New Mexico Administrative Code
Title 2 - PUBLIC FINANCE
Chapter 60 - INVESTMENT AND DEPOSIT OF PUBLIC FUNDS
Part 4 - DEPOSITORY BANK REQUIREMENTS, COLLATERAL LEVEL REQUIREMENTS, AND CUSTODIAL BANK REQUIREMENTS
Section 2.60.4.15 - CUSTODIAL BANK NON-COMPLIANCE

Universal Citation: 2 NM Admin Code 2.60.4.15

Current through Register Vol. 35, No. 18, September 24, 2024

A. Unless a waiver is granted by the state treasurer pursuant to Subsection D of 2.60.4.13.NMAC, a financial institution will be disqualified from serving as custodial bank for state deposits when any one of the following three conditions occur:

(1) any one of the following risk assessment ratio conditions occur for three consecutive quarters:
(a) primary capital-to-asset ratio falls below 6.1 percent;

(b) net operating income-to-total average asset ratio falls below .61 percent; or

(c) the non-performing loans-to-primary capital ratio rises above 34.9 percent;

(2) any two of the following risk assessment ratio conditions occur for two consecutive quarters:
(a) primary capital-to-asset ratio falls below 6.1 percent;

(b) net operating income-to-total average assets ratio falls below .61 percent; or

(c) the non-performing loan-to-primary capital ratio rises above 34.9 percent; or

(3) any one of the following risk assessment ratio conditions occur for more than one quarter:
(a) primary capital-to-asset ratio falls below 5.0 percent;

(b) net operating income-to-total average asset ratio falls below .51 percent; or

(c) the non-performing loans-to-primary capital ratio rises above 49.9 percent.

B. The state treasurer shall notify the custodial bank in writing of revocation of its designation as custodial bank stating the reason for revocation. The financial institution shall notify depository banks of termination of the custodial agreement within three (3) business days and shall cooperate in the expeditious and orderly transfer of collateral.

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