Table of Contents Annual Report(1).pdf · Other: Copying fees & Application Packets $400 $974 Mortgage Fees (General Fund Contribution) $220,550 $216,900 GENERAL FUND TOTAL $3,997,183

0

1

2

Table of Contents Historical Review ........................................................................................................................................ 4

Executive Staff ......................................................................................................................................... 5

Institutions Regulated by the Financial Institutions Division ................................................................. 8

Revenues ...................................................................................................................................................... 9

Activity Conducted By Financial Institutions Division for Year 2017 ................................................. 10

Charters, Permits, ................................................................................................................................. 10

Certificates or Licenses: ....................................................................................................................... 10

Renewals: ............................................................................................................................................... 10

Examinations: ........................................................................................................................................ 11

Consumer Complaints: ......................................................................................................................... 11

New Mexico State Chartered Banks ........................................................................................................ 12

Bank Commentary .................................................................................................................................... 13

New Mexico State Chartered Bank Total Assets ............................................................................... 18

New Mexico State Chartered Banks Consolidated Report of Condition ............................................. 19

New Mexico State Chartered Credit Unions .......................................................................................... 37

Credit Union Commentary ...................................................................................................................... 38

New Mexico State Chartered Credit Unions Consolidated Report of Condition ............................... 41

New Mexico Consumer Financial Industries .......................................................................................... 48

Consumer Industries Commentary ......................................................................................................... 49

New Mexico Mortgage and Escrow Industries ....................................................................................... 54

Mortgage and Escrow Commentary ....................................................................................................... 55

3

Executive Staff

Christopher Moya Acting Director Kevin Graham Division Attorney

Rebecca Moore Bank Industry Manager David Gee Credit Union Industry Manager

Joe Cruz Mortgage Industry Manager David Mora Consumer Industry Manager

Nick Kost Chief Examiner Maya Otero Office Manager

Bank Examiners Mortgage Examiners

Juan Pablo Trevizo Christopher Wolf

Angela Johnson Isaac Garcia Chelsie Gantert Lori Roybal Charles Lange Margaret Ducharme Melodie Ryan Michael Saiz

Credit Union Examiners Small Loan Examiners

Aldo Rivali Melissa Baca Ginger Mitchell Lydell Brown David Shelton Susan Paleo

Licensing Staff Money Service Business Examiners

Michelle Medina Eric Valdez Johanna Sandoval Anthony Sena

4

Historical Review The First Annual Report of the State Banking Department was submitted in 1912, by authority under Section 3, Chapter 61, Laws of 1912. The individual submitting the report held the title “Traveling Auditor and Bank Examiner."

The title has changed several times over the years from State Bank Examiner to Commissioner to the current title of Director.

Listed below are the State Bank Examiners, Commissioners and Directors of Banking from 1915 to current.

Name Title Term Served

R. H. Carter State Bank Examiner George H. Van Stone State Bank Examiner James B. Read State Bank Examiner Langdon B. Gregg State Bank Examiner Woodlan P. Saunders State Bank Examiner Lawrence A. Tamm State Bank Examiner John Bingham State Bank Examiner Woodlan P. Saunders State Bank Examiner Nolan P. Walte State Bank Examiner Woodlan P. Saunders State Bank Examiner Alfred W. Kaune State Bank Examiner Woodlan P. Saunders State Bank Examiner Frank F. Weddington State Bank Examiner Joseph B. Grant State Bank Examiner Keith B. Moore State Bank Examiner Arthur Atherton Commissioner of Banking W. J. Upton Commissioner of Banking Charles F. McConnell Commissioner of Banking Grant O. Brumlow Commissioner of Banking S. L. Sanders Commissioner of Banking Roy W. Davidson Commissioner of Banking Herbert H. Hughes Commissioner of Banking Arthur L. Ortiz Commissioner of Banking A. M. Swarthout Director Richard C. Bosson Director Mary M. McInerny Director James W. Stretz Director Kenneth J. Carson, Jr. Director Robert I. LaGrange Director William J. Verant Director Cynthia Richards Director Christopher Moya Director

1915 – 1918 1918 – 1920 1920 – 1923 1923 – 1925 1925 – 1926 1926 – 1931 1931 – 1934 1934 – 1939 1939 – 1941 1941 – 1951 1951 – 1954 1954 – 1955 1955 – 1960 1960 – 1961 1961 – 1963 1963 - 1963 1963 – 1967 1967 – 1968 1968 – 1970 1970 – 1971 1971 – 1975 1975 – 1977 1977 – 1981 1981 – 1983 1983 – 1984 1984 – 1986 1986 – 1988 1988 – 1993 1993 - 1994 1995 – 2011 2011 - 2016

2016 - Current

5

Executive Staff

Christopher Moya Director

Kevin Graham Division Counsel

6

Rebecca Moore Bank & Trust Industry Manager

Nick Kost Chief Examiner

David Gee Credit Union Industry Manager

7

Maya Otero Office Manager

David Mora Consumer Area Industry Manager

Joe Cruz Mortgage & Escrow Industry Manager

8

Institutions Regulated by the Financial Institutions Division

12/31/2018 12/31/2017 State Chartered Banks 31 32 Small Loan Companies 597 620 Motor Vehicle Sales Finance Companies 268 272 Credit Unions 19 19 Collection Agencies 578 579 Collection Agency Manager's License's 580 583 Collection Agency Branches 398 371 Repossessor's 49 52 Endowed Care Cemeteries 17 17 Licensed Mortgage Loan Companies 396 389 Licensed Mortgage Loan Branches 852 842

6,991 6,784 36 39 11 7 9 9 14 12 1 1

119 100

Licensed Mortgage Loan Originators Escrow Companies Trust Companies Loan Production Offices of New Mexico Banks Check Cashers Currency Exchangers Money Transmitters MSB Authorized Delegates 4,896 4,752

TOTAL 15,862 15,480

9

Revenues

General Fund FY 2018 FY 2017 Consumer Area $1,667,407 $1,368,680 Banks & Trusts $1,673,809 $1,565,928 Credit Unions $435,017 $412,627 Other: Copying fees & Application Packets $400 $974 Mortgage Fees (General Fund Contribution) $220,550 $216,900 GENERAL FUND TOTAL $3,997,183 $3,656,139

Mortgage Regulatory Fund (MRF) FY 2018 FY 2017 Mortgage Loan Company Licensing $543,850 $433,650 Mortgage Loan Company Branch Licensing $515,150 $499,550 Mortgage Loan Originator Licensing $1,702,700 $1,732,00 MRF TOTAL $2,761,700 $2,665,200

Money Services Business Regulatory Fund (MSBRF) FY 2018 FY 2017 Money Transmitters $309,145 $407,325 Check Cashers 23,000 $40,000 Currency Exchangers $1,000 $4,000 MSBRF Total $333,145 $451,325 TOTAL REVENUES $7,092,028 $6,772,664

10

Activity Conducted By Financial Institutions Division for Year 2018

Charters, Permits, Certificates or Licenses: 12/31/2018 12/31/2017

2 5 1 0 4 0 1 3 0 0

80 33 13 22

0 0 61 45 67 48

109 41 7 4 0 0 4 0

42 4 239 46

1,724 1,734 0 2

22 51 2 7 0 1

New Escrow Companies New Banks / Charter ConversionsNew Bank Branches New ATM Permits New Savings & Loan Associations New Small Loan Companies New Motor Vehicle Sales Finance Companies New Credit Unions New Collection Agencies New Managers for Collection Agencies New Collection Agency Branches New Repossessors New Endowed Care Cemeteries & Mausoleums New Certified Independent Trust Companies New Mortgage Loan Companies New Mortgage Branches New Mortgage Loan Originators New Loan Production Offices New Money Transmitter New Check Casher New Currency Exchanger New Authorized Delegates Money Services Business 720 821

TOTAL 3,098 2,867

Renewals: 12/31/2018 12/31/2017

Escrow Companies 37 35 Small Loan Companies 552 626 Motor Vehicle Sales Finance Companies 249 272 Collection Agency Licensees 541 530 Collection Agency Manager's License's 539 527 Repossessors 44 42 Endowed Care Cemeteries & Mausoleums 17 17 Licensed Mortgage Loan Companies 376 377 Mortgage Branches 774 782 Mortgage Loan Originators 4,908 5,407 Money Transmitters 113 NA Check Cashers 11 NA Currency Exchanger 1 NA

TOTAL 8,162 8,615

11

Examinations: 12/31/2018 12/31/2017

Escrow Companies 5 6 Banks 11 15 Small Loan Companies 582 645 Credit Unions 19 19 Trust Companies 6 5 Licensed Mortgage Loan Companies 45 49 Licensed Mortgage Loan Branches 100 52 Motor Vehicle Sales Finance Co 23 NA Money Service Businesses 8 NA

TOTAL 799 791

Consumer Complaints: 12/31/2018 12/31/2017

Banks 4 3 Trust Companies 0 1 Credit Unions 5 6 Escrow Companies 6 7 Small Loan Licenses 8 3 Motor Vehicle Sales Finance Companies 1 1 Collection Agencies 3 5 Repossessors 1 2 Endowed Care Cemeteries & Mausoleums 1 1 Licensed Mortgage Loan Companies 15 9 Money Transmitters 4 3

TOTAL 48 41

12

New Mexico State Chartered Banks

13

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2012 2013 2014 2015 2016 20172018

3,960,0004,080,000 4,187,985 4,658,065 4,990,272 5,482,388 5,881,536

7,020,0007,190,000 7,586,170 8,197,489 8,311,399 8,492,7229,750,975

Loans to Deposits ($000s)

Loans Deposits

Bank Commentary Loans to Deposits

Deposit growth seriously outpaced loan growth in 2018, as is shown in the comparison bar graph below. While the availability of quality loans has been less than stellar in New Mexico since the great recession, the oil boom in the Southeast corner has provided an overflow of deposits as well. We are certainly grateful for the revenue the oil sector has provided. My hometown of Carlsbad is nearly unrecognizable with all the growth.

