NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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(Parentheses ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Regulation and Licensing Department

SUMMARY

Synopsis of HBIC Amendment

This amendment to House Bill 710 clarifies that the land used to secure a loan of an amount no greater than eighty percent of the appraised value, be "improved farmland or is improved by offsite improvements such as streets, water, sewers or other utilities;"

Synopsis of Bill

This bill amends and repeals several laws relating to banks and banking.

Section 58-1-3 NMSA 1978 DEFINITIONS-As used in the Banking Act.

New Definitions

"allowances for loan and lease losses"

"capital"

"capital surplus"

"intangible assets"

"lessee"

"lessor"

"limited life preferred stock"

"mandatory convertible debt"

"minority interest in consolidated subsidiaries"

"mortgage servicing rights"

"perpetual preferred stock"

"surplus" or "unimpaired surplus fund"

Section 58-1-21(C) NMSA 1978. LOANS

New Definition

"improved farm land"

Section 58-1-24 DIVERSIFICATION OF LOANS AND INVESTMENTS

Increases the maximum a banks' financial obligations may be in the form of discount notes, letters of credit, accepted drafts, bonds, notes bills of exchange or other forms of indebtedness from thirty percent to sixty percent of total deposits or seventy-five percent of savings, whichever is greater, for obligations secured by real estate, together with the current market value of any real estate owned by the bank and not used in its banking business.

Section 58-1-25 NMSA 1978 ACQUISITION OF PROPERTY TO SATISFY OR PROTECT PREVIOUS LOAN

Provides for discretionary appraisals dependent on the valuation of the property and/or the decision of the director of the institution.

Section 58-1-54 NMSA 1978

New Definition

"Federally chartered or insured depository institution"

Section 58-5-7 NMSA 1978 LEGAL HOLIDAY FOR BANKS

Would no longer require banks to close on holidays.

Repeal Sections 58-1-42, 58-6-1 and 58-6-2.

58-1-42. Fees for filing reports and certificates.

Except the reports prescribed in Section 58-1-40 NMSA 1978 which shall be filed without charge, on filing any certificate or other paper required by the provisions of the Banking Act [Chapter 58, Articles 1, 2 through 6 and 8 NMSA 1978], the bank filing such certificate or paper shall pay to the commissioner [director of the financial institutions division of the regulation and licensing department] a fee of one dollar ($1.00) for each certificate or paper so filed.
History: 1953 Comp., § 48-22-33.8, enacted by Laws 1975, ch. 330, § 26.
58-6-1. [Power to make loans guaranteed under Servicemen's Readjustment Act.]

Without regard to any provision of law, banks, trust companies and building and loan associations organized under the laws of this state are authorized to make any loan guaranteed in whole or in part as provided by the Servicemen's Readjustment Act of 1944, and amendments thereto, or for which there is a commitment to so guarantee or for which a conditional guarantee has been issued.

History: 1941 Comp., § 50-309a, enacted by Laws 1945, ch. 122, § 1; 1953 Comp., § 48-3-10.

58-6-2. Minor may contract for loan.

Any veteran of World War II otherwise eligible for a loan under the Servicemen's Readjustment Act of 1944, but who is a minor, is hereby empowered to contract and bind himself for a loan to be guaranteed under the said act. The disability of minority of any person otherwise eligible for guaranty or insurance of a loan pursuant to the Servicemen's Readjustment Act of 1944, as amended (38 U.S.C.A. 694 et seq.), and of the minor spouse of any eligible veteran, irrespective of his or her age, in connection with any transaction entered into pursuant to said act, as amended, is hereby removed for all purposes in connection with such transaction, including, but not limited to, incurring of indebtedness or obligations, and acquiring, encumbering, selling, releasing or conveying property or any interest therein, and litigating or settling controversies arising therefrom, if all or part of any obligations incident to such transaction be guaranteed or insured by the administrator of veterans affairs pursuant to such act; provided nevertheless that this act [58-6-1, 58-6-2 NMSA 1978] shall not be construed to impose any other or greater rights or liabilities than would exist if such person and such spouse were under no such disability.

History: 1941 Comp., § 50-309b, enacted by Laws 1945, ch. 122, § 2; 1947, ch. 186, § 1; 1953 Comp., § 48-3-11.

FISCAL IMPLICATIONS

Unknown at this time.

SIGNIFICANT ISSUES

This bill amends many sections of laws that affect banks, and the banking industry. This analyst is not qualified to provide an adequate analysis of all of the changes and the impacts to the financial sector of the economy that this bill may have.

The legislature may wish to consider calling expert witnesses from the banking industry as well as attorneys familiar with banking and the rules, regulations, statutes and federal codes governing them.

The Regulation and Licensing Department reports that the changes will bring parity to state and national banks and other federally charters insured depository institutions.

JBE/gm