PUB 22 ISSUE 1 PUBLISHED BY NEW MEXICO BANKERS ASSOCIATION, FOUNDED IN 1906 ABA Washington Summit Update By Kyle Beasley Page 4 Economic Chaos or Something More Sinister? By Mark Anderson Page 13 2025 Legislative Update By John W. Anderson Page 6
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OVER A CENTURY: BUILDING BETTER BANKS — HELPING NEW MEXICO REALIZE DREAMS The mission of the New Mexico Bankers Association (NMBA) is to serve member bank needs by acting as New Mexico banking’s representative to government, the public and the industry; providing resources, education and information to enhance the opportunities for success in banking; promoting unity within the industry on common issues; and seeking to improve the regulatory climate to the end that banks can profitably compete in the providing of financial and related products and services. ©2025 New Mexico Bankers Association (NMBA) | The newsLINK Group LLC. All rights reserved. New Mexico Bankers Digest is published four times per year by The newsLINK Group LLC for NMBA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of NMBA, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. New Mexico Bankers Digest is a collective work, and as such, some articles are submitted by authors who are independent of NMBA. While a first-print policy is encouraged, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. PRESIDENT’S MESSAGE 4 ABA Washington Summit Update EXECUTIVE VICE PRESIDENT’S MESSAGE 6 2025 Legislative Update By John W. Anderson, Executive Vice President New Mexico Bankers Association WASHINGTON UPDATE 9 Celebrating a Legacy of Collaboration By Rob Nichols, President and CEO, American Bankers Association 10 Incentivizing Retention Across Generations: Compensation Best Practices Strategies for Attracting and Retaining Top Talent By Ken Derks, Consultant, and Trey Deupree, Consultant, NFP 13 Economic Chaos or Something More Sinister? By Mark Anderson, Legal and Legislative Assistant, NMBA 16 New Mexico’s Capra Bank Harnesses Local Expertise with Advisory Board of Directors By Sharon Brooks, Editor-in-Chief, Albuquerque Business First 18 Getting To Know the Fed Discount Window By Michael A. Johnson, SVP & Southwest Regional Manager, PCBB 20 Bowling Together Ken Clayton — ABA Government Relations Council Chair, NMBA Board Member, and Former NMBA President — And His Vision for Strong Banks and Strong Hometowns By Evan Sparks, Editor-in-Chief, ABA Banking Journal 22 Bank News Our Mission CONTENTS 2024-25 NMBA Board of Directors President Kyle Beasley Bank of Albuquerque 100 Sun Ave. NE, Ste. 500 Albuquerque, NM 87109 President-Elect Max Myers Century Bank 100 S. Federal Pl. Santa Fe, NM 87501 Secretary-Treasurer Elizabeth Earls Capra Bank 400 Tijeras Ave. NW Albuquerque, NM 87102 Immediate Past President Mark Horn Pinnacle Bank 107 E. Aztec Ave. Gallup, NM 87103 Executive Vice President John Anderson NM Bankers Association 316 Osuna Rd. NW, Ste. 502 Albuquerque, NM 87107 TERMS EXPIRING 2025 Scott Czarniak First National 1870 7300 Jefferson St. NW Albuquerque, NM 87109 Aaron Emmert Pioneer Bank 3000 N. Main St. Roswell, NM 88201 Howie Herbert U.S. Bank 7900 Jefferson St. NE Albuquerque, NM 87109 TERMS EXPIRING 2026 Renanah Taylor Bank of Montreal 303 Roma St. NW, Ste. 100 Albuquerque, NM 87102 J. Chesley Steel Southwest Capital Bank 1410 Central Ave. SW Albuquerque, NM 87104 Sheila Matthews Four Corners Community Bank 500 W. Main St., Ste. 101 Farmington, NM 87401 TERMS EXPIRING 2027 Nicole Noto Wells Fargo Bank N.A. 200 Lomas Blvd. NW, 12th Fl. Albuquerque, NM 87102 Jay Jenkins CNB Bank PO Box 1359 Carlsbad, NM 88220 Jason Wyatt Western Commerce Bank 212 N. Canal St. Carlsbad, NM 88220 3
PRESIDENT’S MESSAGE ABA WASHINGTON SUMMIT UPDATE KYLE BEASLEY President, New Mexico Bankers Association that our industry is better appreciated and more poised for congressional support for regulatory relief than we have seen in quite some time. Some of the highlights and quotes from the featured speakers are shown below: • U.S. Treasury Secretary Scott Bessent: “Our nation’s financial health is like a 350-pound two-pack-a-day smoker, and we’re not going to have him running a marathon tomorrow. It’s going to take some time and perhaps some pain.” • Senate Banking Committee Chair Tim Scott (R-SC): Top committee priorities are affordable housing, stablecoin legislation, overdraft fees and reform of the Consumer Financial Protection Bureau. • House Financial Services Committee Chairman French Hill (R-AK): “Asset thresholds in statutes like the Dodd-Frank Act are ‘artificial barriers’ distorting strategic decision-making by banks. Artificially low thresholds drive banks to make consolidation decisions that they might not otherwise find necessary.” Hill said, “I’m a strong supporter of regulatory tailoring.” With one key point being the $10 billion threshold for CFPB supervision, Hill wants to have all the options on the table for the CFPB, including using budget reconciliation to limit the scope and spending of the CFPB and using a legislative approach to bring the CFPB under congressional spending instead of its current funding model, which involves