0001| AN ACT | 0002| RELATING TO FINANCIAL INSTITUTIONS; ALLOWING DEPOSITS OF THE SEVERANCE | 0003| TAX PERMANENT FUND IN BRANCH BANKS. | 0004| | 0005| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: | 0006| Section 1. Section 7-27-5.19 NMSA 1978 (being Laws 1993, Chapter | 0007| 267, Section 2) is amended to read: | 0008| "7-27-5.19. DEPOSITS IN NEW MEXICO FINANCIAL INSTITUTIONS-- | 0009| LIMITATIONS.-- | 0010| A. No more than twenty percent of the book value of the | 0011| severance tax permanent fund may be invested in deposits in New Mexico | 0012| financial institutions under terms and conditions set by the council | 0013| in accordance with the provisions of this section. | 0014| B. To be eligible for deposits under this section, a | 0015| financial institution's loans and investments shall equal in the | 0016| aggregate at least one hundred thousand dollars ($100,000). If | 0017| eligible, a financial institution may qualify for deposits as follows: | 0018| (1) a financial institution may qualify for deposits | 0019| in an amount equal to new loans and investments made by that financial | 0020| institution after July 1, 1993; | 0021| (2) the financial institution shall provide the state | 0022| investment officer with the necessary documentation and information | 0023| for each new loan or investment and the state investment officer shall | 0024| verify that each such loan or investment meets the requirements of | 0025| this section and the regulations, guidelines and investment policies | 0001| adopted pursuant to this section; and | 0002| (3) in any calendar year, the state investment | 0003| officer may increase the deposits in any financial institution only to | 0004| the extent new loans and investments made by the financial institution | 0005| have increased over the same period of the prior year. | 0006| C. Notwithstanding any other collateral, interest rate or | 0007| other provisions of law to the contrary governing deposit of public | 0008| money in Chapter 6, Article 10 NMSA 1978, deposits of the severance | 0009| tax permanent fund made pursuant to this section shall be governed by | 0010| the regulations, guidelines and investment policies established by the | 0011| council and shall not be made until such regulations, guidelines and | 0012| policies are adopted. Those policies shall provide: | 0013| (1) the terms and conditions for pledging of | 0014| collateral security and the amount and kind of collateral security to | 0015| be pledged; provided: | 0016| (a) no collateral shall be required for deposits | 0017| of financial institutions rated "A" by the council pursuant to its | 0018| risk assessment analysis, unless the council in its sole discretion | 0019| deems it necessary to protect the severance tax permanent fund; | 0020| (b) financial institutions not rated "A" by the | 0021| council shall secure each severance tax permanent fund deposit with | 0022| security having an aggregate value equal to seventy-five percent of | 0023| the amount of money deposited by that institution or any greater | 0024| percentage determined by the council in its sole discretion to be | 0025| necessary to protect the severance tax permanent fund; | 0001| (c) secured deposits shall be secured by: 1) | 0002| securities of the United States or its agencies or instrumentalities, | 0003| the state or its agencies or instrumentalities or political | 0004| subdivisions of the state; 2) securities guaranteed by agencies or | 0005| instrumentalities of the United States; or 3) New Mexico residential | 0006| mortgages; | 0007| (d) to be rated "A" by the council, a bank shall | 0008| at a minimum have: 1) primary capital at least equal to six percent | 0009| of assets; 2) net income after taxes at least equal to sixty-one | 0010| hundredths of one percent of the average assets of the bank for the | 0011| current quarter and for each of the three previous quarters; and 3) an | 0012| aggregate amount of nonperforming loans, defined as loans that are at | 0013| least ninety days past due, that does not exceed thirty-four and nine- | 0014| tenths percent of primary capital; provided the council in its sole | 0015| discretion may increase any of the requirements of this paragraph to | 0016| protect the severance tax permanent fund; and | 0017| (e) to be rated "A" by the council, a savings | 0018| and loan association shall have a regulatory net worth equal to at | 0019| least three percent of total assets and net income after taxes equal | 0020| to at least thirty hundredths of one percent of average