With the

rapid growth in deposits during 2018 (almost 15% above 2017 deposits), and the modest loan growth of less than 7%, the loan to deposit ratio fell again after rising steadily since 2014. The demand for quality loans in New Mexico continues to be lackluster.

56.41% 56.75%55.21%

56.82%

60.04%

64.55%

60.32%

50.00%

52.00%

54.00%

56.00%

58.00%

60.00%

62.00%

64.00%

66.00%

2012 2013 2014 2015 2016 2017 2018

Loan to Deposit Ratio

14

Earnings The good news for banks this year is that earnings grew significantly – double-digit growth in fact. Due in part to maturing loans and securities repricing at higher rates, banks also continue to improve efficiencies. Some have even banded together to share external resources to improve further. Increased earnings continue to

have a positive impact with regard to internal capital formation through retained earnings, as is demonstrated in the following section on assets and equity capital. Assets and Equity Capital

As deposit grow continues, so do the corresponding assets and liabilities. For those outside the industry, a bank customer’s deposits are a liability on the bank’s balance sheet. However, the

banks in turn deploy those deposits into securities or loans on the

bank’s balance

sheet. Equity capital

creates a buffer so that if loans or securities default, the

deposit customer is not directly

impacted. This why there is such an importance placed on bank capital – it is an added layer of protection for consumers who deposit funds into banks.

2012 2013 2014 2015 2016 2017 2018Earnings 97,000 95,200 99,539 116,255126,825139,401169,696% Earnings Growth -1.86% 4.56% 16.79% 9.09% 9.92% 21.73%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Earnings ($000s)

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2012 2013 2014 2015 2016 2017 2018

8,440,000 8,580,000 9,014,8569,603,406 9,770,890 10,069,775

10,616,765

Assets ($000s)

15

857,000 814,000 878,241 933,740 948,950 1,030,771 1,092,266

8,440,000 8,580,0009,014,856

9,603,406 9,770,890 10,069,77510,616,765

10.15%

9.49%

9.74% 9.72% 9.71%

10.24%10.29%

9.00%

9.20%

9.40%

9.60%

9.80%

10.00%

10.20%

10.40%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2012 2013 2014 2015 2016 2017 2018

Equity Capital to Assets ($000s)

Equity Capital ($000s) Assets ($000s) % Equity to Assets

The good news for bank customers is that Equity Capital to Assets continues its march upward. As of year-end 2008, the average for state chartered banks capital was 8.86%, compared with 10.29% at year-end 2018. In real dollars, that was capital of $833 million, compared with almost $1.1 billion today – and that is with 5 fewer banks now. The strength of New Mexico banks continues to increase, as is illustrated in this text and the associated graph.

Trust Companies

I am pleased to see that our state certified trust companies continue to grow both in assets held/managed and in number. During 2017 and 2018, we worked hard with four different companies to become certified by FID. Each new trust company has a specialty niche market, all of which are valuable assets to the citizens of New Mexico. Two of the new companies specialize in Special Needs Trusts, and two are focused on retirement accounts – but they cater to different segments and needs in those realms.

0

2,000,000

4,000,000

6,000,000

2015 2016 20172018

3,500,000 3,900,000 4,319,151 4,546,893

Trust Assets ($000s)

Trust Assets

16

Overview

First, I would like to send a warm welcome our “newest” member of the state chartered bank community – CNB Bank in Carlsbad. While CNB is not a new bank (they were originally chartered as a national bank in 1924), they are new to the state chartered experience as of December 1, 2018.

Focus in community banks and independent trust companies in 2019 must remain on providing more technology, without massive investment dollars being spent, and then on cybersecurity to protect those channels. The changes driven both by customers and by legislation and feel daunting to those tasked with the day-to-day survival of their company.

Perhaps collaborating with Fintech companies will help banks become more nimble at providing digital services. Perhaps bank branches will start to look more like airport check-in kiosks or internet cafés than a traditional bank branch. Perhaps more ITMs will start showing up to handle the ever-dwindling number of transactions that run through branches, but still allow an individual to connect with a real service rep when needed. I cannot imagine branches will disappear completely in near future – consumers still like to have a face to the company, particularly during difficulties. AI still has a long way to go before it can replace that. I do see a continued significant downward shift in size and staffing of those branches. The change in branches is what will keep them alive, and in turn, keep community banks alive.

Another key component to keeping community banking vibrant into the future is finding, training, and retaining new talent. As demographics should a dramatic shift of our youth from rural communities to urban areas, and from New Mexico to other states, this has become an ever-growing challenge. Can sharing resources for IT, HR, Compliance, or other specialized areas be helpful? Perhaps for sections that are not customer facing, can teleworking from urban areas help to fill the gaps that are getting tougher to fill in the rural areas. Each financial institution has to address the challenges they face in the unique way that works best for them.

Final Thoughts

Lions and tigers and bears, oh my! In thinking about writing my thoughts for this year’s report, I remembered this line from the Wizard of Oz movie. Only for us, I suppose it would be lending concerns, tariff talks, and bear market predictions (oh my). When I dust off my fortune telling equipment this time of year, I try to think about what might affect New Mexico’s state chartered banks and certified trust companies in the near-term future. Certainly, hemp agriculture is a hot topic. Should banks take the growers deposits, should banks lend on crops? Checking my magic 8 ball and it says, “reply hazy, try again.” My crystal ball does no better on the question of when or how tariffs will be enacted and how they will ultimately affect the New Mexico economy. Bear market? Guess that is much like the weather around here, if you don’t like it right now, just wait a minute and it will change. Other topics we seem to go over year after year is the opportunities and threats associated with Fintech, appraiser shortages in rural markets, difficulties of succession planning due to the outflow of the state’s youth, and the low loan to deposit ratio in our state – which leads to banks from other states trying to deposit grab here to put to use in their home state instead. Perhaps we will see a more positive outcome in 2019? The magic 8 ball says, “ask again later.”

17

With so much uncertainty, it is refreshing for the citizens of New Mexico to have their local banks and trust companies to turn to. People who understand the needs of their community and are focused on how they can help locals today instead of focusing on international market fluctuations that make take years to be felt here. That said, I was recently in interviews and it struck me just how many people from outside the industry still have our state banks lumped into the same category as those deemed “too big to fail” in the not so distant past. Having been a community banker myself for almost two decades, that still cuts deep. Our upstanding certified trust companies have taken a hit with the bad publicity over Desert State Life Management, Ayudando, and other firms that have taken advantage of some of our most vulnerable citizens.

I want to take this opportunity to encourage the fine citizens of our state to try a community

bank if you do not like the service you are receiving at that Mega Bank. If your trust is being administered in a faraway state and is causing you stress, bring that trust to one of the great companies headquartered right here in New Mexico. Lists of state banks and trust companies are just a click away on our website. I think you will be amazed at the difference.

Rebecca S. Moore Bank & Trust Industry Manager

18

New Mexico State Chartered Bank Total Assets

Year Number

of Banks Total Assets Year Number

of Banks Total Assets

1970 33 $ 589,486,100 1971 38 $ 705,573,500 1972 38 $ 875,354,800 1973 42 $ 1,024,517,200 1974 44 $ 1,135,083,300 1975 44 $ 1,270,042,300 1976 44 $ 1,401,962,000 1977 45 $ 1,631,442,000 1978 46 $ 1,918,913,000 1979 49 $ 2,128,954,000 1980 49 $ 2,428,431,000 1981 48 $ 2,677,073,000 1982 51 $ 3,033,396,000 1983 51 $ 3,135,590,000 1984 51 $ 3,373,234,000 1985 51 $ 3,708,376,000 1986 52 $ 3,995,388,000 1987 52 $ 3,848,889,000 1988 52 $ 3,907,677,000 1989 52 $ 4,090,412,000 1990 50 $ 4,165,081,000 1991 47 $ 4,541,692,000 1992 48 $ 4,815,751,000 1993 49 $ 5,139,579,000 1994 40 $ 4,140,116,000 1995 40 $ 4,416,190,000 1996 41 $ 4,891,094,000 1997 38 $ 3,990,911,000 1998 37 $ 3,860,997,000 1999 35 $ 3,978,256,000 2000 38 $ 4,150,895,000 2001 38 $ 4,582,266,000 2002 36 $ 5,134,360,000 2003 36 $ 5,754,527,000 2004 35 $ 6,137,882,000 2005 34 $ 6,673,389,000 2006 33 $ 7,538,404,000 2007 36 $ 8,971,251,000 2008 36 $ 9,402,335,000 2009 37 $ 9,820,200,000 2010 37 $ 9,822,970,000 2011 36 $ 7,993,911,000 2012 35 $ 8,439,804,000 2013 35 $ 8,584,524,000 2014 32 $ 9,014,856,000 2015 32 $ 9,603,406,000 2016 32 $ 9,770,891,000 2017 32 $10,069,771,000 2018 31 $10,616,765,000

