2020, ch. 214, § 3, p. 625.

§ 26-2136C. Disclosure of confidential information by the department — Penalty.

1. The department of finance, its director, employees, and former employees shall not disclose to any person or agency any fact or information obtained in the course of business of the department under this chapter, except in the course of their official duties for the department and in the following cases:
   1. When, by the provisions of this chapter or chapter 1, title 74, Idaho Code, it is made the duty of the department to make public records and publish the same;
   2. When the department is required by law to take special action regarding the affairs of any credit union;
   3. When called as a witness in any criminal proceeding in a court of competent jurisdiction, provided that the court must review such information in chambers to determine the necessity of disclosing such information, and subject to the privilege provided by sections 26-1111(3) and 26-2136B, Idaho Code;
   4. When, in the case of a problem credit union, it is necessary or advisable, in the discretion of the director, for the good of the public or of the depositors; or
   5. When, in the discretion of the department, it is advisable to disclose any such information to a state or federal credit union supervisory agency.
2. Any person who violates the provisions of this section shall be guilty of a felony, and conviction shall subject the offender to a forfeiture of his office or employment.

History.

I.C.,§ 26-2136C, as added by 2020, ch. 214, § 4, p. 625.

§ 26-2137. False reports.

Any person, firm, corporation, or association which maliciously and knowingly spreads false reports about the management or finances of any credit union shall be guilty of a misdemeanor.

History.

I.C.,§ 26-2137, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2138. Taxation.

A credit union shall be deemed an institution for savings and, together with all the accumulations therein, shall not be subject to taxation except as to real estate owned. The shares of a credit union shall not be subject to a stock transfer tax when issued by the corporation or when transferred from one (1) member to another.

History.

I.C.,§ 26-2138, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2139. Conversion.

A state chartered credit union may be converted into a federal credit union by complying with the following requirements:

1. The proposition for such conversion shall first be approved and a date set for a vote thereof by the members, either at a meeting to be held on such date or by a written ballot to be filed on or before such date, by a majority of the board of directors of the state chartered credit union. Written notice of the proposition and of the date set for the vote shall be delivered in person to each member, or mailed to each member at the address for such member appearing on the records of the credit union not more than twenty (20) nor less than five (5) days prior to such date. Approval of the proposition for conversion shall require the majority of those votes cast in person or in writing.
2. A statement of results of the vote verified by the affidavits of the president or vice president and the secretary shall be filed with the director within ten (10) days after the vote is taken.
3. Promptly after the vote is taken and in no event later than ninety (90) days thereafter if the proposition for conversion is approved by such vote, the credit union shall take such action as may be necessary under the federal law to make it a federal credit union, and within ten (10) days after the receipt of the federal charter, notice shall be filed with the director that the charter has been issued.
4. Upon ceasing to be a state chartered credit union, such credit union shall no longer be subject to any of the provisions of this chapter.

A federally chartered credit union organized under the Federal Credit Union Act may be converted to a state chartered credit union by the following procedure: complying with all state requirements requisite to enabling it to meet proof of solvency and organization as required by this chapter.

When the director has been satisfied that all requirements of this chapter have been complied with, he shall approve the organizational certificate as a state chartered credit union as required by this chapter.

History.

I.C.,§ 26-2139, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2140. Cease and desist order — Penalty.

1. If the director finds that any credit union has engaged in an unsafe or unsound practice in conducting the business of such credit union, or any person has violated any provision of this chapter, any rule or order issued under this chapter, any condition imposed in writing by the director, or any written agreement entered into with the director, the director may order the credit union or other person to cease and desist from any such violation or practice. Such order shall be issued pursuant to chapter 52, title 67, Idaho Code.
2. After providing a notice and an opportunity for a public hearing pursuant to chapter 52, title 67, Idaho Code, the director may assess against and collect a civil money penalty from any credit union or from any director, officer, supervisory committee member, employee, agent, or other person participating in the conduct of the affairs of such credit union who:
   1. Engages or participates in any unsafe or unsound practice in connection with a credit union; or
   2. Violates or knowingly permits any person to violate any of the provisions of this chapter, any rule promulgated pursuant to this chapter, or any lawful order of the director issued pursuant to this chapter.
3. A civil money penalty assessed pursuant to subsection (2) of this section shall not exceed one thousand dollars ($1,000) per day for each day such violation continues. No civil money penalty shall be assessed for the same act or practice if another government agency has taken similar action against the credit union or person to be assessed such civil money penalty. In determining the amount of the civil money penalty to be assessed, the director of the department of finance shall consider:
   1. The good faith of the credit union or person to be assessed with such civil money penalty;
   2. The gravity of the violation;
   3. Any previous violations by the credit union or person to be assessed with such civil money penalty;
   4. The nature and extent of any previous violations; and
   5. Such other matters as the director may deem appropriate.
4. Upon waiver by the respondent of the right to a public hearing concerning an assessment of a civil money penalty, the hearing or portions thereof may be closed to the public when concerns arise about prompt withdrawal of moneys from or the safety and soundness of the credit union.
5. For the purposes of this section, a violation shall include but is not limited to any action by any person alone or with another person that causes, brings about, or results in the participation in, counseling of, or aiding or abetting of a violation.
6. The director may modify or set aside any order assessing a civil money penalty.

History.

I.C.,§ 26-2140, as added by 1977, ch. 213, § 2, p. 582; am. 2020, ch. 214, § 5, p. 625.

§ 26-2140A. Conservatorship.

1. The director may, in his discretion and without notice, appoint himself or an agent as conservator and immediately take possession and control of the business and assets of any credit union in any case in which:
   1. The director determines that such action is necessary to conserve the assets of any credit union or to protect the interests of the members of such credit union;
   2. The credit union, by a resolution of its board of directors, consents to such an action by the director;
   3. There is a violation of a cease and desist order, or any law, rule, regulation or any written agreement entered into with the director; or
   4. There is concealment of books, papers, records, or assets of the credit union or refusal to submit books, papers, records, or affairs of the credit union for inspection to any examiner or to any lawful agent of the director.
2. Not later than thirty (30) calendar days after the date on which the director takes possession and control of the business and assets of a credit union, such credit union may apply to the district court for the judicial district in which the credit union is located for an order requiring the director to show cause why he should not be enjoined from continuing such possession and control. Except as provided in this subsection, no court may take any action, except at the request of the director, to restrain or affect the exercise of powers or functions of the director as conservator.
3. The director may maintain possession and control of the business and assets of such credit union and may operate such credit union until such time as:
   1. The director shall permit such credit union to continue business subject to such terms and conditions as may be imposed by the director;
   2. Such credit union is placed in receivership in accordance with the provisions of section 26-2141, Idaho Code; or
   3. Otherwise ordered by the district court of the judicial district in which the credit union is located.
4. The director may appoint such agents as he considers necessary in order to carry out his duties as conservator.
5. All expenses of the credit union during the period of the conservatorship shall be paid by the credit union.
6. The conservator shall have all the powers of the members, the directors, the officers, and the committees of the credit union and shall be authorized to operate the credit union in its own name or to conserve its assets in the manner and to the extent authorized by the director.
7. The authority granted in this section is in addition to all other authority granted to the director under this chapter.

History.

I.C.,§ 26-2140A, as added by 1991, ch. 236, § 6, p. 566; am. 2020, ch. 214, § 6, p. 625.

§ 26-2140B. Suspension or removal of directors, supervisory committee members, officers, or employees — Prohibition of future employment.

1. The director may issue a written order, pursuant to chapter 52, title 67, Idaho Code, suspending or removing a credit union director, supervisory committee member, officer, or employee upon finding that the director, supervisory committee member, officer, or employee has:
   1. Been dishonest or reckless in the performance of his official duties;
   2. Breached his fiduciary duties to the credit union in a manner that is likely to cause substantial loss or seriously weaken the credit union;
   3. Violated any provision of this chapter, any state or federal law or regulation pertaining to the business of the credit union, or any order of the director;
   4. Been convicted of a felony or any misdemeanor involving theft or dishonesty; or
   5. Engaged or participated in any unsafe or unsound practice in the conduct of the affairs of the credit union.
2. In the event a director, supervisory committee member, officer, or employee has been removed from office as set forth in this section, and the order has not been modified, rescinded, or set aside, or if a person has been removed as a director, supervisory committee member, officer, or employee of a credit union by a federal financial institution regulator or a financial institution regulator in another state, the person is prohibited from becoming employed by a credit union supervised by the director in this state, except as specifically permitted by the director.
3. The director, officer, employee, or credit union affected by order of the director may immediately petition the district court in the judicial district of the county in which the credit union has its principal place of business or in Ada county to set aside the order of the director. Upon the filing of such petition, the court shall have the jurisdiction to affirm or set aside in whole or in part and remand to the director.
4. An order issued under this section must contain a statement of the facts that constitute grounds for removal or prohibition and cite relevant state or federal law or regulation.
5. A prevailing party in any proceeding under this section may be awarded attorney’s fees and costs pursuant to section 12-117, Idaho Code.

History.

I.C.,§ 26-2140B, as added by 2020, ch. 214, § 8, p. 625.

§ 26-2141. Appointment of receiver — Conditions — Proceeding — Bond — Reporting schedule — Subrogation of federal agency to rights of deposit owners.

1. If a credit union refuses to pay its shares, deposits, or obligations in accordance with the terms under which the shares were received or the deposits or obligations were incurred, becomes insolvent, or refuses to submit its books, papers, and records for inspection by the director, or if it appears to the director that the credit union is in an unsafe and unsound condition, the director may apply to the district court for Ada county or for the county in which the principal place of business of the credit union is located for appointment of a receiver for the credit union.
2. In a proceeding for the appointment of a receiver, the court may act upon the application immediately and without notice to any person. If at any time it appears to the court that the asserted reasons for receivership may not exist, the court shall order the director to show cause as to why the court should not dissolve the receivership.
3. An insuring federal agency or private share insurer may act as receiver without bond. All other receivers, with the exception of an employee of the Idaho department of finance appointed as receiver in his official capacity, shall post a bond in an amount determined by the court.
4. A receiver shall report to the director regarding all matters involving the receivership on a schedule established by the director.
5. If a credit union is closed and placed in receivership, and the insuring federal agency or private share insurer pays or makes available for payment the insured shares and deposit liabilities of the closed credit union, the federal agency or private share insurer, whether or not it has become receiver of the credit union, is subrogated to all of the rights of the owners of the deposits against the closed credit union in the same manner and to the same extent as subrogation of the federal agency or private share insurer under the laws governing the federal agency or private share insurer.
6. For purposes of this section, “insolvent” means a credit union that meets either of the following:
   1. It is not able to pay its debts and other obligations, including those related to member shares, as they become due; or
   2. Its liabilities exceed its assets.
7. If a federal agency is appointed as receiver of a credit union, the receivership procedures of the federal agency shall govern the receivership.