assets for the | 0021| current quarter and for each of the previous three quarters; provided | 0022| the council may increase these requirements or add additional criteria | 0023| for nonperforming loans as a percentage of primary capital or net | 0024| worth that are similar to the criteria for banks, as necessary to | 0025| conform to changing applicable federal regulatory requirements or to | 0001| protect the severance tax permanent fund; | 0002| (2) the rate at which severance tax permanent fund | 0003| deposits shall bear interest, payable monthly, which shall be at a | 0004| fixed market rate determined by the council, but in no event shall the | 0005| rate of interest paid be less than the yield available on comparable | 0006| maturities of obligations of the United States government, its | 0007| agencies or instrumentalities or obligations guaranteed by the United | 0008| States government, its agencies or instrumentalities, whichever is | 0009| higher; | 0010| (3) the terms of maturity, renewal or withdrawal; | 0011| provided that in no event shall the maturity exceed eight years and | 0012| the council may withdraw any deposit before maturity without penalty | 0013| if more than seventy-five percent collateral is required by the rules | 0014| and regulations adopted by the council; and | 0015| (4) such other terms, including the financial | 0016| condition of the financial institution, as the council deems prudent | 0017| to protect the severance tax permanent fund and to implement | 0018| efficiently and effectively the deposit program. | 0019| D. In making deposits in New Mexico financial institutions | 0020| pursuant to this section, the state investment officer shall not | 0021| deposit from the severance tax permanent fund an amount that exceeds | 0022| two hundred percent of the total equity capital in the case of banks | 0023| or two hundred percent of the net worth in the case of savings and | 0024| loan associations or ten percent of the total of that bank's or the | 0025| savings and loan association's deposits, whichever is less. These | 0001| limits shall be based on the most recently published statement of | 0002| financial condition required by federal or state financial authorities | 0003| as certified by an authorized officer of the financial institution | 0004| unless the council has more current reliable information from the | 0005| financial institution. In the event a financial institution exceeds | 0006| the limitations set forth in this subsection, the state investment | 0007| officer may withdraw without penalty the deposits that exceed that | 0008| limitation. The maximum funds on deposit or the deposit limit in this | 0009| subsection shall not apply to the state fiscal agent bank as to the | 0010| funds held by the fiscal agent bank or demand deposits held by a state | 0011| checking depository bank approved by the state board of finance in | 0012| accordance with the provisions of Section 6-10-35 NMSA 1978. | 0013| E. As used in this section: | 0014| (1) "financial institution" means a New Mexico bank, | 0015| a branch of a bank doing business in New Mexico or a savings and loan | 0016| association that is qualified as an insured public depository; | 0017| (2) "investment" means a New Mexico municipal bond or | 0018| a New Mexico industrial revenue bond; and | 0019| (3) "loan" means a loan of any term that is | 0020| secured or unsecured and is made for business purposes. "Loan" | 0021| does not include a loan that is a renewal or restructuring of a | 0022| loan existing on or before July 1, 1993, a loan of more than three | 0023| million dollars ($3,000,000) to one borrower, a student loan, a | 0024| consumer loan or a loan to purchase or provide permanent financing | 0025| on a personal residence, but does include a loan that is made to | 0001| "persons of low or moderate income" as that term is defined in the | 0002| Mortgage Finance Authority Act, is secured by real estate and is | 0003| held and serviced by the original lending financial institution in | 0004| New Mexico. For purposes of this paragraph, "business" includes | 0005| but is not limited to manufacturing; construction; transportation; | 0006| communications; publishing; wholesale or retail business; | 0007| restaurants; entertainment; architectural, engineering and other | 0008| professional services; medical and health services; food | 0009| processing; farming or ranching; mining and natural resource | 0010| exploration and development; and research and technology | 0011| development." |