drawing directly from the Federal Reserve. • Acting FDIC Chairman Travis Hill: “Key policy priorities for the FDIC in coming months will include revising guidelines issued last year for resolution plan submissions for banks with more than $250 billion in assets and taking steps to boost de novo bank formation, particularly in areas of the county without a local community bank.” Elizabeth Arevalo, the Deputy Chief of Staff for Rep. Teresa Legar Fernandez, with John Anderson, Max Myers, Kyle Beasley, Ken Clayton and Jay Jenkins A great contingent of New Mexico bankers recently attended the ABA Annual Washington, D.C., Legislative Summit. I was joined by Max Myers (Century Bank), Jay Jenkins (CNB Bank, Carlsbad), Ken Clayton (Western Bank, Artesia) and John Anderson (NMBA). The agenda was first class with a great lineup of featured speakers. Our timing was very interesting given everything going on in Washington, namely DOGE and tariffs. Broadly, I sensed On Capitol Hill, we met with staff members of several of our New Mexico Congressional delegates, and special thanks to Sen. Ben Ray Luján, who set aside time to meet with us personally. New Mexico bankers are very fortunate to have Western Bank Artesia CEO Ken Clayton serving as the chairman of the ABA Government Relations Committee. He did an excellent job in leading the discussions with our Congressional delegation regarding the NMBA and ABA legislative priorities. It’s great to have friends in high places! Our congressional discussions were centered around the NMBA and ABA legislative priorities highlighted below (my perspectives are included in parentheses): • Our support for access to credit for our Rural Economy Act (ACRE), which would lower interest rates for farmers, ranchers and rural homeowners on loans secured by farm real estate and aquaculture facilities. (I sensed a lot of support for this.) • Cannabis banking legislation that would enable banks to serve state-licensed cannabis businesses, their employees and service providers in states where cannabis
3 DECADES OF SERVICE HTRUST.COM ∙ 575.758.7700 ∙ NEW MEXICO Offices in Taos, Santa Fe & Albuquerque Helping New Mexico families fulfill lasting legacies. State-chartered, locally-owned trust company—devoted to families & advisors is legal. (Good support for this among Democrats but being held up by resistance from some Republicans. The resistance has more to do with legalizing cannabis than it does with banking legal cannabis businesses.) • Credit union oversight. (Not sensing much traction on this unfortunately.) • Deposit insurance reform. (Much work to do on this. Ken Clayton’s Government Affairs Committee is working on proposals to address flexibility and fairness to, hopefully, mitigate future FDIC special assessments — “inequities between too big to fail versus too small to care.”) • Federal regulation of payment stablecoin. (Sen. Scott’s committee is working on legislation to establish licensing and regulatory requirements for stablecoin issuers at the federal and state levels. It permits state oversight of stablecoin issuers with a market capitalization under $10 billion, while larger issuers would be regulated by the Federal Reserve and the Office of the Comptroller of the Currency. Another aspect is to prohibit interest payments to prevent disintermediation from the banking industry. It cleared the Banking Committee in March with bipartisan support.) • Overdraft protection legislation that would preserve overdraft protection by nullifying the CFPB’s $5 cap on overdraft fees. (I sensed a considerable understanding of our “risk-reward” position on this issue.) • Tax policy to include extending the 2017 tax cuts as well as the section 199A pass-through deduction for sub-S entities. (Good support for this in terms of the certainty it provides to the economy, but also concerns expressed by the New Mexico delegation as to how the “one big beautiful bill” budget cuts could impact federal Medicaid funding and the impacts that could have on New Mexico.) It continues to be my honor and pleasure to serve as this year’s president of NMBA. Please let me know how I can help you in any way. Kyle Beasley, Ken Clayton, John Anderson, Sen. Ben Ray Luján, Max Myers and Jay Jenkins 5
EXECUTIVE VICE PRESIDENT’S MESSAGE JOHN W. ANDERSON, Executive Vice President New Mexico Bankers Association 2025 LEGISLATIVE UPDATE The 2025 Legislature adjourned on Saturday, March 22, having considered nearly 1,200 bills. A total of 195 of those bills ultimately passed both houses of the Legislature. The governor had until April 11 to approve or veto those bills sent to her by the Legislature for review. She ultimately ended up vetoing 35 bills and signed the remaining bills into law. At her press conference shortly after the close of the session, the governor criticized the legislature for its failure to enact juvenile crime measures she supported — measures that would have imposed longer sentences for juveniles convicted of certain enumerated crimes and lowered the age at which minors could be tried as adults for certain crimes. She has threatened to bring the legislature back into a special session to force action