History.

I.C.,§ 26-2141, as added by 2020, ch. 214, § 10, p. 625.

§ 26-2141A. Receiver — Duties — Powers.

1. A receiver appointed pursuant to section 26-2141, Idaho Code, shall do all of the following:
   1. Take possession of the books, records, and assets of the credit union and collect all debts, dues, and claims belonging to the credit union;
   2. Sue and defend, compromise, and settle all claims involving the credit union;
   3. Sell all real and personal property of the credit union;
   4. Exercise all fiduciary functions of the credit union as of the date of the commencement of the receivership;
   5. Pay all administrative expenses of the receivership. The administrative expenses are a first charge on the assets of the credit union and the receiver shall pay those expenses before any final distribution or payment of dividends to creditors or members;
   6. Except as provided in this subsection, pay ratably the debts of the credit union. The receiver may not pay any debt that does not exceed one thousand dollars ($1,000) in full, but the holder of that debt is not entitled to payment of interest on the debt;
   7. After paying or providing for payment of all the administrative expenses and debts under subsections (e) and (f) of this section, pay ratably to the members of the credit union the balance of the net assets of the credit union in proportion to the number of shares held and owned by each;
   8. Have all the powers of the directors, officers, and members of the credit union necessary to support an action taken on behalf of the credit union; and
   9. Hold title to the credit union’s property, contracts, and rights of action, beginning on the date the credit union is ordered into receivership.
2. A receiver appointed pursuant to section 26-2141, Idaho Code, may do all of the following:
   1. Borrow money as necessary or expedient to aid in the liquidation of the credit union and secure the borrowing by the pledge of a lien, security interest, or mortgage on the assets of the credit union;
   2. Employ agents, legal counsel, accountants, appraisers, consultants, and other personnel the receiver considers necessary to assist in the performance of the receiver’s duties. With the prior approval of the district court, the receiver may employ personnel of the department of finance if the receiver considers the employment to be advantageous or desirable. The expense of employing personnel of the department of finance is an administrative expense of the liquidation that is payable to the department of finance;
   3. If approved by the district court, dispose of records of a credit union that are obsolete and unnecessary to administer the receivership or retain records, as necessary, through the termination of the receivership or for any period following the receivership as the receiver may find necessary or appropriate. In such case, a receiver may preserve assets of a liquidated credit union and deposit them in an account to be used to maintain the records of a liquidated credit union after the closing of the receivership; and
   4. Exercise other powers and duties ordered by the district court under the laws of this state applicable to the appointment of a receiver.

History.

I.C.,§ 26-2141A, as added by 2020, ch. 214, § 11, p. 625.

§ 26-2142. Voluntary and/or involuntary liquidation.

1. A credit union may elect to dissolve voluntarily and wind up its affairs in the following manner: The board shall adopt a resolution recommending that the credit union be dissolved voluntarily and directing that the question of dissolution be submitted to a regular or special meeting of the members. After the adoption of the resolution to voluntarily dissolve, no receipts shall be accepted nor withdrawals permitted from its share or deposit accounts, nor shall any loans be made nor any dividends declared nor paid pending final determination by its membership on the voluntary dissolution. At a meeting specially called to consider the matter, a majority of the entire membership may vote to dissolve the credit union, provided a copy was mailed to the members of the credit union at least ten (10) days prior thereto. Any member not present at such meeting may, within the next twenty (20) days, vote in favor of or may oppose dissolution by signing a statement in form approved by the department of finance and such vote shall have the force and effect as if cast at such meeting. The credit union shall thereupon immediately cease to do business except for the purposes of liquidation, and the president and secretary shall within five (5) days following such meeting notify the department of finance of intention to liquidate and shall include a list of the names of the directors and officers of the credit union together with their addresses.
2. If the department of finance, after issuing notice of suspension and providing opportunity for a hearing, rejects the credit union’s plan to continue operations, the department of finance may issue a notice of involuntary liquidation and appoint a liquidating agent. The credit union may request a stay of execution of such action by appealing to the appropriate court of the jurisdiction in which the credit union is located. Involuntary liquidation may not be ordered prior to following the suspension procedures outlined in this chapter.
3. The credit union shall continue in existence for the purpose of discharging its debts, collecting and distributing its assets, and doing all acts required in order to wind up its business and may sue and be sued for the purpose of enforcing such debts and obligations until its affairs are fully adjusted. The board or, in the case of involuntary dissolution, the liquidating agent shall apply and distribute the assets of the credit union or the proceeds from any disposition of the assets of the credit union in the following sequence:
   1. Secured creditors, up to the value of their collateral;
   2. Costs and expenses of liquidation, including a surety bond that shall be required;
   3. Wages due the employees of the credit union;
   4. Costs and expenses incurred by creditors in successfully opposing the release of the credit union from certain debts as allowed by the department of finance;
   5. Taxes owed to the United States or any other governmental unit;
   6. Debts owed to the United States;
   7. General creditors; secured creditors, to the extent their claims exceed the value of their collateral; and owners of deposit accounts, to the extent such accounts are uninsured; and (h) Members, to the extent of uninsured share accounts and the organization that insured the accounts of the credit union.
4. If the credit union shall not be completely liquidated and its assets discharged within three (3) years after the special meeting of the members, the director may take possession of the books, records, and assets and proceed to complete liquidation. If the director determines after one (1) year from the commencement of liquidation proceedings that the liquidation is not proceeding in a reasonable and expeditious manner under all of the circumstances, he may take possession of the books, records, and assets and appoint a liquidating agent who shall give a bond to complete the liquidation.

As soon as the board or the liquidating agent determines that all assets from which there is a reasonable expectancy of realization have been liquidated and distributed as set forth in this section, the director shall execute a certificate of dissolution. The credit union shall be subject to examination by and reporting to the department of finance to determine that all procedures have been observed as required by this chapter and shall pay such examination fees as are determined by the department of finance in accordance with its schedules.

History.

I.C.,§ 26-2142, as added by 1977, ch. 213, § 2, p. 582; am. 1988, ch. 158, § 2, p. 285; am. 2020, ch. 214, § 12, p. 625.

§ 26-2143. Branch offices.

A credit union may under such regulations as the director may adopt establish branch offices at locations other than its main office if the maintenance of such branch offices shall be reasonably necessary to furnish services to its membership. The credit union must justify that ninety per cent (90%) of the cost of the branch and its operation will be derived from existing and potential membership in the proposed area. No additional branch offices shall be established to serve persons who are not entitled to membership as defined in the common bond provision of the existing field of membership.

Prior written approval of the director shall be necessary for the establishment of branch offices. He shall have the authority to issue notice and hold a hearing to determine if the establishment of the branch office is necessary and in the best interests of the credit union.

The applicant credit union will pay to the department of finance an investigation fee to cover the actual cost of investigation not to exceed five hundred dollars ($500). These funds will be deposited into the finance administrative account pursuant to section 67-2702, Idaho Code.

History.

I.C.,§ 26-2143, as added by 1977, ch. 213, § 2, p. 582; am. 1984, ch. 47, § 6, p. 76.

§ 26-2144. Administration, rules and regulations.

The administration of the provisions of this chapter shall be under the general supervision and control of the director. The director may from time to time make, amend and rescind such rules, regulations and forms necessary to carry out the provisions of this chapter. No rule, regulation or form may be made unless the director finds that the action is necessary or appropriate for the public interest or for the protection of the credit union’s welfare consistent with the purposes of this chapter.

History.

I.C.,§ 26-2144, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2145. Authority to exercise federal powers.

1. Notwithstanding any other provision of law, but subject to the limitations provided for in this section, a credit union may engage in any activity in which it could engage, exercise any power it could exercise, or make any loan or investment which it could make if it were operating as a federal credit union, or a credit union chartered by another state.
2. Before engaging in any activity or exercising any power afforded under this section, a credit union shall first notify the director of its intent to do so. This notice shall be sent to the director by U.S. mail, postage prepaid, certified or registered, with return receipt requested. Should the director take no action on the request within twenty (20) days of delivery to the director, the right to engage in the action or power so requested shall be deemed granted.
3. Should the director deny the request, the affected credit union shall have the right to request a hearing before the director, which hearing shall be held within thirty (30) days of the date of the denial.
4. The director shall have the discretion to deny any request which is inconsistent with the purposes of this chapter.
5. No such approval shall operate to deny the director of any of his authority under this chapter and such permitted activity shall be subject to regulation by the director.

History.

I.C.,§ 26-2145, as added by 1984, ch. 95, § 2, p. 220; am. 1997, ch. 111, § 3, p. 269.

§ 26-2146. Investment in service corporation.

No limitation or prohibition otherwise imposed by any provision of the laws of the state of Idaho exclusively relating to credit unions shall prevent or prohibit any two (2) credit unions from investing not more than ten percent (10%) of the paid-in shares and deposits of members of each of them in a credit union service corporation.

History.

I.C.,§ 26-2146, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2147. Credit unions jointly holding stock — Effect of withdrawal by one credit union.

If stock in a credit union service corporation has been held by two (2) credit unions, and one (1) of such credit unions ceases to utilize the services of the corporation and ceases to hold stock in it, and leaves the other as the sole stockholding credit union, the corporation may nevertheless continue to function as such and the other credit union may continue to hold stock in it.

History.

I.C.,§ 26-2147, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2148. Duty of credit union service corporation not to discriminate — Burden of proof.

Whenever a credit union, referred to in this section as any “applying credit union” subject to examination by either the department of finance of the state of Idaho, or a federal supervisory agency, applies for a type of credit union services for itself from a credit union service corporation which supplies the same type of credit union services to another credit union, and the applying credit union is competitive with any credit union, referred to in this section as a “stockholding credit union” which holds stock in such corporation, the corporation must offer to supply such services by either:

1. Issuing stock to the applying credit union and furnishing credit union services to it on the same basis as to the other credit unions holding stock in the corporation, or
2. Furnishing credit union services to the applying credit union at rates no higher than necessary to fairly reflect the cost of such services, including the reasonable cost of the capital provided to the corporation by its stockholders, at the corporation’s option, unless comparable services at competitive overall cost are available to the applying credit union from another source, or unless the furnishing of the services sought by the applying credit union would be beyond the practical capacity of the corporation. In any action or proceeding to enforce the duty imposed by this section, or for damages for the breach thereof, the burden shall be upon the credit union service corporation to show such availability.

