T26CH7
Title 26 > T26CH7
Sections (15)
26-701
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [26-701, added 1979, ch. 41, sec. 2, p. 87; am. 1993, ch. 53, sec. 3, p. 141.]
26-702
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: (a) To have shares available for use in connection with employee stock option, bonus, purchase or similar plans; (b) To sell to a director for the purpose of acquiring qualifying shares; (c) 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; (d) To reduce the number of shareholders to qualify as a subchapter S corporation; (e) To reduce costs associated with shareholder communications and meetings; (f) To facilitate a bank’s shareholder dividend reinvestment plan; or (g) Any other legitimate corporate purpose as may be approved by the director. History: [26-702, added 1979, ch. 41, sec. 2, p. 88; am. 1986, ch. 58, sec. 1, p. 167; am. 2008, ch. 140, sec. 7, p. 405.]
26-703
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [26-703, added 1979, ch. 41, sec. 2, p. 88; am. 2004, ch. 159, sec. 2, p. 515; am. 2007, ch. 126, sec. 3, p. 378.]
26-704
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-704) 26-708, added 1979, ch. 41, sec. 2, p. 90; am. and redesig. 2004, ch. 159, sec. 4, p. 515.]
26-705
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: (a) A contractual commitment to advance funds; (b) A maker or endorser’s obligation arising from a bank’s discount of commercial paper; (c) 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; (d) 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; (e) 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; (f) 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; (g) Loans or extensions of credit that have been charged off on the books of the bank in whole or in part, unless the l
26-706
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-706) 26-710, added 1979, ch. 41, sec. 2, p. 91; am. 1990, ch. 93, sec. 1, p. 193; am. 1995, ch. 99, sec. 4, p. 301; am. and redesig. 2004, ch. 159, sec. 6, p. 521; am. 2007, ch. 126, sec. 4, p. 378.]
26-707
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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, lots, 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 foreclosures or trustee’s 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: (a) An appraisal prepared by a state-certified or state-licensed appraiser; or (b) An appropriate evaluation when the recorded investment is equal to or less than two hundred fifty thousand dollars ($250,000). 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. (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 dispos
26-708
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-708) 26-712, added 1979, ch. 41, sec. 2, p. 93; am. and redesig. 2004, ch. 159, sec. 8, p. 523; am. 2008, ch. 140, sec. 8, p. 406.]
26-709
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-709) 26-713, added 1979, ch. 41, sec. 2, p. 93; am. and redesig. 2004, ch. 159, sec. 9, p. 523.]
26-710
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-710) 26-714, added 1979, ch. 41, sec. 2, p. 93; am. and redesig. 2004, ch. 159, sec. 10, p. 523.]
26-711
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-711) 26-715, added 1979, ch. 41, sec. 2, p. 93; am. and redesig. 2004, ch. 159, sec. 11, p. 523.]
26-712
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-712) 26-716, added 1979, ch. 41, sec. 2, p. 93; am. 1993, ch. 52, sec. 2, p. 135; am. and redesig. 2004, ch. 159, sec. 12, p. 523.]
26-713
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-713) 26-717, added 1979, ch. 41, sec. 2, p. 94; am. and redesig. 2004, ch. 159, sec. 13, p. 524.]
26-714
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-714) 26-718, added 1979, ch. 41, sec. 2, p. 94; am. and redesig. 2004, ch. 159, sec. 14, p. 524.]
26-715
TITLE 26 BANKS AND BANKING CHAPTER 7 LIMITATIONS ON LOANS, INVESTMENTS, AND PRACTICES 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: [(26-715) 26-719, added 1979, ch. 41, sec. 2, p. 94; am. and redesig. 2004, ch. 159, sec. 15, p. 524.]