on those criminal proposals. It has been rumored that the governor is also considering calling a special session to address health care, including revisions to the New Mexico Medical Malpractice Act. Tax Package What started as a $130 million tax increase tax package (HB 14) ended up much leaner. The enacted bill provides: • No increased tax on oil production. • A 20% tax increase on wholesale liquor, sending $10 million in revenues to the Tribal Alcohol Harms Alleviation Fund. • $113 million, to be funded from next year’s budget, for: • $250 per foster parent/guardian personal income tax credit — $8.8 million. • GRT exemption for co-insurance payments for medical services — $22.5 million. Surprisingly, the bill was vetoed by the governor. Budget — HB 2 HB 2 includes total authorized recurring spending of $10.65 billion from the general fund for FY26 for agency operations and $141.2 million for compensation.
Total recurring spending reflected in the bill for FY26 is just over $10.79 billion, almost $611 million, or 6%, above FY25. The bill also keeps state reserves at 30%, reflecting the target set by the Legislative Finance Committee in budget guidelines adopted in fall 2025. For nonrecurring appropriations, when considering all revenue sources, the HB 2 amendment appropriates a total of $1.56 billion for special appropriations, $183.7 million for supplemental and deficiency appropriations, $107.4 million in information technology appropriations, $457.8 million in Government Results and Opportunity fund spending, typically for two-to-three-year pilot programs, $1.6 billion in fund transfers and $189.5 million for transportation. Other Appropriations Contained in HB 2 • $24 million in site readiness, which prepares prime, construction-ready locations for companies to quickly and easily set up in New Mexico. • $25 million in funding for research and development initiatives to help attract new and growing industries to the state. • $65 million for road maintenance across New Mexico. • $12 million for rural air service statewide. • Funds research to strategically plan the state’s water future, with $19 million to New Mexico Tech for groundwater monitoring and improvements, and $4 million for water research at New Mexico State University. • $20 million to clean up abandoned uranium mines and other contaminated sites. • $50 million to help New Mexico communities recover from fires and floods. • Directs $1.24 million to hot shot fire crews, watershed management and forest restoration. • $4 million to law enforcement recruitment and retention. • $500,000 for crime victim reparations. • $2 million to support victims and survivors of sexual assault and domestic violence. • $15 billion in state and federal funding for Medicaid and other critical health care services. • Dedicates substantial funding to mental and behavioral health care, including $280 million to expand infrastructure and access with regional coordination to get funds to areas most in need, and key funding for crisis response systems. • $100 million down payment to start the new Behavioral Health Trust Fund. • $25 million to the Rural Health Care Delivery Fund to expand health care in rural areas. • $110 million to targeted housing development, including transitional housing, with a focus on Albuquerque, Bernalillo and Dona Ana counties. • $45.9 million available to housing providers to focus on specialized housing solutions and a strategic response to homelessness. • Improves food security for New Mexicans with $10 million in annual funding for food banks. • $4.7 billion in recurring funding for public education, a 6% increase over last year. • Raises minimum teacher salaries by $5,000 per license level. • Increase funding to the Early Childhood Education and Care Department by $170 million, or 21.6%, to greatly expand pre-K, childcare assistance, home visiting and tribal language support. • Increase public school funding by $76 million to support students in grades 6-12. • Continues funding for the teacher loan repayment program, to retain and attract more educators to New Mexico. The NMBA Legislative Priority List of Bills Supported or Opposed Public Banking Act (HB 130): The bill did not pass; NMBA opposed it. The bill would have enacted the Public Banking Act in which it would establish the Public Bank of New Mexico. The bill is very similar to the bills which have been introduced in past legislative sessions — establishing a board of directors; permitting certain investments, lending actions, purchases and property transactions. The bill appropriated $50 million to the state banking fund to capitalize the bank. Only $4 million could be utilized for establishing and chartering the bank and developing the bank’s lending program. Another $60 million was appropriated to the bank to be deposited in an account with the bank. Artificial Intelligence Regulation (HB 60): The bill did not pass; NMBA opposed it. The bill would have enacted the Artificial Intelligence Act. Artificial intelligence system is defined as a machine-based system that for an explicit or implicit objective infers from the inputs the system receives how to generate