History.

I.C.,§ 26-2148, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2149. Prohibited activities.

No credit union service corporation may engage in any revenue producing activity other than the performance of credit union services for credit unions and, to an extent not exceeding one half (½) of its total activity, the performance of similar services for persons or organizations other than credit unions.

History.

I.C.,§ 26-2149, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2150. Customer-credit union communication terminal.

A credit union may make available for use by its customers one (1) or more electronic devices or machines through which the customer may communicate to the credit union a request to withdraw money either from his account or from a previously authorized line of credit, or an instruction to receive or transfer funds for the customer’s benefit. The device may receive or dispense cash in accordance with such a request or instruction, subject to verification on line or off line by the credit union. Any transactions initiated through such a device shall be subject to verification by the credit union either by direct wire transmission or otherwise. Such facilities may be unmanned or manned.

A person may perform as would a device so long as the person does not perform any functions not specifically authorized by this section.

These devices shall be designated as a customer-credit union communication terminal (CCUCT). A CCUCT at locations other than the main office or a branch office of the credit union does not constitute a branch. A credit union shall provide insurance protection under its bonding program for transactions involving such devices.

1. The establishment and use of CCUCT is subject to the following limitations:
   1. Written notice must be given to the director’s office no less than thirty (30) days before any CCUCT is put into operation. Any credit union presently utilizing a CCUCT shall comply with the notice requirements within thirty (30) days. Such notice shall describe with regard to the communication system:
   2. The functions of the CCUCT shall be limited to:
   3. Arrangements may be made at the CCUCT for the placing or installation of a receptacle in which a customer may place packaged communication intended for the credit union.
   4. The CCUCT shall be a communication service available only to customers of the credit union or other financial institutions which the board of directors of the credit union may approve.
   5. The CCUCT shall not be advertised as a full service branch or as performing anything other than activities set out in subsection (a) (2) of this section.
2. To the extent consistent with the anti-trust laws, credit unions are required to share unmanned CUCCTs [CCUCTs] at a reasonable fee with one (1) or more other financial institutions if requested by the other financial institution.
   1. the location;
   2. a general description of the area where located and the manner of installation;
   3. the manner of operation;
   4. the kinds of functions which will be performed;
   5. whether the CCUCT will be shared, and, if so, under what terms and with what other institutions and their location;
   6. the manufacturer and, if owned, the purchase price or, if leased, a copy of the lease;
   7. the distance from the nearest credit union office and from the nearest similar CCUCT of the reporting credit union; and
   8. the distance from the nearest office and nearest CCUCT of another credit union, which will share the facility, and the name of such other credit union or credit unions.
3. The director may issue a cease and desist order upon a finding that a credit union utilizing a CCUCT is doing so in a manner not specifically authorized by this section.
4. This section shall be deemed to apply to federal credit unions operating customer-credit union communication terminals and for the purpose of this section a financial institution shall mean any state or federally chartered commercial bank, savings and loan association or credit union authorized by the department of finance or a comparable federal agency to do business in the state of Idaho.

History.

I.C.,§ 26-2150, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2151. Custodial accounts.

A credit union is authorized to act as custodian or fiduciary for members of the credit union and may receive reasonable compensation for so acting under any written trust instrument or custodial agreement in connection with a tax-advantaged savings plan authorized under the Internal Revenue Code or chapter 30, title 63, Idaho Code, if the funds of such trust or funds subject to the custodial agreement are invested only in savings accounts or deposits in such credit union. All funds held in such fiduciary capacity by any such credit union may be commingled for appropriate purposes of investment, but individual records shall be kept by the fiduciary for each participant and shall show in proper detail all transactions engaged in under the authority of this section.

History.

I.C.,§ 26-2151, as added by 1977, ch. 213, § 2, p. 582; am. 2020, ch. 214, § 13, p. 625.

§ 26-2152. Interstate credit unions — Approval — Permit — Fees — Supervision.

1. Provided that the membership limits as defined in section 26-2110, Idaho Code, are maintained:
   1. A credit union chartered under this chapter may operate in another state unless prohibited by the law of the other state. Idaho is the home state for any credit union chartered under this chapter.
   2. A credit union chartered under the laws of another state may operate in Idaho with the approval of the director on the terms and conditions provided in subsection (2) of this section. Idaho is the host state for any credit union chartered under the laws of any other state. The state which charters the credit union is the home state of the credit union.
2. The director may issue a permit to a credit union chartered in another state to operate in this state in a manner consistent with the Idaho credit union act, provided that the credit union applies for such permit on a form approved by the director and has approval from the regulator of credit unions in its home state to operate in Idaho. A credit union for which Idaho is a host state shall acknowledge that Idaho laws relating to consumer protection apply to transactions with residents in Idaho. The credit union for which Idaho is a host state shall maintain its books and records in Idaho or in such other place as the director may agree in writing. The director may, pursuant to chapter 52, title 67, Idaho Code, suspend or revoke the permit of any credit union for which Idaho is the host state for any violation of the Idaho credit union act.
3. The director shall assess fees as provided in section 26-2136, Idaho Code, to be paid by a credit union for which Idaho is the host state on the basis of the assets of the credit union which are derived from its operations in Idaho. The director, in his discretion, may adjust such fees according to the level of participation of the department in the supervision of the credit union.
4. The director may enter into agreements with private share insurers and credit union regulators both with the federal government and in other states, to coordinate and facilitate regulation and supervision of interstate credit unions as permitted by section 26-2610, Idaho Code.

History.

I.C.,§ 26-2152, as added by 1997, ch. 111, § 4, p. 269.

§ 26-2153. Share and deposit insurance.

1. Not later than January 1, 1986, a state chartered credit union shall apply for and obtain insurance on shares and deposits as provided by the national credit union administration under title II of the federal credit union act (12 U.S.C. section 1781 et seq.), or alternatively, a form of comparable insurance approved by the director. This requirement does not apply to a credit union with debt and equity capital consisting primarily of funds from other credit unions.
2. A credit union which has been denied a commitment for such insurance shall within thirty (30) days after the denial, commence steps to either liquidate, or merge with an insured credit union, or apply in writing to the director for additional time to obtain an insurance commitment.
3. No credit union shall be granted a charter by the director unless such credit union has obtained insurance of its member share and deposit accounts.
4. 1. Notwithstanding the above, a credit union whose members, after being fully informed on the subject, vote, by a simple majority of those members present at a meeting called for such purpose, to not obtain share insurance, shall not be required to obtain such insurance as condition precedent to doing business in this state. (4)(a) Notwithstanding the above, a credit union whose members, after being fully informed on the subject, vote, by a simple majority of those members present at a meeting called for such purpose, to not obtain share insurance, shall not be required to obtain such insurance as condition precedent to doing business in this state.
   2. In those credit unions in which the membership has voted to reject the need for share insurance, the rejection shall be placed before the membership for reconsideration at least biannually thereafter.
   3. Should the membership of a credit union, in which the need for share insurance has been rejected, determine, as provided above, that the need for share insurance does exist, the credit union shall, within thirty (30) days following the date of the meeting held for the purpose of voting on the subject, make application for and obtain insurance as provided above.
   4. Those credit unions whose members have voted to remain uninsured shall disclose to their members, on a regular and periodic basis, that their shares and deposits in that credit union are not protected by share insurance and the procedures required by this section.
5. The director may make available reports of condition and examination findings to the national credit union administration or to any qualified insuring organization and may accept any report of examination made on behalf of such agency or organizations. The director may appoint an official of the national credit union administration or of any qualified insuring organization as a liquidating agent of an insured credit union.

The director shall grant one or more extensions of time to obtain the insurance upon satisfactory evidence that the credit union has made or is making a substantial effort to achieve the conditions precedent to issuance of the insurance.

History.

I.C.,§ 26-2153, as added by 1984, ch. 59, § 1, p. 107.

§ 26-2154. Credit unions eligible as depositories.

Notwithstanding any other provision of this chapter, any state credit union or federal credit union located within this state may become a state depository by making application for that purpose to the state treasurer and may accept such funds as nonmember deposits.

History.

I.C.,§ 26-2154, as added by 1986, ch. 74, § 1, p. 220.

§ 26-2155. Designation of depository — Reporting of reserves and undivided earnings.

1. The state treasurer shall designate credit unions qualified under this chapter as a state depository or depositories. Such designation shall be determined by competitive bidding or by other means generally accepted as standard business practice. In no case shall the deposit or deposits of state funds in the account of any public entity in any credit union exceed at any one time, the total of the reserves and undivided earnings of such credit union or the total sum covered by share and deposit insurance provided by either the national credit union share insurance fund or by a deposit guarantee corporation authorized to issue share and deposit insurance contracts in this state, whichever sum shall be less. In the event that any credit union has been designated as a depository under this chapter, such designation shall continue in force until revoked by the treasurer.
2. Every credit union designated as a state depository and holding any deposit of the funds of the state of Idaho under the provisions of this section shall, on or before beginning to hold such deposits, file with the state treasurer the affidavit of one (1) of its officers showing the amount of the reserves and undivided earnings of such credit union. Such affidavits shall be effective for the purposes of this section, to and including January 31 next following the date of their filing but no longer, and, on or before that date, if such credit union is to continue as a designated state depository under this section, a like affidavit shall be filed in like manner for the succeeding year. No such credit union shall receive deposits from nor act as depository for the funds of the state of Idaho unless and until an affidavit as is herein required and which still continues in effect is on file with the state treasurer in accordance with this section.
3. The state treasurer is authorized in his or her discretion and from time to time to negotiate for the payment to designated state depositories of reasonable compensation for services rendered in acting as such depositors. The method and/or rate of such compensation and the terms and conditions thereof shall be fixed by the state treasurer after such negotiation, which may include the calling of bids for specific services. All bids received, whether by a formal bidding process or by negotiation, and the compensation fixed by the treasurer, which shall be in the form of a written agreement, shall be a matter of public record.

History.

I.C.,§ 26-2155, as added by 1986, ch. 74, § 2, p. 220; am. 1988, ch. 158, § 3, p. 285.