19

New Mexico State Chartered Banks Consolidated Report of Condition

As of December 31, 2018

20

Consolidated Report of Condition Balance Sheet

As of December 31, 2018 ($000)

12/31/2018 12/31/2017

Number of Banks 31 32

ASSETS

Noninterest-bearing balances and currency and coin 217,497 186,104 Interest-Bearing Balances 703,286 601,170 Securities:

Held-to-Maturity Securities 990,143 1,010,170 Available-for-Sale Securities 2,148,448 2,116,847 Equity Securities not held for trading 2,432 NR Federal Funds sold 136,028 145,047 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables: - - Loans and leases held for sale 15,982 14,578 Loans and Leases, Net of Unearned Income 5,967,797 5,567,333 LESS: Allowance for Loan and Lease Losses 86,261 84,945 Net Loans and Leases 5,881,536 5,482,388 Trading Assets 688 - Premises and Fixed Assets 196,096 202,161 Other Real Estate Owned 26,683 34,098 Investments in Unconsolidated Subsidiaries 2,341 2,015 Direct and Indirect investments in real estate ventures - - Intangible Assets 35,195

Other Assets 260,410 249,876 Total Assets 10,616,765 10,069,775

LIABILITIES

Deposits:

In Domestic Offices 9,750,975 8,492,722 Noninterest-Bearing 3,039,868 2,799,694 Interest-Bearing 6,111,107 5,693,029 Federal Funds Purchased 42,039 46,415 Sec. Sold Under Agreements to Repurchase 132,436 179,118 Trading Liabilities - - Other borrowed money (includes mortgage indebtedness

and obligations under capitalized leases)

(from Schedule RC-M) 135,619 263,336 Subordinated Notes and Debentures - - Other Liabilities 63,448 57,335 Total Liabilities 9,524,499 9,039,000

EQUITY CAPITAL

Common Stock 48,372 49,232 Surplus (exclude surplus preferred stock) 401,114 354,269 Retained Earnings 676,509 642,494 Accumulated Other Comprehensive Income (31,914) (12,885) Other equity capital components (1,815) (2,339) Total Bank equity capital 1,092,266 1,030,771 Noncontrolling (minority) interests in consolidated subsidiaries

- -

Total equity capital 1,092,266 1,030,771 Total liabilities and equity capital 10,616,765 10,069,771

21

WESTERN BANK MAIN BANK ALAMOGORDO ALBUQUERQUE

ASSETS Noninterest-bearing balances and currency and coin 6,080 1,217 Interest-Bearing Balances 28 24,074 Securities: Held-to-Maturity Securities 19,176 - Available-for-Sale Securities 962 9,933 Equity Securities not held for trading - - Federal Funds sold - 1,000 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables: Loans and leases held for sale - - Loans and Leases, Net of Unearned Income 33,901 99,412 LESS: Allowance for Loan and Lease Losses 472 1,390 Net Loans and Leases 33,429 98,022 Trading Assets - - Premises and Fixed Assets 1,378 6,462 Other Real Estate Owned 483 - Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - - Other Assets 1,354 2,835 Total Assets 62,890 143,543 LIABILITIES Deposits: In Domestic Offices 48,867 129,612 Noninterest-Bearing 10,944 22,598 Interest-Bearing 37,923 107,013 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase - - Trading Liabilities - - Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) (from Schedule RC-M) 3,113 - Subordinated Notes and Debentures - - Other Liabilities 285 421 Total Liabilities 52,265 130,033 EQUITY CAPITAL Perpetual preferred stock and related surplus - - Common Stock 634 10 Surplus (exclude surplus preferred stock) 3,291 8,119 Retained Earnings 6,727 5,511 Accumulated Other Comprehensive Income (27) (130) Other equity capital components - - Total Bank equity capital 10,625 13,510 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 10,625 13,510 Total liabilities and equity capital 62,890 143,543

Consolidated Report of Condition

Balance Sheet As of December 31, 2018

($000)

22

NEW MEXICO SOUTHWEST BANK & TRUST CAPITAL BANK ALBUQUERQUE ALBUQUERQUE

ASSETS


Held-to-Maturity Securities 52,871 11,302 Available-for-Sale Securities 291,226 41,804 Equity Securities not held for trading 958 - Federal Funds sold 2,700 3,815 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale - - Loans and Leases, Net of Unearned Income 1,059,490 266,122 LESS: Allowance for Loan and Lease Losses 9,095 4,507 Net Loans and Leases 1,050,395 261,615 Trading Assets - - Premises and Fixed Assets 23,441 11,560 Other Real Estate Owned 341 7,975 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets 11,233 - Other Assets 31,424 7,982 Total Assets 1,492,555 382,497 LIABILITIES

Deposits:

In Domestic Offices 1,307,464 339,169 Noninterest-Bearing 521,511 111,954 Interest-Bearing 785,953 227,215 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase 27,779 1,284 Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) 2,487 5,000 Subordinated Notes and Debentures - - Other Liabilities 6,219 380 Total Liabilities 1,343,949 345,833 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 27 6,500 Surplus (exclude surplus preferred stock) 49,577 21,500 Retained Earnings 101,951 9,596 Accumulated Other Comprehensive Income (2,949) (932) Other equity capital components - - Total Bank equity capital 148,606 36,664 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 148,606 36,664 Total liabilities and equity capital 1,492,555 382,497



($000)

23

FIRST

AMERICAN BANK WESTERN BANK

ARTESIA ARTESIA ASSETS


Held-to-Maturity Securities 58,366 9,911 Available-for-Sale Securities 265,700 60,004 Equity Securities not held for trading - - Federal Funds sold - 30,824 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 3,550 - Loans and Leases, Net of Unearned Income 710,479 95,404 LESS: Allowance for Loan and Lease Losses 15,422 1,257 Net Loans and Leases 695,057 94,147 Trading Assets - - Premises and Fixed Assets 26,677 1,840 Other Real Estate Owned 681 311 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets 3,914 - Other Assets 29,479 1,610 Total Assets 1,140,870 218,870 LIABILITIES

Deposits:

In Domestic Offices 981,645 199,571 Noninterest-Bearing 329,956 103,910 Interest-Bearing 651,689 95,661 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase 22,648 - Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) - - Subordinated Notes and Debentures - - Other Liabilities 16,111 18 Total Liabilities 1,020,404 199,589 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 3,769 400 Surplus (exclude surplus preferred stock) 55,997 5,350 Retained Earnings 66,130 14,249 Accumulated Other Comprehensive Income (5,430) (718) Other equity capital components - - Total Bank equity capital 120,466 19,281 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 120,466 19,281 Total liabilities and equity capital 1,140,870 218,870



($000)

24

WESTERN CNB BANK COMMERCE BANK

CARLSBAD CARLSBAD ASSETS


Held-to-Maturity Securities - 124,366 Available-for-Sale Securities 194,295 5,186 Equity Securities not held for trading - - Federal Funds sold - - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale - - Loans and Leases, Net of Unearned Income 187,819 233,531 LESS: Allowance for Loan and Lease Losses 1,904 2,219 Net Loans and Leases 185,915 231,312 Trading Assets - - Premises and Fixed Assets 2,020 4,722 Other Real Estate Owned - 744 Investments in Unconsolidated Subsidiaries - 1,385 Direct and Indirect investments in real estate ventures - - Intangible Assets 407 - Other Assets 11,698 2,658 Total Assets 414,538 493,995 LIABILITIES

Deposits:



(from Schedule RC-M) - - Subordinated Notes and Debentures - - Other Liabilities 529 286 Total Liabilities 384,577 454,494 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 2,500 672 Surplus (exclude surplus preferred stock) 2,500 9,905 Retained Earnings 28,881 29,579 Accumulated Other Comprehensive Income (3,920) (655) Other equity capital components - - Total Bank equity capital 29,961 39,501 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 29,961 39,501 Total liabilities and equity capital 414,538 493,995



($000)

25

FARMERS &

STOCKMENS BANK FNB NEW MEXICO

CLAYTON CLAYTON ASSETS


Held-to-Maturity Securities - - Available-for-Sale Securities 3,950 40,740 Equity Securities not held for trading - - Federal Funds sold 27,023 - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 1,550 - Loans and Leases, Net of Unearned Income 154,147 181,867 LESS: Allowance for Loan and Lease Losses 2,376 2,318 Net Loans and Leases 151,771 179,549 Trading Assets - - Premises and Fixed Assets 2,420 11,046 Other Real Estate Owned 188 616 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets 3,479 374 Other Assets 2,799 9,085 Total Assets 224,410 253,948 LIABILITIES

