TITLE 26

BANKS AND BANKING

CHAPTER 21

IDAHO CREDIT UNION ACT

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:

(a) (i) Loans held by credit unions, out-of-state credit unions, or federal credit unions; and

(ii)  Loans to members held by other lenders, with approval of the director;

(b)  Bonds, securities, or other investments that are fully guaranteed as to principal and interest by the United States government;

(c)  General obligations of this state and its political subdivisions;

(d)  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;

(e)  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;

(f)  Common trust or mutual funds whose investment portfolios consist of securities issued or guaranteed by the federal government or an agency of the government;

(g)  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;

(h)  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;

(i)  Stocks, shares, membership units, or other ownership interests in corporations, limited liability companies, or mutual associations, and loans to such organizations in an aggregate amount not to exceed thirty-five percent (35%) of the credit union’s net worth or two and one-half percent (2.5%) of the credit union’s assets, whichever is less. Investments and loans to any one (1) organization are limited to ten percent (10%) of the credit union’s net worth. The principal purpose of the investment must be to enhance the credit union’s operations or the products and services it makes available to members. Investments and loans authorized pursuant to this paragraph must satisfy one (1) of the following criteria:

(i)   The ownership of such organizations or membership of such mutual associations, as applicable, is primarily confined to credit unions or organizations of credit unions;

(ii)   The organizations are formed primarily to service credit unions or their members or otherwise to assist credit union operations; or

(iii) The organization is engaged in, planning, or developing activity that is incidental to or complementary to the credit union’s operations and the investment is approved by the director. Activity is incidental or complementary to the credit union’s operations if it would be performed for or provided to the credit union, or if it would be performed for or provided to the credit union’s members in relation to products, services, or activity that the credit union performs for or provides to its members. The investment shall be made for the purpose of aiding the credit union in achieving its business, operational, or service objectives and shall not be made for speculative investment purposes.

(3)  A credit union may not invest in any of the following:

(a)  A federal depository institution or state depository institution as those terms are defined in the federal deposit insurance act, 12 U.S.C. 1813; or

(b)  A bank holding company or savings bank holding company as those terms are defined in the federal bank holding company act, 12 U.S.C. 1841.

(4)  The director may authorize credit unions to purchase investments not listed above by rule or upon written application.

(5)  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.

(6)  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.

(7)  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:

[26-2127, added 2020, ch. 230, sec. 11, p. 678; am. 2024, ch. 130, sec. 7, p. 526.]