§ 26-2156. Bond coverage.

1. Each credit union must be adequately insured against risk. The board of directors of each credit union must at least annually review its bond and other insurance coverage to ensure that it is adequate in relation to the potential risks facing the credit union and the minimum requirements set by the board.
2. Each credit union must purchase a blanket fidelity bond that:
   1. Covers the officers, employees, directors, members of official committees, attorneys and other agents;
   2. Covers against loss caused by fraud and dishonesty; and
   3. Has the following required minimum dollar amount of coverage:
3. The maximum amount of allowable deductible is computed based on the credit union’s asset size and capital level, as follows:
4. The director may require an additional amount of bond coverage for a credit union, taking into account the size of the credit union, the credit union’s field of membership, risk level of the credit union, and any other factors the director finds relevant to the determination of appropriate bond coverage for a credit union.
5. The board of directors should purchase additional or enhanced coverage when circumstances warrant.
6. If a credit union fails to maintain a blanket fidelity bond in the amount prescribed by the director, the director may order the credit union to cease its operations until such time when the credit union obtains the required bond.
7. When a credit union receives notice that its fidelity bond coverage will be suspended or terminated, the credit union shall notify the director in writing no fewer than thirty (30) days prior to the effective date of the suspension or termination. History.

Assets      Minimum Bond

$0 to $4,000,000           Lesser of total assets or $250,000

$4,000,001 to $50,000,000           $100,000 plus $50,000 for each million or fraction thereof over $1,000,000

$50,000,001 to $500,000,000           $2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000, to a maximum of $5,000,000

Over $500,000,000           1% of assets rounded to the nearest hundred million, to a maximum of $9,000,000

Assets      Maximum Deductible

$0 to $100,000      No deductible allowed

$100,001 to $250,000      $1,000

$250,001 to $1,000,000      $2,000

Over $1,000,000           $2,000 plus .001 of total assets, to a maximum of $200,000; for credit unions that received a composite capital, asset, management, earnings, liquidity, and sensitivity (CAMELS) rating of “1” or “2” for the last two (2) full examinations and maintained a net worth classification of “well-capitalized” under national credit union administration (NCUA) regulations part 702 for six (6) immediately preceding quarters or, if subject to a risk-based net worth (RBNW) requirement under NCUA regulations part 702, has remained “well-capitalized” for the six (6) immediately preceding quarters after applying the applicable RBNW requirements, the maximum deductible is $1,000,000

I.C.,§ 26-2156, as added by 2018, ch. 165, § 21, p. 328; am. 2019, ch. 188, § 4, p. 596.

§ 26-2157. Authority of director to call and attend special meeting of the board.

The director may require and attend a special meeting of the board of a credit union if an examination of the credit union results in a composite capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk (CAMELS) rating of “3,” “4,” or “5.” The director’s request for a special board meeting must be made in writing to the chairman and the secretary of the board. On receipt of such a request, the secretary shall designate a time and place for the special board meeting, which shall be held within thirty (30) days after receipt of the request. The director may require the attendance of all of the directors at the special board meeting, and an absence unexcused by the director constitutes a violation of this chapter.

History.

I.C.,§ 26-2157, as added by 2020, ch. 214, § 14, p. 625.

§ 26-2158 — 26-2167. Books and records — Examinations — False reports — Taxation — Conversion — Cease and desist order — Suspension — Liquidation — Branch offices — Administration, rules and regulations. [Repealed.]

§ 26-2168, 26-2169. [Reserved.]

CORPORATE CREDIT UNIONS

§ 26-2170. Definition, purpose and restrictions, Idaho corporate credit union.

1. The Idaho corporate credit union is a cooperative nonprofit corporate entity which can assist credit unions in meeting their investment and borrowing needs, assist credit unions in the sound management of their liquid assets and serve as a financial intermediary for credit unions.
2. Any person, corporation, copartnership or association, except a corporate credit union organized under the provisions of this chapter, or the Federal Credit Union Act, using a name or title containing the words “corporate credit union” or any derivation thereof or representing themselves as a corporate credit union shall be fined not more than one thousand dollars ($1,000), or imprisoned not more than one (1) year or both and may be permanently enjoined from using such words in its name.

History.

I.C.,§ 26-2170, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2171. Organization — Idaho corporate credit union.

Any seven (7) or more credit unions within the state of Idaho, with at least one (1) credit union from each of the seven (7) chapters of the Idaho credit union league, may, through designated delegates appointed by their board of directors, organize the Idaho corporate credit union and become members thereof by:

1. Filing an application furnished by the director;
2. Executing in duplicate, articles of incorporation by the terms of which they agree to be bound, which articles shall state:
   1. The name, which shall include the words “Idaho Corporate Credit Union” and the city in which the proposed credit union is to have its principal place of business;
   2. The term of existence of the credit union, which shall be perpetual;
   3. The par value of shares of the Idaho corporate credit union, which shall be one hundred dollars ($100);
   4. The names and addresses of the respective credit unions who are subscribers to the articles of incorporation and the number of shares subscribed by each; and
3. Adopting bylaws for the general government of the credit union, consistent with provisions of this act and executing the same in duplicate.
4. Forwarding the required charter fee, application, articles of incorporation and the bylaws to the director. If they conform to the statute, as determined by the director, he shall issue a certificate of approval to the articles and return a copy of the bylaws and the articles to the applicants or their representative, which shall be preserved in the permanent files of the credit union.
5. The subscribers for the Idaho corporate credit union shall not transact any business until formal approval of the charter has been received. The director shall cause to be prepared a form of articles of incorporation and a form of bylaws consistent with this act which shall be used by the Idaho corporate credit union incorporators for their guidance.

History.

I.C.,§ 26-2171, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2172. Amendments — Idaho corporate credit union.

The articles of incorporation or the bylaws may be amended as provided in the bylaws and in accordance with section 26-2106, Idaho Code.

History.

I.C.,§ 26-2172, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2173. Corporate powers — Idaho corporate credit union.

The Idaho corporate credit union shall have the general rights and powers of any other credit union organized under the Idaho Credit Union Act and shall have the following additional powers:

1. As authorized by its board of directors or executive committee, to deposit in federally insured state and national banks and deposit with or invest in shares of or loans to United States central credit union to an extent which shall not exceed its shares, and certificates of deposit.
2. Receive investments from members in the form of shares or corporate deposits. Time deposits of surplus funds shall be evidenced by certificates of deposit having a maturity of not less than ninety (90) days. Surplus funds are those funds which are not needed to meet the member’s loan needs or expenses.
3. To pay and return on shares, share certificates and deposits at such rates as are determined by the board of directors, giving due consideration to the amount and time period of the savings or investment commitment.
4. To borrow from any source except individuals provided that the total amount shall not exceed fifty percent (50%) of its members’ shares, daily interest deposits and certificates of deposit. Provided that with prior written approval of the director of finance, the corporate credit union may exceed the fifty percent (50%) limitation.
5. To make loans and to participate with the United States central credit union in making loans to members of the corporate credit union upon the terms and conditions determined by the board of directors.
6. To make deposits in any member credit union in this state and the United States central credit union.
7. To purchase the fixed assets of a member credit union if the board of directors of the corporate credit union determines it in the best interest of the member credit union.
8. To develop and enter into agreement for the purpose of participation in any governmental agency liquidity or interlending system among credit unions and for the purpose of aiding credit unions in establishing concentrated lines of credit with other financial institutions, and to act as a depositor and transmitter of funds for the purpose of carrying out this power.
9. To accept deposits from the United States central credit union in the form of certificates of deposit.

History.

I.C.,§ 26-2173, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2174. Membership in the Idaho corporate credit union.

Membership in the Idaho corporate credit union shall be limited to and consist of the credit union subscribers to the articles of incorporation, credit unions organized under the Idaho credit union act or the federal credit union act, and organizations or associations of credit unions who have paid the membership fee, if any, as provided in the bylaws, have subscribed to and paid for one (1) or more shares as provided in the bylaws and have complied with such other requirements as the articles of incorporation or the bylaws may specify.

History.

I.C.,§ 26-2174, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2175. Expulsion and/or withdrawal from the field of membership of the Idaho corporate credit union.

A member of the Idaho corporate credit union may be expelled by the board of directors, but only after an opportunity has been given to the member to be heard for the purpose of such expulsion. A written notice of this hearing, setting forth the time, place, and date for such meeting shall be forwarded to the member by the board, together with the charges which serve as the basis for the expulsion. The member may be expelled for failure to meet the conditions of its membership, failure to carry out its obligation to the credit union, or refusal to comply with the provisions of the law or bylaws under which the corporate credit union operates or habitual neglect to pay obligations. Upon completion of the hearing, and if the board of directors has voted to expel the member, the member shall remain liable for any sums owed to the Idaho corporate credit union for loans and/or other purposes. The Idaho corporate credit union may require twenty (20) days’ written notice to withdraw shares and/or deposits by the member, as funds become available.

History.

I.C.,§ 26-2175, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2176. Meetings and elections of the Idaho corporate credit union.

Meetings and elections shall be held as indicated in the bylaws. Each member shall have one (1) vote irrespective of shareholdings. No member may vote by proxy, but may vote through a duly authorized delegate appointed by the members of the board of directors or executive committee of each corporate member.

History.

I.C.,§ 26-2176, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2177. Official family — Idaho corporate credit union.

The business affairs of the corporate credit union shall be managed by a board of directors of at least seven (7) directors. One (1) director shall be elected from the designated delegates of each of the seven (7) credit union chapters of the state, as defined by the Idaho credit union league structure. The board of directors may serve as the supervisory committee or may employ an auditor acceptable to the director and may delegate certain loan functions and preapproved lending limits to the manager of the corporate credit union.

History.

I.C.,§ 26-2177, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2178. Officers — Idaho corporate credit union.

Within sixty (60) days following the organizational meeting and at each annual meeting, the directors shall elect from their own number a chairman, one (1) or more vice-chairmen, a treasurer and a secretary, of whom the last two (2) may be the same individual. An assistant treasurer may be appointed by the board of directors. The chairman and secretary shall execute a certificate of election which shall set forth the names and addresses of the officers, directors and members elected or appointed. The certificate of election shall be executed on a form approved by the department of finance and one (1) copy of each shall be filed with the department of finance within ten (10) days after such election or appointment. The terms of the officers shall be for such terms respectively as the bylaws provide, and until their successors are chosen and have been duly qualified.