Deposits:

In Domestic Offices 187,643 228,619 Noninterest-Bearing 58,374 76,918 Interest-Bearing 129,269 151,701 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase - - Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) 9,043 677 Subordinated Notes and Debentures - - Other Liabilities 1,010 1,220 Total Liabilities 197,696 230,516 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 686 1,200 Surplus (exclude surplus preferred stock) 16,479 8,800 Retained Earnings 9,661 14,886 Accumulated Other Comprehensive Income (112) (1,454) Other equity capital components - - Total Bank equity capital 26,714 23,432 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 26,714 23,432 Total liabilities and equity capital 224,410 253,948



($000)

26

AMERICAN HERITAGE THE BANK OF

CLOVIS CLOVIS ASSETS


Held-to-Maturity Securities - 15,067 Available-for-Sale Securities 24,811 52,147 Equity Securities not held for trading - - Federal Funds sold - 2,300 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale - 111 Loans and Leases, Net of Unearned Income 48,767 108,451 LESS: Allowance for Loan and Lease Losses 744 2,058 Net Loans and Leases 48,023 106,393 Trading Assets - - Premises and Fixed Assets 2,056 1,972 Other Real Estate Owned 268 - Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - - Other Assets 3,426 8,448 Total Assets 87,471 196,050 LIABILITIES

Deposits:

In Domestic Offices 76,399 160,770 Noninterest-Bearing 21,448 44,648 Interest-Bearing 54,951 116,122 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase - 4,513 Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) - 5,000 Subordinated Notes and Debentures - - Other Liabilities 519 1,603 Total Liabilities 76,918 171,886 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 4,593 3,569 Surplus (exclude surplus preferred stock) 2,584 8,818 Retained Earnings 3,318 12,846 Accumulated Other Comprehensive Income 59 (1,070) Other equity capital components - - Total Bank equity capital 10,554 24,163 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 10,554 24,163 Total liabilities and equity capital 87,472 196,049



($000)

27

THE CITIZENS WESTERN BANK OF BANK OF

CLOVIS CLOVIS ASSETS

Noninterest-bearing balances and currency and coin 18,229 755 Interest-Bearing Balances 10,848 48,789 Securities:

Held-to-Maturity Securities - 13,858 Available-for-Sale Securities 106,349 - Equity Securities not held for trading - - Federal Funds sold 10,000 - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale - - Loans and Leases, Net of Unearned Income 194,414 37,429 LESS: Allowance for Loan and Lease Losses 2,152 614 Net Loans and Leases 192,262 36,815 Trading Assets - - Premises and Fixed Assets 3,340 1,226 Other Real Estate Owned - - Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - - Other Assets 11,787 1,038 Total Assets 352,815 102,481 LIABILITIES

Deposits:



(from Schedule RC-M) - 8,690 Subordinated Notes and Debentures - - Other Liabilities 1,865 74 Total Liabilities 313,551 93,458 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 2,000 410 Surplus (exclude surplus preferred stock) 10,566 2,040 Retained Earnings 30,355 6,573 Accumulated Other Comprehensive Income (3,657) - Other equity capital components - - Total Bank equity capital 39,264 9,023 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 39,264 9,023 Total liabilities and equity capital 352,815 102,481



($000)

28

FIRST NEW FOUR CORNERS MEXICO BANK COMMUNITY BANK

DEMING FARMINGTON ASSETS


Held-to-Maturity Securities 75,306 - Available-for-Sale Securities - 56,696 Equity Securities not held for trading - - Federal Funds sold 19,400 - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 131 - Loans and Leases, Net of Unearned Income 81,725 256,680 LESS: Allowance for Loan and Lease Losses 1,725 4,148 Net Loans and Leases 80,000 252,532 Trading Assets - - Premises and Fixed Assets 3,400 8,051 Other Real Estate Owned 308 310 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - 191 Other Assets 5,879 4,710 Total Assets 207,190 351,314 LIABILITIES

Deposits:

In Domestic Offices 176,513 275,377 Noninterest-Bearing 49,175 103,081 Interest-Bearing 127,338 172,296 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase - 33,319 Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) - - Subordinated Notes and Debentures - - Other Liabilities 2,242 1,106 Total Liabilities 178,755 309,802 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 1,200 3,866 Surplus (exclude surplus preferred stock) 2,800 10,660 Retained Earnings 26,250 28,476 Accumulated Other Comprehensive Income - (1,490) Other equity capital components (1,815) - Total Bank equity capital 28,435 41,512 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 28,435 41,512 Total liabilities and equity capital 207,190 351,314



($000)

29

THE CITIZENS LEA COUNTY BANK STATE BANK

FARMINGTON HOBBS ASSETS


Held-to-Maturity Securities 228,892 - Available-for-Sale Securities 117,540 215,815 Equity Securities not held for trading - - Federal Funds sold - - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 256 1,585 Loans and Leases, Net of Unearned Income 276,758 96,058 LESS: Allowance for Loan and Lease Losses 4,238 794 Net Loans and Leases 272,520 95,264 Trading Assets - - Premises and Fixed Assets 3,812 2,012 Other Real Estate Owned 128 - Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - 217 Other Assets 28,459 10,529 Total Assets 679,648 334,758 LIABILITIES

Deposits:

In Domestic Offices 544,110 295,339 Noninterest-Bearing 160,525 119,718 Interest-Bearing 383,585 175,621 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase 20,790 7,628 Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) 44,500 - Subordinated Notes and Debentures - - Other Liabilities 1,231 1,829 Total Liabilities 610,613 304,796 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 500 2,431 Surplus (exclude surplus preferred stock) 15,685 3,069 Retained Earnings 55,169 25,965 Accumulated Other Comprehensive Income (2,318) (1,503) Other equity capital components - - Total Bank equity capital 69,036 29,962 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 69,036 29,962 Total liabilities and equity capital 679,649 334,758



($000)

30

CITIZENS FIRST NEW BANK OF MEXICO BANK

LAS CRUCES LAS CRUCES ASSETS


Held-to-Maturity Securities 2 24,021 Available-for-Sale Securities 119,050 - Equity Securities not held for trading - - Federal Funds sold - 130 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 5,345 1,208 Loans and Leases, Net of Unearned Income 393,958 59,240 LESS: Allowance for Loan and Lease Losses 7,099 1,532 Net Loans and Leases 386,859 57,708 Trading Assets - - Premises and Fixed Assets 13,046 4,025 Other Real Estate Owned 218 - Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - - Other Assets 13,529 1,784 Total Assets 559,864 112,442 LIABILITIES

Deposits:



(from Schedule RC-M) - - Subordinated Notes and Debentures - - Other Liabilities 5,574 3,176 Total Liabilities 504,567 95,756 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 1,111 4,000 Surplus (exclude surplus preferred stock) 6,900 3,000 Retained Earnings 49,358 9,686 Accumulated Other Comprehensive Income (2,072) - Other equity capital components - - Total Bank equity capital 55,297 16,686 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 55,297 16,686 Total liabilities and equity capital 559,864 112,442



($000)

31

WESTERN COMMUNITY HERITAGE BANK 1ST BANK

LAS CRUCES LAS VEGAS ASSETS


Held-to-Maturity Securities 6,989 - Available-for-Sale Securities 8,309 49,762 Equity Securities not held for trading - - Federal Funds sold - 19,935 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 1,448 - Loans and Leases, Net of Unearned Income 143,816 44,356 LESS: Allowance for Loan and Lease Losses 1,115 960 Net Loans and Leases 142,701 43,396 Trading Assets - - Premises and Fixed Assets 8,258 4,439 Other Real Estate Owned - 3,217 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets 1,846 - Other Assets 2,516 3,378 Total Assets 206,023 142,708 LIABILITIES

Deposits:



(from Schedule RC-M) 10,276 142 Subordinated Notes and Debentures - - Other Liabilities 716 147 Total Liabilities 179,120 130,172 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 1,200 495 Surplus (exclude surplus preferred stock) 27,818 14,366 Retained Earnings (1,825) (1,733) Accumulated Other Comprehensive Income (290) (592) Other equity capital components - - Total Bank equity capital 26,903 12,536 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 26,903 12,536 Total liabilities and equity capital 206,023 142,708



($000)

32

JAMES POLK STONE WESTERN BANK COMMUNITY BANK

LORDSBURG PORTALES ASSETS


Held-to-Maturity Securities - 69,561 Available-for-Sale Securities 82,153 - Equity Securities not held for trading - - Federal Funds sold - 3,900 Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 288 - Loans and Leases, Net of Unearned Income 70,547 110,790 LESS: Allowance for Loan and Lease Losses 2,785 2,201 Net Loans and Leases 67,762 108,589 Trading Assets - - Premises and Fixed Assets 3,642 7,921 Other Real Estate Owned 760 1,152 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - - Other Assets 5,437 3,121 Total Assets 182,119 220,287 LIABILITIES

Deposits:

In Domestic Offices 159,356 181,440 Noninterest-Bearing 62,813 99,173 Interest-Bearing 96,544 82,267 Federal Funds Purchased - 12,914 Sec. Sold Under Agreements to Repurchase - - Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) 922 72 Subordinated Notes and Debentures - - Other Liabilities 1,194 499 Total Liabilities 161,472 194,925 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 452 1,000 Surplus (exclude surplus preferred stock) 4,663 6,000 Retained Earnings 16,176 18,362 Accumulated Other Comprehensive Income (644) - Other equity capital components - - Total Bank equity capital 20,647 25,362 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 20,647 25,362 Total liabilities and equity capital 182,119 220,287



($000)

33

BANK OF THE INBANK SOUTHWEST RATON ROSWELL

ASSETS


Held-to-Maturity Securities 124,956 88 Available-for-Sale Securities - - Equity Securities not held for trading - - Federal Funds sold - - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale - - Loans and Leases, Net of Unearned Income 191,725 127,706 LESS: Allowance for Loan and Lease Losses 414 1,242 Net Loans and Leases 191,311 126,464 Trading Assets - - Premises and Fixed Assets 5,546 5,643 Other Real Estate Owned 2,600 1,735 Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets 12,053 11 Other Assets 7,060 3,460 Total Assets 356,496 148,081 LIABILITIES

Deposits:

In Domestic Offices 272,783 123,979 Noninterest-Bearing 99,140 17,992 Interest-Bearing 173,643 105,987 Federal Funds Purchased 24,125 5,000 Sec. Sold Under Agreements to Repurchase 1,519 - Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) - 4,746 Subordinated Notes and Debentures - - Other Liabilities 1,530 98 Total Liabilities 299,957 133,823 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 1,365 990 Surplus (exclude surplus preferred stock) 55,097 8,093 Retained Earnings (36) 5,175 Accumulated Other Comprehensive Income 113 - Other equity capital components - - Total Bank equity capital 56,539 14,258 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 56,539 14,258 Total liabilities and equity capital 356,496 148,081



($000)

34

VALLEY BANK

OF COMMERCE CENTURY BANK

ROSWELL SANTA FE ASSETS


Held-to-Maturity Securities - - Available-for-Sale Securities 249 282,191 Equity Securities not held for trading - 1,474 Federal Funds sold - - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale - - Loans and Leases, Net of Unearned Income 55,416 494,339 LESS: Allowance for Loan and Lease Losses 1,250 6,600 Net Loans and Leases 54,166 487,739 Trading Assets - 688 Premises and Fixed Assets 953 19,543 Other Real Estate Owned - 4,400 Investments in Unconsolidated Subsidiaries - 956 Direct and Indirect investments in real estate ventures - - Intangible Assets - 1,470 Other Assets 3,927 30,518 Total Assets 186,919 849,548 LIABILITIES

Deposits:

In Domestic Offices 168,314 724,677 Noninterest-Bearing 75,703 268,785 Interest-Bearing 92,611 455,892 Federal Funds Purchased - - Sec. Sold Under Agreements to Repurchase 20 - Trading Liabilities - - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) - 40,951 Subordinated Notes and Debentures - - Other Liabilities 554 7,977 Total Liabilities 168,888 773,605 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 502 322 Surplus (exclude surplus preferred stock) 5,544 20,383 Retained Earnings 11,985 55,402 Accumulated Other Comprehensive Income - (164) Other equity capital components - - Total Bank equity capital 18,031 75,943 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 18,031 75,943 Total liabilities and equity capital 186,919 849,548



($000)

35

FIRST NEW

MEXICO BANK OF FIRST STATE BANK

SILVER CITY SOCORRO ASSETS


Held-to-Maturity Securities 41,544 113,867 Available-for-Sale Securities - 459 Equity Securities not held for trading - - Federal Funds sold 15,001 - Securities purchased under agreements to resell - - Loans and Lease Financing Receivables:

Loans and leases held for sale 510 - Loans and Leases, Net of Unearned Income 46,883 7,682 LESS: Allowance for Loan and Lease Losses 928 1,110 Net Loans and Leases 45,955 6,572 Trading Assets - - Premises and Fixed Assets 1,493 2,482 Other Real Estate Owned 248 - Investments in Unconsolidated Subsidiaries - - Direct and Indirect investments in real estate ventures - - Intangible Assets - - Other Assets 2,383 1,519 Total Assets 111,143 148,108 LIABILITIES

Deposits:



(from Schedule RC-M) - - Subordinated Notes and Debentures - - Other Liabilities 2,423 195 Total Liabilities 97,782 132,409 EQUITY CAPITAL

Perpetual preferred stock and related surplus - - Common Stock 500 1,150 Surplus (exclude surplus preferred stock) 1,800 4,850 Retained Earnings 11,061 9,509 Accumulated Other Comprehensive Income - 190 Other equity capital components - - Total Bank equity capital 13,361 15,699 Noncontrolling (minority) interests in consolidated subsidiaries - - Total equity capital 13,361 15,699 Total liabilities and equity capital 111,143 148,108



($000)

36

CENTINEL BANK

TAOS ASSETS

Noninterest-bearing balances and currency and coin 2,333 Interest-Bearing Balances 26,193 Securities:

Held-to-Maturity Securities - Available-for-Sale Securities 119,117 Equity Securities not held for trading - Federal Funds sold - Securities purchased under agreements to resell - Loans and Lease Financing Receivables:

Loans and leases held for sale - Loans and Leases, Net of Unearned Income 98,885 LESS: Allowance for Loan and Lease Losses 1,592 Net Loans and Leases 97,293 Trading Assets - Premises and Fixed Assets 1,670 Other Real Estate Owned - Investments in Unconsolidated Subsidiaries - Direct and Indirect investments in real estate ventures - Intangible Assets - Other Assets 6,578 Total Assets 253,184 LIABILITIES

Deposits:

In Domestic Offices 230,471 Noninterest-Bearing 85,741 Interest-Bearing 144,730 Federal Funds Purchased - Sec. Sold Under Agreements to Repurchase - Trading Liabilities - Other borrowed money (includes mortgage indebtedness


(from Schedule RC-M) - Subordinated Notes and Debentures - Other Liabilities 2,417 Total Liabilities 232,888 EQUITY CAPITAL

Perpetual preferred stock and related surplus - Common Stock 318 Surplus (exclude surplus preferred stock) 4,860 Retained Earnings 17,266 Accumulated Other Comprehensive Income (2,149) Other equity capital components - Total Bank equity capital 20,295 Noncontrolling (minority) interests in consolidated subsidiaries - Total equity capital 20,295 Total liabilities and equity capital 253,183



($000)

37

New Mexico State Chartered Credit Unions

38

Credit Union Commentary

The Financial Institutions Division supervised nineteen federally insured state chartered credit unions during the year. The overall condition and performance of state chartered credit unions remains healthy. Total assets held by state chartered credit unions are in excess of two point eight billion dollars. State chartered credit unions continue to experience increases in total assets, loans, shares and equity.

The 2018 increase in assets, loans, and shares are good indications that state chartered credit unions are effectively competing for their share of the New Mexico market. Total Assets increased 6.07%. Total shares increased 5.25%. Total Loans increased 11.74%. Total Equity increased 8.46%. Net income increased 41.60%. The overall condition and performance of state chartered credit unions remains healthy. Despite this positive note, the state of New Mexico continues to rely heavily on federal government spending due to the presence of its national labs and military bases. New Mexico also continues to rely heavily on the oil and gas sector to fund state government and the economy. Continued success depends on how well the credit union’s Board of Directors and Management evaluate their business plan to determine if it is still viable given the rapidly changing economic,

39

competitive, technological and regulatory environment. Credit unions must ensure sound Asset-Liability Management practices that properly identifies the risk in the balance sheet due to rising interest rates. Credit unions need to keep current and informed regarding the Current Expected Credit Loss (CECL) standard. The Financial Accounting Standards Board (FASB) have not yet issued substantive guidance on the CECL standard. Credit Unions should be evaluating what steps will be taken to be in compliance with CECL and projecting what effect it will have on the balance sheet once implemented. Credit unions need to be aware of the Office of the Comptroller of the Currency’s deliberations as to whether to issue a special-purpose national bank charter for Fintech companies. Fintech companies have the ability to provide to consumers, increased speed, convenience and new product offerings that make it easier for consumers to manage their financial lives. Fintech companies typically have lower overhead costs when compared to brick and mortar operations thus allowing for better pricing. It is unknown at this time if Fintech companies will be a major market disrupter to the current financial industry. The potential threat of Fintech companies should cause the credit union system to focus on ways to encourage innovation within the credit union industry. Credit unions must ensure that a robust cybersecurity plan in place. Cybersecurity must be a top priority for credit unions. Credit unions need to identify, assess, and mitigate cybersecurity risks in light of the increasing volume and sophistication of cyber threats. Disruption, degradation, or unauthorized alteration of information and systems that support credit union services can affect operations and their core processes that will undermine member’s confidence. Credit unions must develop plans for how they will recover from a denial of service attack. Plans need to be in place for stolen data regarding sensitive member information. How will the credit union regain member confidence after an attack? As the complexity of Credit Unions increase, proper Succession Planning is vital in ensuring the Credit Union can operate seamlessly when key staff members are no longer with the institution. Board and Management must ensure that they do not expose the credit union to risks that they do not fully understand. Credit Unions must assess their net worth level as it relates to their risk

40

profile and business needs. Compliance, information security, credit risk, interest rate risk, liquidity risk and strategic decisions should be on the forefront of the Board of Directors and Management agendas. The continued growth in the state chartered credit union’s assets, loans and shares is a result of member’s satisfaction and confidence in the state chartered credit union system. “I want to thank all Credit Union Volunteers and Staff for your hard work and dedication in ensuring that state chartered credit unions remain a viable financial option for New Mexico consumers.”

