SFC/SB 578

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AN ACT

RELATING TO FINANCIAL INSTITUTIONS; ESTABLISHING THE LINKED

DEPOSIT PROGRAM.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new Section 6-10-24.2 NMSA 1978 is enacted

to read:

"6-10-24.2. LINKED DEPOSIT PROGRAM.--

A. As used in this section:

(1) "financially at risk rural community"

means a community with the following characteristics:

(a) no more than one insured bank,

thrift institution or credit union within the community; and

(b) a population not exceeding three

thousand five hundred; and either

(c) a declining population as evidenced

by a decrease in population as shown by the two most recent

federal decennial censuses; or

(d) a median household income less than

eighty percent of the state median household income;

(2) "linked deposit program" means a

depository institution's participation in the deposit program

established pursuant to this section;

(3) "market rate" means the rate of return

established by the state board of finance for deposits held

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by qualified depository institutions;

(4) "qualified depository institution" means

an insured bank, trust institution or credit union qualified

pursuant to Section 6-10-15 NMSA 1978;

(5) "qualifying branch" means an office of a

qualified depository institution that is open five days a

week, has a night deposit box and provides banking services

to residents of the community; and

(6) "state deposits" means public funds

under the control of the state treasurer or the state

treasurer's designee and held by qualified depository

institutions.

B. The state treasurer may invest up to fourteen

percent of state deposits, not to exceed forty-nine million

dollars ($49,000,000), in qualified depository institutions

with a qualifying branch located in a financially at risk

rural community. No more than ten million dollars

($10,000,000) may be deposited in any one qualified

depository institution pursuant to the linked deposit

program. For funds invested in qualified depository

institutions pursuant to the linked deposit program, the

state treasurer is authorized to accept a rate of return that

is not more than one percent below the market rate.

C. The director of the financial institutions

division of the regulation and licensing department shall

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promulgate rules implementing the provisions of this section.

Those rules shall address the following areas:

(1) eligibility criteria for qualified

depository institutions participating in the linked deposit

program;

(2) application procedures for participation

in the linked deposit program; and

(3) verification criteria for determining

that a qualified depository institution participating in the

linked deposit program is meeting the banking service needs

of a financially at risk community."

Section 2. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.