outputs, including content, decisions, predictions or recommendations that can influence physical or virtual environment. The bill required notice of use, documentation of systems, disclosure of algorithmic discrimination risk and risk incidents. It also required risk management policies and impact assessments. It provided for enforcement by the State Department of Justice and for civil actions by consumers for injunctive or declaratory relief. The bill was patterned after a recently-enacted AI bill in Colorado. It contained a definition of financial institution, which was too narrow. Paid Family and Medical Leave Act (HB 11): The bill did not pass; NMBA opposed it. This issue has been one of the more controversial proposals facing the legislature since 2019. Under the proposal, employees would pay 0.5% of wages while employers with five or more employees would pay 0.4% payroll tax. The rates are subject to adjustment annually. A state-run fund was established to administer leave payments. The bill applied to all industries and mandates compliance. 7
The Workforce Solutions Department would manage the program. The definition of family member is broad to include an applicant’s spouse or domestic partner or a person related to an applicant or applicant’s spouse or domestic partner such as a grandchild, grandparent, a biological, foster, step or adopted sibling; a spouse or domestic partner of a family member, an individual whose close association with the applicant or domestic partner is the equivalent of a family relationship. The bill included several other categories of family members. The bill also provided for the Paid Family and Medical Leave program to pay an eligible applicant a percentage of the employee’s wages to allow the applicant to bond with a new child, care for a family member, prepare for and adjust to a spouse’s military deployment or to take action to protect the employee or the employee’s family member from certain forms of violence. Also included is a preemption for similar programs, which was extremely narrow. The legislation would provide 12 weeks of paid parental leave and nine weeks paid medical and safe leave, which could eventually increase to 12 weeks. Interchange (HB 476): The bill did not pass; NMBA opposed it. The bill would have prohibited interchange on the tax and tip portion of every credit and debit transaction. Illinois is the only state with a law similar to HB 476. That law is being litigated in federal court, and the judge in that case has ruled based on preemption that Illinois state-chartered banks and credit unions are the only financial institutions required to comply. Medicaid Trust Fund (SB 88): The bill passed; NMBA supported it. The bill will establish a permanent fund to support the state’s largest health care expense, Medicaid. The bill proposes an initial investment of $300 million and a variety of ongoing funding sources to increase the fund to $2 billion, including unspent capital outlay dollars. When the trust fund reaches its target level, it will generate $100 million yearly for the state’s share of the Medicaid program. Every one of those state dollars is matched by $3 in federal funding, meaning that this fund will ultimately generate $400 million annually, making it an extremely valuable long-term return on investment for all New Mexicans. Those dollars can help the state raise the reimbursement rates for health care providers who treat patients insured under Medicaid — 42% of all New Mexicans. Increasing those reimbursement rates will help New Mexico recruit and retain more doctors since New Mexico has a higher proportion of patients insured by Medicaid than any other state, and Medicaid often pays less than the cost of providing treatment. The governor signed the bill into law. Conservator Liability (HB 125): The bill did not pass; NMBA supported it. The bill allows courts presiding over a conservatorship to enter orders to approve actions or proposed actions or conservator reports if and only if the conservator files a petition and notifies the protected person, the conservator and other persons determined by the court and the court conducts a hearing with notice having been provided to the same parties. In the case of the death of the protected person, notice would have to be given to that person’s heirs and the personal representative named in the deceased person’s last will and testament. Releases of liability for conservators signed by the protected person are invalid. Investment of Government Funds by State Treasurer (HB 541): The bill did not pass; NMBA supported it. The bill would have expressly authorized the state treasurer to invest funds in the same vehicles as those currently authorized for county and municipal treasurers, including “federally insured obligations, including brokered certificates of deposit, certificate of deposit account placement services and federally insured cash accounts.” These “federally insured obligations” consist of deposits placed at network banks through a deposit placement network. Redaction of Public Records (SB 171): The bill did not pass; NMBA supported it. The bill amends existing law that