Section 58-1-29 - Issuance of capital debentures or notes.
58-1-29. Issuance of capital debentures or notes.
A. After obtaining approval of the commissioner [director of the financial institutions division of the regulation and licensing department] and the approval of the stockholders owning two-thirds of the issued and outstanding shares of stock of the bank entitled to vote, a bank may issue and sell its capital debentures or notes. Capital debentures or notes may be converted into shares of common or preferred stock in accordance with the provisions of the debentures or notes and under any terms or conditions prescribed or approved by the commissioner [director]. The principal amount of any capital debentures or notes outstanding at any time shall not exceed an amount equal to the sum of one hundred percent of the banks' [bank's] unimpaired paid-in capital stock and fifty percent of its unimpaired surplus fund.
B. Capital debentures or notes are an unsecured indebtedness of the bank and are subordinate to the claims of depositors and all other creditors of the bank, regardless of whether the claims of the depositors or other creditors arose before or after the issuance of the capital debentures or notes. In the event of liquidation of the bank, all depositors and other creditors of the bank are entitled to be paid in full before any payment is made of principal or interest on the outstanding capital debentures or notes. After payment to depositors and creditors, capital debentures or notes shall be paid pro rata regardless of the date of their issuance. No payment of the principal of outstanding capital debentures or notes shall be made unless, after the payment, the aggregate of the capital, surplus, undivided profits and capital debentures or notes then outstanding is equal to the aggregate of the foregoing items immediately after the original issue of the capital debentures or notes. Convertible debentures or notes may be issued without offering them to the existing stockholders of the bank if it is so provided in the articles of incorporation of the bank on its organization, or by later amendment to these articles.
C. The amounts of outstanding capital debentures or notes legally issued by any bank shall be treated as capital for the purpose of computing the loan limits prescribed in Section 58-1-24 NMSA 1978 and for determining the amount of money a state bank may borrow for temporary purposes as provided in Section 58-1-28 NMSA 1978, and for computing the amount that may be invested in banking premises under the provisions of Section 58-1-26 NMSA 1978.