41

New Mexico State Chartered Credit Unions Consolidated Report of Condition

As of December 31, 2018

42

NEW MEXICO STATE-CHARTERED CREDIT UNIONS

CONSOLIDATED REPORT OF CONDITION AS OF DECEMBER 31, 2018

($000)

2018

2017

Credit Unions 19 19 ASSETS

Cash & Equivalents 167,455

241,588 Total Investments 300,903

317,109

Loans Held for Sale 308

106

Real Estate Loans 664,906

599,518 Unsecured Loans 177,933

156,243

Other Loans 1,382,346

1,235,696 TOTAL LOANS 2,225,184

1,991,457

(Allow. Ln & Lease Losses) (20,061)

(18,737) Land And Building 78,632

77,554

Other Fixed Assets 9,674

6,664 NCUSIF Deposit 23,842

22,725

All Other Assets 86,011

69,102 TOTAL ASSETS 2,871,949

2,707,568

LIABILITIES & CAPITAL:

Dividends Payable 116

87 Notes & Int. Payable 16,266

500

Accts. Pay. & Other Liab. 30,822

32,342 Uninsured Sec. Capital 0

0

TOTAL LIABILITIES 47,205

32,930 Share Drafts 494,565

450,814

Regular shares 1,103,723

1,023,434 All Other Shares & Dep. 903,042

902,204

TOTAL SHARES & DEPOSITS 2,501,330

2,376,453 Regular Reserve 31,267

31,266

Other Reserves -6,587

-3,187 Undivided Earnings 298,735

270,108

TOTAL EQUITY 323,415

298,186 TOTAL LIABILITIES, SHARES, & EQUITY 2,871,949

2,707,568

43

NEW MEXICO STATE CHARTERED CREDIT UNIONS REPORT OF CONDITION

AS OF DECEMBER 31, 2018 ($000)

Animas Artesia Belen Chaves

ASSETS Cash & Equivalents 20,232,017 2,591,308 2,656,481 3,685,414 Total Investments 22,305,660 13,727,657 6,079,299 14,540,080 Loans Held for Sale 0 0 0 0

Real Estate Loans 21,198,210 14,696,282 7,021,020 0 Unsecured Loans 7,864,933 3,609,541 1,923,215 400,109 Other Loans 51,741,728 59,083,534 13,147,254 8,524,424 TOTAL LOANS 80,804,871 77,389,357 22,091,489 8,924,533 (Allow. Ln & Lease Losses) (462,481) (525,000) (130,053) (43,733) Land And Building 1,964,254 1,833,781 1,701,603 78,012 Other Fixed Assets 194,969 113,770 365,937 17,489 NCUSIF Deposit 1,139,801 824,215 259,903 206,142 All Other Assets 5,586,962 9,280,997 153,706 74,305 TOTAL ASSETS 131,766,053 105,236,085 33,178,365 27,482,242 LIABILITIES & CAPITAL:

Dividends Payable 0 0 0 0 Notes & Int. Payable 0 0 0 0 Accts. Pay. & Other Liab. 938,116 1,618,310 218,668 210,310 Uninsured Sec. Capital 0 0 0 0 TOTAL LIABILITIES 938,116 1,618,310 218,668 210,310 Share Drafts 18,916,022 12,318,695 681,284 3,150,328 Regular shares 78,567,765 37,207,466 17,214,135 19,326,786 All Other Shares & Dep. 21,597,826 38,928,413 10,399,945 166,891 TOTAL SHARES & DEPOSITS 119,081,613 88,454,574 28,295,364 22,644,005 Regular Reserve 2,174,718 1,190,632 274,489 292,653 Other Reserves -615,532 100,000 0 0 Undivided Earnings 10,187,138 13,872,569 4,389,844 4,335,274 TOTAL EQUITY 11,746,324 15,163,201 4,664,333 4,627,927 TOTAL LIABILITIES, SHARES, & EQUITY

131,766,053 105,236,085 33,178,365 27,482,242

44



Financial Cuba Del Norte Deming Security

ASSETS Cash & Equivalents 3,084 61,680 302 7,586 Total Investments 5,118 32,359 2,424 5,031 Loans Held for Sale 0 0 0 0

Real Estate Loans 3,089 153,067 0 0 Unsecured Loans 484 49,720 902 3,892 Other Loans 3,632 292,813 1,605 25,326 TOTAL LOANS

7,205 495,600 2,508 29,218 (Allow. Ln & Lease Losses) (68) (3,014) (34) (145) Land And Building 222 19,053 0 2,697 Other Fixed Assets 13 4,012 1 98 NCUSIF Deposit 133 5,242 39 349 All Other Assets 133 21,564 12 1,782 TOTAL ASSETS

15,839 636,497 5,252 46,615 LIABILITIES & CAPITAL:

Dividends Payable 0 0 27 0 Notes & Int. Payable 0 0 0 0 Accts. Pay. & Other Liab. 25 8,035 16 178 Uninsured Sec. Capital 0 0 0 0 TOTAL LIABILITIES

25 8,035 43 178 Share Drafts 2,245 107,072 0 5,287 Regular shares 5,056 304,723 4,203 24,860 All Other Shares & Dep. 6,150 144,275 0 10,430 TOTAL SHARES & DEPOSITS

13,451 556,070 4,203 40,577 Regular Reserve 254,243 7,655 74 407 Other Reserves 0 0 72 0 Undivided Earnings 2,109 64,737 860 5,453 TOTAL EQUITY 2,363 72,392 1,006 5,860 TOTAL LIABILITIES, SHARES, & EQUITY

15,839 636,497 5,252 46,615

45



First

High

Financial Guadalupe Desert Jemez

ASSETS Cash & Equivalents 23,194 14,397 2,132 2,444 Total Investments 52,453 12,557 1,745 7,649 Loans Held for Sale 90 0 0 0

Real Estate Loans 104,749 61,878 2,987 7,320 Unsecured Loans 39,583 12,359 271 973 Other Loans 297,116 55,449 7,878 4,814 TOTAL LOANS

441,448 129,687 11,136 13,107 (Allow. Ln & Lease Losses) (5,027) (1,544) (108) (54) Land And Building 7,405 8,857 101 45 Other Fixed Assets 2,156 537

477

NCUSIF Deposit 4,781 1,416 113 188 All Other Assets 17,113 1,046 39 193 TOTAL ASSETS


Dividends Payable 0 70 0 2 Notes & Int. Payable 0 0 300 0 Accts. Pay. & Other Liab. 6,462 1,878 0 30 Uninsured Sec. Capital 0 0 0 0 TOTAL LIABILITIES

6,462 1,948 300 32 Share Drafts 107,463 19,132 0 5,534 Regular shares 240,133 49,937 10,225 7,859 All Other Shares & Dep. 145,113 76,349 3,057 7,274 TOTAL SHARES & DEPOSITS

492,710 145,419 13,282 20,667 Regular Reserve 5,380 730 121 571 Other Reserves 1,947 -2,326 0 0 Undivided Earnings 37,114 21,182 1,456 2,780 TOTAL EQUITY 44,441 19,587 1,576 3,350 TOTAL LIABILITIES, SHARES, & EQUITY

543,612 166,954 15,158 24,050

46



Los Alamos

LOCO Schools Questa Rincones

ASSETS Cash & Equivalents 1,754 1,574 2,125 525 Total Investments 21,215 4,723 762 295 Loans Held for Sale 0 0 0 0

Real Estate Loans 288 5,763 2,876 83 Unsecured Loans 1,813 1,355 130 90 Other Loans 20,381 5,885 3,416 3,046 TOTAL LOANS

22,482 13,003 6,423 3,219 (Allow. Ln & Lease Losses) (497) (65) (96) (50) Land And Building 2,186 0 516 96 Other Fixed Assets 206 7 26 10 NCUSIF Deposit 373 159 63 29 All Other Assets 330 244 40 10 TOTAL ASSETS


Dividends Payable 9 2 5 2 Notes & Int. Payable 0 0 0 100 Accts. Pay. & Other Liab. 1,272 35 26 16 Uninsured Sec. Capital 0 0 0 0 TOTAL LIABILITIES

1,281 35 31 119 Share Drafts 6,578 1,008 1,264 0 Regular shares 17,424 11,304 5,422 1,438 All Other Shares & Dep. 15,865 4,831 670 2,117 TOTAL SHARES & DEPOSITS