provides most documents filed with the county clerk are public to allow for certain personal information to be redacted if the document is requested by a third party. Specifically, the county clerk could redact the month and day of the date of birth and all but the four last digits of a social security number or driver’s license number. Other bills monitored by the NMBA included (not a complete listing): • Prevailing Wage on IRB Projects (HB 6): Bill passed. Signed by governor. • Embezzlement Penalty Enhancement (SB 155): Bill passed. Signed by governor. • State Fairgrounds District Act (SB 481): Bill passed. Signed by governor. • Local Government Rent Control (SB 216): Bill did not pass. • Student Loan Bill of Rights (HB 224): Bill did not pass. • Strategic Bitcoin Reserve Act (SB 275): Bill did not pass. • Veteran Property Tax Exemption (HB 47): Bill passed. Signed by governor. • Oil and Gas Royalty Rate Increase (SB 23): Bill passed. Signed by governor. • Technology and Innovation (HB 20): Bill passed. Signed by governor. • Strategic Economic Development Site Readiness (SB 169): Bill passed. Signed by governor. • High Wage Jobs Tax Credit (HB 368): Bill passed. Signed by governor. • Housing Trust Fund (SB 145): Bill did not pass. • Baby Bonds (SB 397): Bill did not pass. • Unfair Trade Practices Act (HB 61): Bill did not pass. • Deposit of Will (HB 132): Bill did not pass. • Increase Corporate Income Tax (SB 141): Bill did not pass. 8
WASHINGTON UPDATE CELEBRATING A LEGACY OF COLLABORATION At the beginning of this year, my travels on behalf of ABA took me to Southern California at a time when deadly wildfires were still raging through many neighborhoods in Los Angeles and the surrounding area. As I sat there in that room full of bankers, friends and colleagues, the sentiment I felt was unmistakable: When the smoke cleared and the dust settled, bankers would be there, ready to serve their communities and support the recovery — just as they have done throughout American history. As I reflect on ABA’s 150th milestone anniversary in 2025, and as I look at where we are as a nation today, I am reminded that bankers have a long and proud tradition of coming together during hard times to work together and find solutions. That certainly was true of ABA’s founding; in 1873, the United States was facing a financial panic and one of the worst recessions in history. Unemployment and bankruptcies were surging, and 300 banks failed. It was on the heels of this unrest that two young bankers — inspired by the women’s suffrage movement and the power of collective action — worked to convene the first-ever meeting of the American Bankers Association in July 1875 in Saratoga Springs, New York. Since then, ABA has provided a forum for bankers to meet and together develop solutions that make the banking sector stronger, safer and more accessible. Just a few examples: We helped mobilize bankers to safeguard bank funds during a string of bank robberies in the 1890s; we pioneered the routing number system that made it easier for customers to move money; and we encouraged bank lending throughout World War II to help finance military operations through bank purchases of government bonds. In more recent times, ABA has supported banks’ role as economic first responders in the wake of major natural disasters (like the recent floods in Kentucky) and a global pandemic, and we have helped bolster their mission of making sure that the American dream is achievable for all Americans, particularly those in historically underserved communities. As we continue to face a climate of unprecedented challenges, from a deeply divided political landscape to heightened economic uncertainty, our nation’s banks remain strong, resilient and ready to respond to whatever comes our way. ABA is standing ready to aid them in their important work. Despite the many things today that threaten to divide us, much like our founders did 150 years ago, I, too, believe that we are stronger together. I hope that in the months and years to come, you’ll continue to be an active part of this organization. Continue sharing your voices, perspectives and ideas as we work to shape the future of banking policy in this country over the next 150 years. Together, we can — and will — achieve more. Email Rob at nichols@aba.com. ROB NICHOLS President and CEO American Bankers Association Despite the many things today that threaten to divide us, much like our founders did 150 years ago, I, too, believe that we are stronger together. 9