History.

I.C.,§ 26-2178, as added by 1977, ch. 213, § 2, p. 582; am. 1988, ch. 158, § 4, p. 285.

§ 26-2179. Board of directors — Idaho corporate credit union.

The board of directors of the corporate credit union shall have the same general powers and duties as boards of directors of credit unions organized under the Idaho credit union act and in the corporate credit union bylaws.

History.

I.C.,§ 26-2179, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2180. Loans to member credit unions — Idaho corporate credit union.

The Idaho corporate credit union may loan to members upon such security and for purposes only as provided in its bylaws. Loans shall be evidenced by a written instrument and within limits set by board policy. No loan shall be made unless approved in writing by a majority of the board of directors or manager as delegated by the board of directors.

The board may establish lines of credit to member credit unions based on the financial statements of the member credit union. Where a line of credit has been approved, application for loans need no further consideration as long as the aggregate obligation does not exceed the limits of such line of credit. The board of directors shall at least once a year review all lines of credit and any lines of credit shall expire if the member becomes more than sixty (60) days delinquent in its obligations to the Idaho corporate credit union.

History.

I.C.,§ 26-2180, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2181. Compensation — Corporate officers.

The officers of the corporate credit union shall have the same rights regarding compensation as officers of other credit unions organized under the Idaho credit union act. Nothing in this section is to be interpreted to preclude the corporate credit union officers from receiving an honorarium as established annually by the board of directors for each meeting plus their actual expenses.

History.

I.C.,§ 26-2181, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2182. Shares and deposits.

1. A share is defined as a term applied to each one hundred dollars ($100) standing to the share account of a member. The shares of a credit union shall all be common shares of one (1) class and shall have a par value of one hundred dollars ($100) per share. No certificate shall be issued to denote ownership of a share in the credit union.
2. In the event of default, the Idaho corporate credit union shall have and may exercise a lien on the shares of any member for any sum due the credit union from said member.

History.

I.C.,§ 26-2182, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2183. Reserve allocations — Idaho corporate credit union.

No reserve shall be required for the corporate credit union except a special reserve may be required by the director of finance when an annual examination reflects need for such reserves for potential losses from investments. Loans one (1) month to six (6) months delinquent shall be required to have a reserve equal to ten percent (10%) of the unpaid balance of such loans. Loans over six (6) months delinquent shall be required to have a reserve equal to one hundred percent (100%) of the unpaid balance of such loans. The director may allow distribution of the special reserve if the losses do not materialize.

History.

I.C.,§ 26-2183, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2184. Dividends — Idaho corporate credit union.

1. After allocations to the reserve account if required by the director, the board of directors may at the end of any dividend period duly established, declare a dividend from undivided earnings as the bylaws may provide.
2. Dividends shall be paid on all fully paid shares outstanding at the close of the dividend periods.
3. And provided further that the Idaho corporate credit union may pay interest on daily deposit balances of its members which are in excess of the capital share base requirement for membership.
4. No dividend shall be declared or paid at a time when the corporation is insolvent.

History.

I.C.,§ 26-2184, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2185. Applicable provisions of the Idaho credit union act.

The following provisions of the Idaho credit union act shall apply to the Idaho corporate credit union:

1. Share reduction, section 26-2131, Idaho Code.
2. Reports, section 26-2133, Idaho Code.
3. Books and records, section 26-2135, Idaho Code.
4. Examinations, section 26-2136A, Idaho Code.
5. False reports, section 26-2137, Idaho Code.
6. Cease and desist orders, suspension, and liquidation, section 26-2140, Idaho Code.
7. Administration, rules and regulations, section 26-2144, Idaho Code.
8. Fiscal year, section 26-2112, Idaho Code.
9. Penalties for official misconduct, section 26-2117, Idaho Code.

History.

I. C.,§ 26-2185, as added by 1977, ch. 213, § 2, p. 582; am. 2020, ch. 214, § 15, p. 625.

§ 26-2186. Taxation — Idaho corporate credit union.

The Idaho corporate credit union shall be deemed an institution for savings and, together with all the accumulations therein, shall not be subject to taxation except to real estate owned. The shares of a credit union shall not be subject to a stock transfer tax when issued by the corporation or when transferred from one (1) member to another.

History.

I.C.,§ 26-2186, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2187. Construction against repeal.

This chapter being a general chapter intended as unified coverage of its subject matter, no part of it shall be deemed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

History.

I.C.,§ 26-2187, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2188. Severability.

If any provision of this chapter or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this chapter which can be given effect without the invalid provisions or application, and to this end the provisions of this chapter are severable.

History.

I.C.,§ 26-2188, as added by 1977, ch. 213, § 2, p. 582.

§ 26-2201 — 26-2220. Formation and operation of collection agencies — Disposition of funds — Agent defined — Practice of law prohibited. [Repealed.]

§ 26-2221. Short title.

This act shall be known as the “Idaho Collection Agency Act.”

History.

I.C.,§ 26-2221, as added by 1995, ch. 211, § 1, p. 715.

§ 26-2222. Definitions.

As used in this act:

1. “Agent” means any person who, for compensation or gain, or in the expectation of compensation or gain, contacts persons in Idaho in connection with the business activities of a licensee or person required to be licensed under this act.
2. “Business funds” means all moneys belonging to or due a licensee or person required to be licensed in connection with the business activities authorized under this act.
3. “Collection activities” means the activities enumerated in subsections (2) through (6) of section 26-2223, Idaho Code.
4. “Collection agency” means a person who engages in any of the activities enumerated in subsections (2) through (6) of section 26-2223, Idaho Code.
5. “Credit repair organization” means any person engaged in any of the activities enumerated in subsection (8) of section 26-2223, Idaho Code. A credit repair organization does not include:
   1. A consumer reporting agency, as defined in 15 U.S.C. section 1681a(f), that provides consumer reports based on information furnished by creditors or any affiliate or subsidiary of such consumer reporting agency as defined by rule promulgated by the director;
   2. A person who has an ongoing contractual arrangement with a consumer reporting agency, as described in subsection (5)(a) of this section, to obtain consumer reports from a consumer reporting agency for the purposes of:
      1. Reselling such report, or any information contained in or derived from such report, to a consumer; or
      2. Monitoring information in such report on behalf of a consumer; or
   3. A person to the extent that such person advertises, markets, provides or facilitates consumer access to the products or services offered or provided by:
      1. An entity described in subsection (5)(a) of this section; or
      2. A person described in subsection (5)(b) of this section.
6. “Creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed.
7. “Creditor client” means any person who transfers or assigns to a collection agency licensee or person required to be so licensed under this act, any account, bill, claim or other indebtedness for collection purposes.
8. “Creditor funds” means all funds due and owing a creditor by a licensee or person required to be licensed under this act.
9. “Debt counselor” or “credit counselor” means any person engaged in any of the activities enumerated in subsection (7) of section 26-2223, Idaho Code.
10. “Department” means the Idaho department of finance.
11. “Director” means the director of the Idaho department of finance.
12. “Licensee” means a person who has obtained a license under this act.
13. “Net collections” means all funds that are due to creditors from the licensee pursuant to the contract between the licensee and creditor, or licensee and debtor without taking into account any offset or funds due from the creditor to the licensee, because of the creditor having collected any part of the account due, plus all funds that the licensee agreed to return to debtors or that were not to be applied to debts. (14) “Person” means any individual, corporation, association, partnership, limited liability partnership, trust, company, limited liability company, or unincorporated association.

History.

1970, ch. 53, § 1, p. 118; am. 1974, ch. 24, § 22, p. 592; am. 1987, ch. 295, § 1, p. 630; am. 1990, ch. 346, § 1, p. 930; am. 1997, ch. 370, § 1, p. 1176; am. 2002, ch. 190, § 1, p. 544; am. 2008, ch. 347, § 1, p. 938.

§ 26-2223. Collection agency, debt counselor, credit counselor, or credit repair organization — License required.

No person shall without complying with the terms of this act and obtaining a license from the director:

1. Operate as a collection agency, debt counselor, credit counselor, or credit repair organization in this state.
2. Engage, either directly or indirectly, in this state in the business of collecting or receiving payment for others of any account, bill, claim or other indebtedness.
3. Solicit or advertise in this state to collect or receive payment for another of any account, bill, claim or other indebtedness.
4. Sell or otherwise distribute in this state any system or systems of collection letters or similar printed matter where the name of any person other than the particular creditor to whom the debt is owed appears.
5. Engage in any activity in this state which indicates, directly or indirectly, that a third party is or may be involved in effecting any collections.
6. Engage or offer to engage in this state, directly or indirectly, in the business of collecting any form of indebtedness for that person’s own account if the indebtedness was acquired from another person and if the indebtedness was either delinquent or in default at the time it was acquired.
7. Engage or offer to engage in this state in the business of receiving money from debtors for application or payment to or prorating of a debt owed to, any creditor or creditors of such debtor, or engage or offer to engage in this state in the business of providing counseling or other services to debtors in the management of their debts, or contracting with the debtor to effect the adjustment, compromise, or discharge of any account, note or other indebtedness of the debtor.
8. Engage or offer to engage in this state in the business of selling, providing or performing services to improve any consumer’s credit record, credit history or credit rating, or providing advice or assistance to any consumer with regard to his credit record, credit history or credit rating.

History.

1970, ch. 53, § 2, p. 118; am. 1990, ch. 346, § 2, p. 930; am. 2002, ch. 190, § 2, p. 544; am. 2008, ch. 347, § 2, p. 940.

§ 26-2224. License application.