39,867 17,143 7,355 3,555 Regular Reserve 522 454 189 19 Other Reserves -732 0 0 0 Undivided Earnings 7,111 2,012 2,281 441 TOTAL EQUITY 6,902 2,467 2,470 460 TOTAL LIABILITIES, SHARES, & EQUITY

48,050 19,645 9,857 4,134

47



Rio State

Grande Employees Zia

ASSETS Cash & Equivalents 2,501 9,707 5,286 Total Investments 53,443 31,271 13,206 Loans Held for Sale 0 218 0

Real Estate Loans 42,865 178,135 58,890 Unsecured Loans 19,246 20,974 12,343 Other Loans 192,381 292,423 43,683 TOTAL LOANS

254,492 491,532 114,915 (Allow. Ln & Lease Losses) (3,352) (3,997) (848) Land And Building 11,581 16,304 3,992 Other Fixed Assets 573 713 153 NCUSIF Deposit 2,641 4,676 1,208 All Other Assets 4,866 19,176 4,366 TOTAL ASSETS

326,745 569,599 142,278 LIABILITIES & CAPITAL:

Dividends Payable 0 0 0 Notes & Int. Payable 866 15,000 0 Accts. Pay. & Other Liab. 1,294 6,563 2,007 Uninsured Sec. Capital 0 0 0 TOTAL LIABILITIES

2,160 21,563 2,007 Share Drafts 37,838 148,267 17,809 Regular shares 60,634 140,534 67,654 All Other Shares & Dep. 175,882 197,137 42,780 TOTAL SHARES & DEPOSITS

274,354 485,939 128,263 Regular Reserve 4,737 2,353 3,867 Other Reserves 1,541 -6,513 -61 Undivided Earnings 43,953 66,257 8,204 TOTAL EQUITY 50,231 62,097 12,009 TOTAL LIABILITIES, SHARES, & EQUITY 326,745 569,599 142,278,458

48

New Mexico Consumer Financial Industries

49

Consumer Industries Commentary

OVERVIEW: The consumer industries sector within the Financial Institutions Division (Division) is responsible for the regulatory oversight of collection agencies, money service businesses, motor vehicle sales finance companies, repossession companies, and small loan companies. Oversight of these industries consists of licensing, examinations, investigations, managing consumer complaints, and protecting the financial interests of the public. The following statutes are pertinent to the consumer industries sector, the Collection Agency Regulatory Act (§61-18A-1 through 33 NMSA 1978), the New Mexico Small Loan Act of 1955 (§58-15-1 through 41 NMSA 1978), New Mexico Bank Installment Loan Act of 1959 (§58-7-1 through 11 NMSA 1978), the Motor Vehicle Sales Finance Act (§58-19-1 through 14 NMSA 1978), and the Uniform Money Services Act (§58-32-101 through 1004 NMSA 1978). LICENSING: In 2018, the Division issued or renewed twenty-six hundred seven (2,607) licenses. The largest percentage of licenses issued was in the collection agency industry which accounted for approximately 59.69% of all licenses. Small loan companies account for approximately 24.02% of all licenses. The remaining industries account for approximately 16.29% of all licenses issued in 2018. The table below reflects the percentage of each license type in comparison to the overall number of licenses issued or renewed in 2018.

0.46%

22.33%

14.29%

22.48%

0.04%

3.86%

10.51%2.01%

24.02%

2018 Original and Renewal Licenses

Check Cashers

Collection Agencies

Collection Agency Branches

Collection Agency Managers

Currency Exchangers

Money Transmitters

Motor Vehicle Sales FinanceCompaniesRepossessors

Small Loan Companies

50

Collection Agencies and Repossessors: The total number of licenses increased by approximately 1.43% in 2018. The largest increase was collection agency branches which increased from three-hundred seventy (370) licenses in 2017 to three-hundred ninety-eight licenses in 2018, or approximately 7%. License Type Year-End 2016 Year-End 2017 Year-End 2018 Collection Agencies 576 578 578 Collection Agency Branches 384 370 398 Collection Agency Managers 576 582 580 Repossessors 50 52 49 Total 1,586 1,582 1,605

Consumer Finance Companies: The total number of licenses for the consumer finance industries has steadily decreased over the past three years. The largest decrease occurred within the small loan industry which declined by approximately 3% in 2018. This decline is due to several small loan companies either consolidating existing storefront locations or leaving the New Mexico market altogether. License Type Year-End 2016 Year-End 2017 Year-End 2018 Motor Vehicle Sales Finance Companies

271 272 271

Small Loan Companies 673 622 597 Total 944 894 868

Money Service Businesses: The total number of money service businesses has significantly increased since 2016. In 2018, the number licenses increased by approximately 16%. Money Transmission licenses account for approximately 89% of all licenses issued. These licensees reported that 4,896 authorized delegates were operating within New Mexico as of December 31, 2018. License Type Year-End 2016 Year-End 2017 Year-End 2018 Check Cashers 5 12 14 Currency Exchangers 1 1 1 Money Transmitters 49 100 119 Total 54 113 134

51

Year-End 2016 Year-End 2017 Year-End 2018 Authorized Delegates 3,961 4,752 4,896

EXAMINATIONS: Examinations are essential to ensure that all licensees operate in a manner that is lawful, honest, fair, and efficient. Each licensee is evaluated based upon their overall financial condition, compliance, operational controls and risk management procedures. The Division completed examinations for a combined total of six hundred fourteen (614) licensees in 2018 within the small loan, motor vehicle sales finance, and money service business industries. Small Loan Companies: The Division completed five hundred eighty two (582) small loan examinations in 2018. Results of the examinations concluded that the total number of licensees earning a satisfactory rating had significantly decreased by 21.92%. This was a direct result of the enactment of new provisions within the Small Loan Act of 1955 and Bank Installment Loan Act of 1959 that became effective on January 1, 2018. The chart below details the results of small loan examinations over the past three years.

Motor Vehicle Sales Finance Companies: The Division completed twenty-three (23) motor vehicle sales finance examinations covering thirty-two (32) licenses in 2018. Twenty (20) or 87% of these the companies examined had satisfactory results.

2016 2017 2018

567634

520

95

1162

Small Loan ExaminationsSatisfactory Un-Satisfactory

52

Money Service Businesses: In 2018, the Division began examining money service businesses in accordance with the UMSA §58-32-601 NMSA 1978. A total of eight (8) companies were examined. Below is a breakdown of examinations completed by license type. License Type Number of

Examinations Percentage of Satisfactory Ratings

Check Cashers 6 93.33% Currency Exchangers 0 N/A Money Transmitters 2 100.00%

COMPLAINTS: In 2018, the Division received, investigated, and resolved a total of nineteen (19) complaints. The industry with the largest number of complaints was the small loan industry with eight (8). The chart below details the total number of complaints received for each respective industry. Industry 2016 2017 2018 Check Cashers 0 0 1 Collection Agencies 4 5 3 Currency Exchangers 0 0 0 Money Transmitters 0 3 5 Motor Vehicle Sales Finance Companies

1 1 1

Repossessors 0 2 1 Small Loan Companies 8 3 8 Totals 13 14 19

LOOKING FORWARD: As the regulatory environment continues to evolve, the Division is committed to ensuring all New Mexicans have access to safe and sound financial products and services. Over the next year, the Division will continue its mission by improving licensing by transitioning collection agencies, repossessors, and motor vehicle sales finance companies to the Nationwide Multi-State Licensing System and Registry (NMLS). This transition is expected to begin in the fall of 2019. The Division expects to propose new regulations for each industry to coincide with recent legislation passed over the last few years. The launch of statewide financial literacy programs will provide New Mexico consumers with a basic understanding of budgets, checking and savings accounts, and the

53

credit and interest considerations that will enable them in deciding how and when to use financial services. “The Division will continue to further its mission through the expansion of examination processes, improving licensing processes, and ensure that each licensed entity maintain strong character, financial responsibility, and strong compliance with each applicable regulation. I would like to thank everyone within each of the consumer industries for your continued dedication to provide New Mexico residents with safe and adequate financial products and services.” David J. Mora Consumer Industry Manager

54

New Mexico Mortgage and Escrow Industries

55

Mortgage and Escrow Commentary

OVERVIEW

The Mortgage Regulatory Division oversees mortgage loan companies (MLC), mortgage loan originators (MLO) and escrow companies with effective and timely monitoring, supervision and enforcement. The Mortgage Regulatory Division is responsible for upholding its consumer protections mandate by ensuring the adherence to applicable federal and state statutes and regulations. The Mortgage Regulatory Division works directly with mortgage loan companies and escrow companies to provide guidance, support and information. In addition, the Mortgage Regulatory Division facilitates the resolution of all consumer complaints against mortgage loan companies, mortgage loan originators and escrow companies through proper investigation, mitigation, resolution and closure. The Mortgage Regulatory Division operates under the Mortgage Regulatory Fund (MRF). MRF was created as a non-reverting fund in the state treasury and is administered the Financial Institutions Division of the Regulation and Licensing Department. The fund consists of application, licensing, renewal, examination, investigation and any other fees received that are associated with the costs of administering the New Mexico Mortgage Loan Originator Licensing Act (58-21B-1 NMSA 1978), fees specified in Subsection E of Section 58-21-5 NMSA 1978 and any money that is appropriated or donated or that otherwise accrues to the fund. Money in the fund shall be invested by the state investment officer in the manner that land grant permanent funds are invested pursuant to Chapter 6, Article 8 NMSA 1978. Income from investment of the fund shall be credited to the fund.