Every applicant for a license under this act shall file with the director an application in a form prescribed by the director that shall include:

1. The name of the applicant; if the applicant is a corporation, a list of its officers and directors and their addresses; if the applicant is a partnership, a list of the partners and their addresses; or if the applicant is a limited liability company, a list of its members or managers and their addresses.
2. The street address of the applicant’s principal location.
3. All names by which the applicant engages in collection activities.
4. The names of all persons and organizations with which the applicant is affiliated, and the location of the principal office or place of business of each such affiliate.
5. A complete description of the business to be conducted, or plan of operation contemplated, by the applicant in this state.
6. The name, address and qualifications of a natural person possessing a minimum of three (3) years of experience related to the business to be conducted under this act who will supervise the applicant’s office locations from which business activities in this state will be conducted.
7. Copies of all contracts, forms, form letters, and advertisements or solicitations to be used by the applicant in its business activities under this act, which must accompany the application and be identified as exhibits by number.
8. If the applicant is a corporation, a limited liability company, partnership, or limited liability partnership, a copy of its articles of incorporation, articles of organization, partnership agreement, or operating agreement, duly authenticated.
9. A list of the names, business addresses and telephone numbers of all agents who will contact persons or solicit business for the applicant in this state.
10. The name and business address of the applicant’s agent for service of process located in this state.
11. A nonrefundable application fee of one hundred fifty dollars ($150).
12. An agreement of consent authorizing the director to examine any and all of the applicant’s financial accounts used for business activities under this act.
13. Such other information concerning the applicant as the director may reasonably require. Such application shall be executed and verified on oath by the applicant. Information required at the time of application, except for advertisements and solicitations, shall be updated and filed with the director as necessary to keep the information current.

History.

1970, ch. 53, § 3, p. 118; am. 1974, ch. 154, § 2, p. 1379; am. 1990, ch. 213, § 23, p. 930; am. 1995, ch. 211, § 3, p. 715; am. 2002, ch. 190, § 3, p. 544; am. 2008, ch. 347, § 4, p. 941.

§ 26-2225. Approval of license application.

1. The director shall act upon all applications for a license under this act. If the director determines that the requirements of this act have been met and all applicable fees paid, and the applicant is not otherwise unqualified for licensure, the director shall issue a license to the applicant.
2. Each license issued under this section shall remain in full force and effect unless the licensee fails to satisfy the renewal requirements of this act, or the license is relinquished, suspended, terminated or revoked.

History.

I.C.,§ 26-2225, as added by 2008, ch. 347, § 6, p. 943.

§ 26-2226. False or fraudulent debt reduction and elimination practices.

1. No person shall obtain or attempt to obtain a fee, compensation or consideration from a person through a false or fraudulent representation or statement that a debt, loan, or extension of credit could or would be eliminated, reduced or substituted, if the representation or statement is false or misleading or has the tendency or capacity to be misleading, or if the person making the representation or statement does not have sufficient information upon which a reasonable belief in the truth of the representation or statement could be based.
2. 1. Whenever it appears to the director that a person has violated subsection (1) of this section, the director shall have the powers and remedies set forth in sections 67-2754 and 67-2755, Idaho Code, as well as the powers and remedies found in this chapter, as to any such violation. (2)(a) Whenever it appears to the director that a person has violated subsection (1) of this section, the director shall have the powers and remedies set forth in sections 67-2754 and 67-2755, Idaho Code, as well as the powers and remedies found in this chapter, as to any such violation.
   2. Any person who violates subsection (1) of this section shall be subject to the criminal proceedings and penalties set forth in sections 67-2757, 67-2758 and 67-2759, Idaho Code, as well as the criminal proceedings and penalties provided in this chapter.

History.

I.C.,§ 26-2226, as added by 2005, ch. 265, § 17, p. 810.

§ 26-2228. Powers of the director.

In addition to any other duties authorized by law, the director shall:

1. Administer and enforce the provisions and requirements of this act;
2. Conduct investigations and issue subpoenas as necessary to determine whether a person has violated any provision of this act, rule or order hereunder;
3. Conduct examinations of the books and records of licensees related to business activities authorized under this act and conduct investigations as necessary and proper for the enforcement of the provisions of this act, rules or orders hereunder;
4. Pursuant to chapter 52, title 67, Idaho Code, issue orders and promulgate rules that, in the opinion of the director, are necessary to execute, enforce and effectuate the purposes of this act; and
5. Require that all funds collected by the department under this act be deposited into the finance administrative account pursuant to section 67-2702, Idaho Code.

History.

1970, ch. 53, § 7, p. 118; am. 1974, ch. 24, § 23, p. 744; am. 1974, ch. 154, § 6, p. 1379; am. 1995, ch. 211, § 4, p. 715; am. 2008, ch. 347, § 8, p. 944.

§ 26-2229. Contracts.

1. Contracts between collection agency licensees or collection agencies required to be licensed under this act and creditor clients shall be in writing.
2. It shall be a violation of this act for any collection agency contract to:
   1. Authorize a collection agency to retain any sums collected on behalf of a creditor client, other than the regular collection fees or commissions authorized by this act;
   2. Penalize a creditor client for any unintentional error, mistake or omission in furnishing the correct name or address of any debtor to a collection agency; or
   3. Require the payment of any fee, commission or compensation in excess of fifty percent (50%) of the amount actually collected on any account, bill, claim or other indebtedness entrusted to the collection agency for collection. However, in the case that a collection agency collects interest on an account, the creditor client and the collection agency may agree in writing for division of such interest between them without such percentage limitation. Furthermore, in the case of the collection of checks dishonored by nonacceptance or nonpayment, the creditor client and the collection agency, by written agreement between them, may provide, in place of a percentage fee, for the payment of a set dollar amount collection fee not to exceed the amount provided in section 28-22-105, Idaho Code, which shall not be subject to the fifty percent (50%) limitation. Collection agreements to proceed under section 1-2301A, Idaho Code, shall be subject to the fifty percent (50%) limitation.
3. 1. No debt counselor, credit counselor or credit repair organization licensed or required to be licensed under this act shall take or receive for services performed for any one (1) person more than fifteen percent (15%) of the amount received by it at any one (1) time from or on behalf of that person for payment or prorating to creditors, and no other charges shall be made or received for any such service. (3)(a) No debt counselor, credit counselor or credit repair organization licensed or required to be licensed under this act shall take or receive for services performed for any one (1) person more than fifteen percent (15%) of the amount received by it at any one (1) time from or on behalf of that person for payment or prorating to creditors, and no other charges shall be made or received for any such service.
   2. Debt counselors or credit counselors who do not receive, hold or disburse funds from debtors for payment to creditors shall not charge or accept as a fee for their services more than twenty percent (20%) of the principal amount of the debtor’s unsecured debt at the time of contracting for services for the management of debt. In the event of cancellation of the contract by the debtor prior to its successful completion, the debt counselor or credit counselor shall refund fifty percent (50%) of any collected fees associated with the amount of debt remaining unsettled at the time of the termination of the contract.

History.

1970, ch. 53, § 8, p. 118; am. 1973, ch. 263, § 1, p. 538; am. 1974, ch. 24, § 24, p. 744; am. 1982, ch. 107, § 1, p. 306; am. 1984, ch. 47, § 8, p. 76; am. 1995, ch. 211, § 5, p. 715; am. 1996, ch. 373, § 4, p. 1269; am. 1997, ch. 370, § 3, p. 1176; am. 2008, ch. 347, § 9, p. 945.

§ 26-2229A. Requirement of fair, open and honest dealing — Prohibited practices.

1. Every licensee or person required to be licensed under this act and its agents shall deal openly, fairly, and honestly without deception in the conduct of its business activities in this state under this act.
2. When not inconsistent with the statutes of this state, the provisions of the federal fair debt collection practices act, 15 U.S.C. section 1692, et seq., as amended, may be enforced by the director against collection agencies licensed or required to be licensed under the provisions of this act.
3. In every instance where a collection agency licensee has a managerial or financial interest in a creditor client, or where a creditor client has a managerial or financial interest in a collection agency licensee, disclosure of such interest must be made on each and every contact with a debtor in seeking to make a collection of any account, claim, or other indebtedness.
4. No collection agency licensee, or collection agency required to be licensed under this act, or agent of such collection agency shall collect or attempt to collect any interest or other charges, fees, or expenses incidental to the principal obligation unless such interest or incidental fees, charges, or expenses:
   1. Are expressly authorized by statute;
   2. Are allowed by court ruling against the debtor;
   3. Have been judicially determined;
   4. Are provided for in a written form agreement, signed by both the debtor and the licensee, and which has the prior approval of the director with respect to the terms of the agreement and amounts of the fees, interest, charges and expenses; or
   5. Reasonably relate to the actual cost associated with processing a demand draft or other form of electronic payment on behalf of a debtor for a debt payment, provided that the debtor has preauthorized the method of payment and has been notified in advance that such payment may be made by reasonable alternative means that will not result in additional charges, fees or expenses to the debtor.
5. No person shall sell, distribute or make use of solicitations, collection letters, demand forms or other printed matter which are made similar to or resemble governmental forms or documents, or legal forms used in civil or criminal proceedings.
6. No person shall use any trade name, address, insignia, picture, emblem or any other means which creates any impression that such person is connected with or is an agency of government.
7. No person licensed, or required to be licensed under this act, shall misappropriate, transfer, or convert to his own use or benefit, funds belonging to or held for another person in connection with business activities authorized under this act.
8. No credit repair organization licensed, or required to be licensed under this act, shall charge or receive money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
9. No person licensed or required to be licensed under this act shall make a representation or statement of material fact, or omit to state a material fact, in connection with the offer, sale or performance of any service authorized under this act, if the representation, statement or omission is false or misleading or has the tendency or capacity to be misleading. History.

I.C.,§ 26-2229A, as added by 1973, ch. 263, § 2, p. 538; am. 1993, ch. 165, § 1, p. 416; am. 1995, ch. 211, § 6, p. 715; am. 1997, ch. 370, § 4, p. 1176; am. 2008, ch. 347, § 10, p. 946.

§ 26-2230. Branch offices.

A licensee must register, in a manner prescribed by the director, each additional place of business from which activities authorized under this act are directly or indirectly conducted in this state. Registered locations shall be considered branches of the licensee. The licensee shall inform the director of the opening of a branch location at least thirty (30) days prior thereto, and no later than thirty (30) days after the closing of any branch location.

History.

I.C.,§ 26-2230, as added by 1995, ch. 211, § 8, p. 715; am. 1997, ch. 370, § 5, p. 1176; am. 2008, ch. 347, § 11, p. 947.

§ 26-2231. Renewal of license.

1. On or before the fifteenth day of March of each year, each licensee shall pay to the director a nonrefundable license renewal fee of one hundred dollars ($100) and shall file with the director a license renewal form providing complete information as required by the director.
2. Failure to fully comply with the license renewal requirements of this section by the fifteenth day of March of each year shall result in automatic expiration of the license as of that date.

History.

1970, ch. 53, § 10, p. 118; am. 1984, ch. 47, § 9, p. 76; am. 1990, ch. 346, § 3, p. 930; am. 2002, ch. 190, § 4, p. 544; am. 2008, ch. 347, § 12, p. 948.

§ 26-2232. Collection agency surety bonds.

1. Upon approval of the application and prior to the issuance of a license under this act, the applicant shall file in the department of finance a surety bond in a form prescribed by the director. The bond shall be executed by the applicant as principal and by a surety company authorized to do business in this state, and shall be for the term of the license issued to the applicant. In lieu of the bond required by this section, a certificate of deposit issued by a financial institution authorized to conduct business in Idaho may be provided to the director in the same principal amount as required for the bond. The interest on the certificate of deposit shall be payable to the licensee. The certificate of deposit shall be maintained at all times during which the licensee is authorized to do business under this act. The certificate of deposit must provide that it will remain in effect for at least three (3) years following discontinuance of operations, unless released earlier by the director when all statutory requirements have been met.
2. The surety bond shall be executed to the state of Idaho in the sum of fifteen thousand dollars ($15,000) or upon renewal in such larger sum as hereinafter provided. In any case where a licensee or its representatives have failed to account for and pay over the proceeds of any collection made or money received for payment or prorating to creditors, or have failed to return to a debtor any sum received that was not to be applied to his debts, the creditor or debtor shall have in addition to all other legal remedies a right of action in his own name on such bond without the necessity of joining the licensee in such action. The bond shall be continuous in form and shall remain in full force and effect for the license period. The surety may cancel the bond provided that the surety shall in such event provide the licensee and the director with notice no less than thirty (30) days prior to cancellation of said bond. Such notice shall be by registered or certified mail with request for a return receipt and addressed to the licensee at its main office and to the director. In no event shall the liability of the surety for any and all claims against the bond exceed the face amount of such bond.
3. Upon renewal of a license, the licensee shall supply the director with a statement of the preceding year’s net collections. The amount of the bond upon renewal shall be in the amount of fifteen thousand dollars ($15,000), or two (2) times the average monthly net collections for the preceding year computed to the next highest one thousand dollars ($1,000), whichever sum is greater, up to a maximum of one hundred thousand dollars ($100,000).

History.

1970, ch. 53, § 11, p. 118; am. 1987, ch. 296, § 1, p. 632; am. 1987, ch. 301, § 1, p. 639; am. 1999, ch. 277, § 1, p. 691; am. 2008, ch. 347, § 13, p. 948.

§ 26-2232A. Debt counselors, credit counselors, credit repair organizations — Bonds.

1. Upon approval of the application and prior to the issuance of a license under this act, an applicant for a license as a debt counselor, credit counselor or credit repair organization shall file in the department of finance a surety bond in a form prescribed by the director. The bond shall be executed by the applicant as principal and by a surety company authorized to do business in this state, and shall be for the term of the license issued to the applicant. In lieu of the bond required by this section, a certificate of deposit issued by a financial institution authorized to conduct business in Idaho may be provided to the director in the same principal amount as required for the bond. The interest on the certificate of deposit shall be payable to the licensee. The certificate of deposit shall be maintained at all times during which the licensee is authorized to do business under this act. The certificate of deposit must provide that it will remain in effect for at least three (3) years following discontinuance of operations, unless released earlier by the director when all statutory requirements have been met.
2. The surety bond shall be executed to the state of Idaho in the sum of fifteen thousand dollars ($15,000) or upon renewal in such larger sum as hereinafter provided. In any case where a licensee or its representatives have failed to account for and pay over moneys accepted, received or held for another in the licensee’s conduct of business authorized by this act, a person injured thereby shall have, in addition to all other legal remedies, a right of action in his own name on such bond without the necessity of joining the licensee in such action. The bond shall be continuous in form and shall remain in full force and effect for the license period. The surety may cancel the bond provided that the surety shall in such event provide the licensee and the director with notice no less than thirty (30) days prior to cancellation of the bond. Such notice shall be by registered or certified mail with request for a return receipt and addressed to the licensee at its main office and to the director. In no event shall the liability of the surety for any and all claims against the bond exceed the face amount of such bond.
3. Upon renewal of a license, the licensee shall supply the director with a statement of the moneys accepted, received or held for another in the licensee’s conduct of business authorized by this act. The amount of the bond upon renewal shall be in the amount of fifteen thousand dollars ($15,000), or two (2) times the average monthly amount over the preceding year of moneys accepted, received or held for another in the licensee’s conduct of business authorized by this act computed to the next highest one thousand dollars ($1,000), whichever sum is greater, up to a maximum of one hundred thousand dollars ($100,000).

History.

I.C.,§ 26-2232A, as added by 2008, ch. 347, § 15, p. 950.

§ 26-2233. Licensee accounts required.

1. Every licensee under this act that receives or holds funds belonging to another in connection with the business activities authorized by this act shall, in its own name, establish and maintain a separate trust account for deposit and remittance of such funds in a financial institution, the deposits of which are insured by the federal deposit insurance corporation. A licensee may not, directly or indirectly, misappropriate, misapply or borrow money held in trust.
2. Every licensee under this act shall establish and maintain a separate business account for the licensee’s business funds and moneys in a financial institution, the deposits of which are insured by the federal deposit insurance corporation.

History.

1970, ch. 53, § 12, p. 118; am. 1983, ch. 252, § 1, p. 672; am. 1995, ch. 211, § 9, p. 715; am. 1997, ch. 370, § 6, p. 1176; am. 2008, ch. 347, § 16, p. 950.

§ 26-2234. Examinations, investigations, records and payment of funds.

1. The director or his duly authorized representative may make an annual examination, or more frequently in the director’s discretion, of the licensee’s business locations from which activities authorized under this act are conducted, and for that purpose the director shall have free access during normal business hours to the offices and places of business, and to the books, creditors’ accounts, trust accounts, business accounts, records, papers, files, safes and vaults used by a licensee for its operations under this act.
2. The director may conduct public or private investigations and examinations within or outside of this state which the director considers necessary or appropriate to determine whether a person has violated, is violating, or is about to violate this act or a rule adopted or order issued under this act, or to aid in the enforcement of this act. For that purpose the director shall have free access during normal business hours to the offices and places of business, and to the books, creditors’ accounts, trust accounts, business accounts, records, papers, files, safes and vaults used by a licensee for its operations under this act.
3. The cost of examination and any investigation shall be paid to the director by each licensee so examined or investigated and the director may maintain an action for the recovery of such costs against the licensee or against the surety providing the bond to indemnify the state for such expenditures as required by this act. The cost shall be fixed annually by the director, but shall not exceed fifty dollars ($50.00) per hour.
4. Each collection agency licensee shall acknowledge in writing each account received for collection and shall maintain a record of such account, and shall make a permanent record of all sums collected and of all disbursements made. Every collection agency licensee shall keep and preserve all records relating to accounts received for collection, moneys collected, receipts, and disposal or disbursement of all creditors’ funds for a period of three (3) years after the final disposition of any account. It shall be unlawful for any person to intentionally make any false entry, omit to make a necessary entry, mutilate, secrete away, destroy or otherwise dispose of any record referenced in this subsection, provided a record may be disposed of after the three (3) year period heretofore provided.
5. Every collection agency licensee shall, within thirty (30) days following the end of each calendar month, remit to his creditor clients all funds due them resulting from collections made by the licensee during said calendar month. Such licensees shall provide each of their creditor clients a written statement of all moneys collected on behalf of such creditor clients and any payments made to such creditor clients within thirty (30) days following the end of each calendar month.
6. Every licensee shall maintain books and records, including financial records in accordance with generally accepted accounting principles, in a manner that will enable the director to determine whether the licensee is complying with the provisions of this act.
7. The director may impound the accounts, including all operating and trust accounts held in any financial institution, of any licensee or person required to be licensed under this act who receives, holds or disburses consumer funds, if the director deems it in the public interest and good cause exists therefor, in accordance with section 67-5247, Idaho Code. History.

1970, ch. 53, § 13, p. 118; am. 1974, ch. 24, § 25, p. 744; am. 1993, ch. 165, § 2, p. 416; am. 2002, ch. 190, § 5, p. 544; am. 2008, ch. 347, § 17, p. 951.

§ 26-2235. Denial, suspension, revocation of permit. [Repealed.]

§ 26-2236. Subpoenas.

The director shall have the power to issue subpoenas as necessary to determine whether a person has violated any provision of this act, rule or order thereunder, to swear witnesses and to take the testimony of any person by deposition, with the same fees and mileage and in the same manner as prescribed by law in judicial procedure in district courts of this state in civil cases. Any party to a proposed revocation or suspension of a license shall have the right of subpoena to compel the attendance of witnesses and produce all reasonably necessary books and writings on his behalf. In case any witness shall fail or refuse to comply with a subpoena to appear before the director, the clerk of the district court of the county in which the administrative proceedings are held shall, upon demand of the director, issue a subpoena reciting the demand therefor and summoning the witness to appear and testify at a time and place fixed; and violation of such subpoena or disobedience thereto shall be deemed and punished as a violation of a subpoena issued by the district court.

History.

1970, ch. 53, § 15, p. 118; am. 1993, ch. 165, § 4, p. 416; am. 2008, ch. 347, § 19, p. 952.

§ 26-2237. Fees — Disposition of funds.

All fees provided for in this act shall be paid to the director and by him remitted to the state treasurer pursuant to section 59-1014, Idaho Code, and all such funds shall be deposited to the credit of the finance administrative account in the state dedicated fund.

History.

1970, ch. 53, § 16, p. 118; am. 1974, ch. 24, § 27, p. 744; am. 1984, ch. 47, § 10, p. 76; am. 2008, ch. 347, § 20, p. 953.

§ 26-2238. Violations — Penalties.

1. Any person who engages in activities authorized under this act, who fails to establish and maintain a separate trust account as required under this act, or fails to disburse funds in accordance with the requirements of this act, or misappropriates, transfers, or converts to his own use or benefit, funds belonging to or held for another person, shall, upon conviction, be guilty of a felony punishable by a fine not to exceed five thousand dollars ($5,000) per violation or by imprisonment for not more than five (5) years, or both.
2. Any person, except a person exempt under section 26-2239, Idaho Code, who engages in activities authorized under this act without first obtaining a license as required by this act shall, upon conviction, be guilty of a felony punishable by a fine not to exceed five thousand dollars ($5,000) or by imprisonment for not more than five (5) years, or both.
3. Any person who shall fail to comply with any of the other provisions of this act shall, upon conviction, be guilty of a misdemeanor.

History.