Money in MRF is appropriated to the Financial Institutions Division of the Regulation and Licensing Department to carry out the provision of the New Mexico Mortgage Loan Originator Licensing Act and the Mortgage Loan Company Act (58-21-1 NMLS 1978).

LICENSING

Nationally – In 2018, the total number of companies with mortgage licenses increased by 6.3 percent while the number of MLO licenses remained relatively flat. The number of companies operating in more than 20 states grew 8 percent, and MLOs licensed in more than 20 states grew 26 percent. All segments for both companies and individuals grew during the year.

New Mexico - As of December 31, 2018, the Mortgage Regulatory Division supervises three hundred and seventy-six (376) mortgage loan companies, eight hundred and seventeen (817) branches, five thousand one hundred and seventy-one (5171) mortgage loan originators, and thirty-eight (38) escrow companies.

56

The number of state- licensed mortgage loan companies (MLC’s) remained constant. The number of mortgage loan company branches grew by 8% and licensed mortgage loan originators (MLO’s) grew by 12.3%.

ORIGINAL AND RENEWAL LICENSES

License Type Year Ending 2018 Year Ending 2017

Mortgage Loan Companies 376 389 Mortgage Loan Branches 817 842 Mortgage Loan Originators 5171 6784

Escrow Companies 38 38

One of the Mortgage Regulatory Division’s main objectives is to promote industry growth and competition with up-to-date monitoring of regulatory developments and trends. To facilitate effective monitoring and regulation, the Mortgage Regulatory Division works closely with its federal regulatory counterparts and maintains cooperative agreements with these federal agencies.

EXAMINATIONS

The examination process continues to expand to include a more in-depth review of the company’s financial condition, compliance procedures and management oversight. More comprehensive examinations will foster greater industry compliance, which in turn will produce better markets for consumers. Examination procedures are a living document and a guide to assist mortgage examiners and provide standards for examinations of mortgage loan companies and escrow

376817

5171

38

2018 Original and Renewal Licenses

Mortgage Loan Companies Mortgage Loan Branches

Mortgage Loan Originators Escrow Companies

57

companies. These procedures are subject to change based on changes in examination techniques, MLC statutes and rules, and applicable changes to federal regulations. In 2018, the Mortgage Regulatory Division examined forty-five (45) mortgage loan companies, one-hundred (100) mortgage loan branches and five (5) escrow companies. In 2017, the Mortgage Regulatory Division examined forty-nine (49) mortgage loan companies, fifty-two (52) mortgage loan company branches and six (6) escrow companies. In 2018, the Mortgage Regulatory Division received, investigated and resolved fifteen (15) mortgage complaints and six (6) escrow company complaints compared to 2017 of twelve (12) mortgage complaints and four (4) escrow company complaints.

2018 DEVELOPMENT AND ENHANCEMENTS

Nationwide Multistate Licensing System (NMLS) 2.0 – The launch of NMLS 2.0 was anticipated for 2018, however, NMLS has decided to go in a new direction with system development and have delayed implementation. This adjustment is giving states the opportunity to better understand the needs for the new system and refine requirements to ensure NMLS builds a high-quality product for state regulators, industry and other NMLS 2.0 users. Features of NMLS 2.0 includes:

• Real-Time System - A real-time system that will show the current state of an entity’s record • Uniform Data – NMLS 2.0 will provide an application/licensing platform containing

uniform data, terms and definitions. • Dynamic Display – NMLS 2.0 will present users with only information that is relevant to

them based on their role (i.e., regulator, industry type, etc.).

2018

2017

020406080

100

Mortgage LoanCompanies

Mortgage LoanBranches

EscrowCompanies

Complaints

45

100

521

49 52

616

Examinations and Complaints2018 vs 2017

2018 2017

58

• One Record – Each distinct legal entity, branch and natural person will have a single, unique record in NMLS. The entity’s one record in NMLS can be used to apply for, maintain or surrender licenses in multiple states and capture all data required in the supervisory process.

• Common Framework – The system will enable uniform core policies based on best practices identified through the established governance process.

• Data Validity – NMLS 2.0 will be built to promote data quality through accurate data input and will validate data where possible.

• Record Information – The ability to create or modify record information will be limited to the entity with their right control on it.

• Legal System of Record – NMLS is a legal system of record for agencies participating in NMLS

• NMLS Unique ID – The NMLS Unique ID will be applied to only unique legal entities or a natural person

• Data Security – NML 2.0 will be built to best practices in data security and privacy protections.

State Examination System (SES) – SES is a new system that will bring the same benefits to the examination, investigation, enforcement and consumer complaint processes that NMLS has brought licensing and monitoring. SES is connected to the Vision 2020 goal of harmonizing multi-state supervision. SES will be the first ever nationwide examination system for managing the supervision processes of state regulators and the companies we supervise. Like NMLS 2.0, state regulator and industry stakeholder engagements plays a critical role in the development of SES. An SES pilot is tentatively scheduled to launch in 2019. Features of SES includes:

• Standardization o Work Flow o Business Rules o Technology

• Collaboration o Examiner to Examinee o Agency to Agency o State to Federal

• Optimization o Resources o Processes o Data Analytics

• Safeguard o Confidentiality o Data Integrity o Regulatory Compliance

59

Electronic Surety Bonds (ESB) – A fully electronic method for submitting and maintaining surety bonds that includes document upload, form submission enhancement, agent authorization. Functionality for electronic surety bonds was enhanced in 2017 in an effort to increase efficiency and support regulator and industry work process. Enhancements include:

• Alternate Security Devise • Annual Certification and Validation • Association of Bond to Multiple License Instances • Attestation Versioning and Display • Regulatory Compliance support

INDUSTRY Loans and Lending: As illustrated below, in 2018, of all mortgage loans closed nationwide, conventional mortgages accounted for 68.69%, FHA-Insured accounted for 19.02%, VA-Guaranteed accounted for 10.49% and FSA/RHS – Guaranteed accounted for 1.35%. Similarly, in New Mexico, conventional mortgages accounted for 57.71%, FHA-Insured accounted for 23.57%, VA-Guaranteed accounted for 17.75% and FSA/RHS – Guaranteed accounted for .96%.

68.69%, 69%

19.02%, 19%

1.35%, 1%

10.94%, 11%

Loan Type - Nationwide

Loan Type - Nationwide

Conventional

FHA-Insured

FSA/RHS-Guaranteed

VA-Guaranteed

60

LOOKING FORWARD

The Mortgage Regulatory Division continues to grow and expand its processes, policies and procedures to evolve with its regulatory oversight and industry changes. Efforts to streamline the supervisory process while ensuring the safety and soundness of entities operating within our state and protecting consumers continues to be at the forefront.

In addition, 2018 includes significant process developments that includes:

• Temporary Authority to Operate (TAO) - The Economic Growth, Regulatory Relief

Protection Act (S.2155) was signed into law on May 24, 2018, adds a new section the federal SAFE Act (12 U.S.C. 501 et. Seq.) entitle “Employment Transitions of Loan Originators.” These amendments become effective November 24, 2019, 18 months after enactment. o Temporary Authority to act as a loan originator permits:

Qualified MLO’s who are changing employment from a depository institution to a state-licensed mortgage company, and

Qualified state-licensed MLO’s seeking licensure in another state

to originate loans while completing any state-specific requirements for licensure such as education and testing.

o Eligibility – MLO’s must be: Employed and sponsored through NMLS by a state-licensed mortgage

company, and Either:

57.71%, 58%23.57%, 23%

.96%, 1%

17.75%, 18%

Loan Type - New Mexico

Loan Type - New Mexico

Conventional

FHA-Insured

FSA/RHS-Guaranteed

VA-Guaranteed

61

Registered in NMLS as and MLO during the one year preceding the application submission; or

Licensed as an MLO during the 30-day period preceding the date of application.

• SES – SES is expected to be piloted among a small group of state agencies and companies.

The pilot will assess readiness to move forward with nationwide deployment and help us identify early enhancements for future SES releases. Once the pilot concludes, NMLS expects to begin nationwide deployment efforts.

The Mortgage Regulatory Division will continue its supervision and regulation of the industries within it oversight and commits to function and performance at the highest levels while maintaining a positive working relationship with consumers and industry. We are thankful for the collaboration, insight and commitment from the industries we supervise as we continue to transform regulatory supervision.

The Mortgage Division is even more excited about what we will accomplish in 2019 as we continue to evolve and transform regulatory supervision through training, technology and continued engagement with Industry and the consumers we serve.

Joe Cruz Manager Mortgage and Escrow Regulatory Division

Table of Contents Annual Report(1).pdf · Other: Copying fees & Application Packets $400 $974 Mortgage Fees (General Fund Contribution) $220,550 $216,900 GENERAL FUND TOTAL $3,997,183

Documents