1970, ch. 53, § 17, p. 118; am. 1997, ch. 370, § 8, p. 1176; am. 2008, ch. 347, § 21, p. 953.

§ 26-2239. Exemptions.

The provisions of this act shall not apply to the following:

1. Persons licensed to practice law in this state, to the extent that they are retained by their clients to engage in activities authorized by this act, and such activities are incidental to the practice of law. Such exemption shall not apply to an attorney engaged in a separate business conducting the activities authorized by this act;
2. Any regulated lender as defined in section 28-41-301, Idaho Code, and its subsidiary, affiliate or agent, to the extent that the regulated lender, subsidiary, affiliate or agent collects for the regulated lender or engages in acts governed by this act which are incidental to the business of a regulated lender;
3. Any bank, trust company, credit union, insurance company or industrial loan company authorized to do business in this state;
4. Any federal, state or local governmental agency or instrumentality;
5. Any real estate broker or real estate salesman licensed under the laws of and residing within this state while engaged in acts authorized by his real estate license;
6. Any person authorized to engage in escrow business in this state while engaged in authorized escrow business;
7. Any mortgage lender engaged in the regular business of a mortgage lender as defined in section 26-31-201, Idaho Code, except a mortgage lender engaged in a separate business conducting the activities authorized by this act;
8. Any court-appointed trustee, receiver or conservator;
9. Any telephone corporation as defined in subsection (14) of section 62-603, Idaho Code, whose initial request for payment on behalf of such telephone corporation or on behalf of another person is made by the telephone corporation as a part of regular telecommunications billings to its customers and at a time before the account, bill, claim or other indebtedness becomes past due or delinquent;
10. Any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom he is so related or affiliated and if the principal business of such person is not the collection of debts.

History.

1970, ch. 53, § 18, p. 118; am. 1990, ch. 346, § 6, p. 930; am. 1993, ch. 165, § 5, p. 416; am. 2003, ch. 112, § 1, p. 355; am. 2008, ch. 347, § 22, p. 953; am. 2013, ch. 54, § 8, p. 108; am. 2015, ch. 244, § 9, p. 1008; am. 2020, ch. 100, § 1, p. 260.

§ 26-2240. Agent identification — Quarterly notice — Fee.

Each applicant for a license under this act, with its initial license application, and each licensee at annual renewal, shall file with the director a list of all agents including the name of each agent and any other identifying information the director may require. A fee of twenty dollars ($20.00) for each listed agent shall accompany the list. Each licensee shall notify the director in writing of any additions to its agent list no less often than every calendar quarter. A fee of twenty dollars ($20.00) shall be paid to the director for each additionally identified agent in the quarterly notification of additions to a licensee’s agent list. An agent is not required to be listed, nor the fee paid therefor, unless the agent acted for the licensee for more than thirty (30) business days.

History.

I.C.,§ 26-2240, as added by 1997, ch. 370, § 10, p. 1176; am. 2008, ch. 347, § 23, p. 954.

§ 26-2241, 26-2242. Expenses of examination — Payment — Denial, suspension, revocation of license. [Repealed.]

§ 26-2243. Property right in accounts — Practice of law prohibited.

A licensee under this act shall have a property right in any account assigned to it for collection; provided, however, no right herein granted shall authorize such licensee to engage in the practice of law.

History.

1970, ch. 53, § 22, p. 118; am. 2008, ch. 347, § 24, p. 954.

§ 26-2244. Cease and desist orders, penalty.

1. Whenever it appears to the director that it is in the public interest, he may order any person to cease and desist from acts, practices, or omissions which constitute a violation of this act or a rule adopted or an order issued under this act.
2. Whenever, after notice and the opportunity for a hearing, the director finds that any person has engaged in any act, practice, or omission constituting a violation of any provision of this act or a rule adopted or an order issued under this act, the director may order the person to cease and desist from such acts, practices or omissions and:
   1. Impose a civil penalty of not more than five thousand dollars ($5,000) for each violation upon any person found to have violated any provision of this act or a rule adopted or an order issued under this act;
   2. Issue an order restoring to any person in interest any consideration that may have been acquired or transferred in violation of this act or a rule adopted or an order issued under this act; and
   3. Issue an order that the person violating this act or a rule adopted or an order issued under this act pay costs, which in the discretion of the director may include an amount representing reasonable attorney’s fees and reimbursement for investigative efforts.

History.

1970, ch. 53, § 23, p. 118; am. 1974, ch. 24, § 28, p. 744; am. 1990, ch. 346, § 9, p. 930; am. 1993, ch. 165, § 7, p. 416; am. 2002, ch. 190, § 6, p. 544; am. 2008, ch. 347, § 25, p. 955.

§ 26-2245. Director’s power to enjoin violations.

1. Whenever it appears to the director that any person, or employee or agent thereof, has engaged in or is about to engage in any act or practice or omission constituting a violation of any provision of this act, or any rule or order issued hereunder, he may in his discretion bring an action in any court of competent jurisdiction to enjoin any such acts, practices or omissions and to enforce compliance with this act or any rule adopted or order issued hereunder. Upon a showing that a person, or employee or agent thereof, has engaged in or is about to engage in an act, practice or omission constituting a violation of this act or any rule adopted or order issued hereunder, a permanent or temporary injunction, or restraining order shall be granted and a receiver or conservator may be appointed, which may be the director, for the defendant’s assets. The director shall not be required to furnish a bond.
2. In addition to the foregoing, the director, in his discretion and upon a showing in any court of competent jurisdiction that a person has violated any provision of this act or rule adopted or order issued hereunder, may be granted the following additional remedies:
   1. An order restoring to any person in interest any consideration that may have been acquired or transferred in violation of this act;
   2. An order that the person violating this act, rule or order issued hereunder, pay a civil penalty to the department in an amount not to exceed five thousand dollars ($5,000) for each violation;
   3. An order allowing the director to recover costs, which in the discretion of the court may include an amount representing reasonable attorney’s fees and reimbursement for investigative efforts; and
   4. An order granting other appropriate remedies upon a proper showing.

History.

1970, ch. 53, § 24, p. 118; am. 2002, ch. 190, § 7, p. 544; am. 2008, ch. 347, § 26, p. 955.

§ 26-2246. Closure or discontinuance of operations — Requirements.

1. Whenever the operations of a collection agency licensee under this act are closed or discontinued due to revocation, termination, or relinquishment of a collection agency license, or for any other reason, the collection agency shall, within thirty (30) days following the closure or discontinuance of operations, furnish the director with sufficient proof in a form to be determined by the director that:
   1. The collection agency has remitted to all of its creditor clients all moneys collected on their behalf and due such creditor clients;
   2. All collection accounts, judgments obtained, and other accounts have been returned to the creditor clients or other proper parties, and if appropriate, assigned by the collection agency to its creditor clients or other proper parties; and
   3. All valuable papers, documents, judgments and other property provided to the collection agency by its creditor clients or other parties in connection with the collection agency’s collection activities have been returned to the creditor clients or other proper parties.
2. A collection agency which holds a license issued pursuant to this act, upon closure or discontinuance of its operations, shall maintain the bonds required of such licensee to conduct a collection agency business until a final accounting of its affairs, as set forth in subsection (1) of this section, has been filed with and approved by the director.
3. Whenever the operations of a collection agency are closed or discontinued as set forth in subsection (1) of this section, in the event the collection agency does not complete all requirements of such subsection within thirty (30) days following the closure or discontinuance of operations, upon demand by the director, the collection agency shall permit the director to take possession of its business records, bank accounts, including creditor client trust accounts, other property belonging to its creditor clients or third parties, and its assets. The director may then liquidate the collection agency’s business, return any moneys owed to the collection agency’s creditor clients, return the collection agency’s accounts to its creditor clients, return or assign any judgments to the agency’s creditor clients, and take any other actions which are reasonably necessary to cause the collection agency to liquidate its assets and to comply with subsection (1) of this section.
4. If a collection agency refuses to permit the director to take possession of its business records, bank accounts, creditor client trust accounts, other property belonging to its creditor clients or third parties and its assets, as set forth in subsection (3) of this section, the director may apply to a court of competent jurisdiction in the county of the collection agency’s principal place of business for the appointment of a receiver or conservator as set forth in section 26-2245(1), Idaho Code. Such receiver or conservator may be the director.
5. The expenses of the receiver or conservator and attorney’s fees, and all expenses necessarily incurred in liquidation of the collection agency, shall be paid out of the funds in the control of the director or conservator, to the extent those funds exceed any sums due and owing to the collection agency’s creditor clients or other proper parties. To the extent funds in the control of the receiver are not sufficient to pay all sums due and owing to the collection agency’s creditor clients or other proper parties and to pay the costs of a receiver or conservator and of liquidation of the collection agency, the collection agency and its owners, shareholders, or interest holders shall be responsible for the balance of any reasonably necessary costs and fees of liquidation. History.

I.C.,§ 26-2246, as added by 2008, ch. 347, § 28, p. 956.

§ 26-2247. Institution of criminal proceedings.

The director may refer such evidence as may be available concerning violations of this act or of any rule or order hereunder to the attorney general or the proper prosecuting attorney, either of whom may in his discretion, with or without such a reference, institute appropriate criminal proceedings under this act.

History.

1970, ch. 53, § 26, p. 118.

§ 26-2248. Administration of act.

The administration of the provisions of this act shall be under the general supervision and control of the director, subject to chapter 52, title 67, Idaho Code. The director may from time to time adopt, amend, and rescind rules and issue orders necessary to carry out the provisions of this act. No rule or order may be made unless the director finds that the action is necessary or appropriate for the public interest or for the protection of the public consistent with the purposes of this act.

History.

1970, ch. 53, § 27, p. 118; am. 2008, ch. 347, § 29, p. 957.

§ 26-2249. Judicial review of final orders of director.

Any person aggrieved by a final order of the director may obtain judicial review of that order pursuant to the provisions of chapter 52, title 67, Idaho Code.

History.

1970, ch. 53, § 28, p. 118; am. 1993, ch. 216, § 12, p. 587.

§ 26-2250. Foreign permittees. [Repealed.]

§ 26-2251. Severability.

The provisions of this act are hereby declared to be severable and if any provision of this act or the application of such provision to any person or circumstance is declared invalid for any reason, such declaration shall not affect the validity of the remaining portions of this act.

History.

I.C.,§ 26-2251, as added by 2008, ch. 347, § 31, p. 957.