Figure 1 Strategies for Attracting and Retaining Top Talent By Ken Derks, Consultant, and Trey Deupree, Consultant, NFP Retaining talent is one of the greatest challenges banks face in today’s dynamic workforce. In fact, staff retention is among the highest concerns, as noted in the 2024 Annual Survey of Community Banks, conducted by the Conference of State Bank Supervisors (see Figure 1). With employees spanning multiple generations — from baby boomers to Gen Z — a one-size-fits-all approach to compensation no longer suffices. Each generation brings unique perspectives and expectations to the workplace, making it crucial for banks to develop tailored compensation strategies that incentivize retention across all age groups. For example, as baby boomers (born 1946-1964) approach retirement or work post-retirement, many Boomers seek stability with generous retirement benefits and health insurance. Gen X (born 1965-1980) values competitive salaries, work-life balance and retirement contributions. Millennials (born 1981-1996) and Gen Z (born 1997-2012) place a strong emphasis on meaningful work, transparent compensation, growth opportunities and short- to mid-term bonuses to help pay for other pre-retirement financial goals such as purchasing a home or funding a child’s education. INCENTIVIZING RETENTION GENERATIONS: COMPENSATION BEST PRACTICES ACROSS 10
In addition, a high priority for bankers is recruiting new talent. Bankers who participated in the 2024 National Compensation Survey1 indicated that the top positions they are planning to recruit included the following: 1. SERPs According to the American Bankers Association’s 2024 Compensation and Benefits Survey, nearly 67% of banks report utilizing deferred compensation plans for key positions.2 These plans can include supplemental executive retirement plans (SERPs), providing a defined post-retirement benefit. SERPs are widely popular with baby boomers and Gen X. Unlike similar broad-based qualified plans, a SERP has no contribution limit or rules that mandate that all employees must be able to participate. They are purposely designed for highly compensated executives and key employees for whom the 401(k) contribution limits act as a form of “reverse discrimination” toward retirement. Also, SERPs are generally fully funded by the bank. 2. Strategic Deferred Compensation Plans These are used when a bank wants to create both a recruiting and retention incentive for top talent. A strategic and customizable deferred compensation plan (DCP) is fully funded by the bank. These are defined Compensation is one of the most important drivers of success in recruiting key talent, particularly in a tight labor market. Comprehensive compensation plans that are successful in landing key talent include not only an attractive base and performance bonus plan but also tailored mid- to longer-term incentives, non-qualified benefit plans and other executive benefits. Employers increasingly recognize and understand the link between well-designed executive compensation packages and overall organizational performance. Creating effective strategies for attracting and retaining key employees across multiple generations can be the game-changer that ensures your most valuable and strategic employees stay and thrive within your bank. It requires structuring compensation packages with flexible options in order to address varying generational priorities. The following are three strategies that your bank can implement to retain and reward top talent. Position Percentage Commercial Lenders 76.6% Top Executives (e.g. C Suite) 40.4% Technology Management 25.5% Risk Management 21.3% Compliance Management 14.9% Wealth Management 10.6% Other 10.6% 2024 National Compensation Survey Report 11
contribution plans, with contributions often based on performance criteria designed to support bank strategic goals. These programs are not usually “all or nothing” in nature. In other words, there is a range of contribution levels tied to performance levels, including no contributions in down years. Strategic DCPs can allow for contributions and earnings to be credited to balances based on ROA, ROE or another metric, thereby tying the long-term value of contributions to the performance of the bank. See examples in the following chart. If Institution Performance or Department/Functional Performance are considered, are the following specific performance measures used for short-term or annual incentive plans? A deferred compensation plan often includes a vesting schedule for bank contributions designed to incentivize participants to remain employed in order to fully benefit from the plan. This serves as a mechanism to not only align your top performers with the goals of the bank but also retain those top performers. For younger generations, a popular feature is one that allows for in-service distributions. “In-service” DCP payment schedules are customizable and can be made at any point (e.g., three, five or 10 years) or even to coincide with certain life events. These can include a home purchase, student loan repayments or a child entering college. 3. Phantom Stock/Stock Appreciation Rights Plans Long-term incentive plans can be an important part of an officer’s compensation package. However, while many privately owned banks are reluctant to share actual tangible equity with their employees, some have been more open to a strategy that is tied to the appreciation of the bank’s value over time. Phantom stock and SARs are ways to provide an equity-like benefit to employees without having them own actual stock. These plans can be designed to pay key officers bonus compensation tied to an increase in the bank’s stock or book value. In a SAR plan, the bank determines a hypothetical stock price through an internal or external valuation of the bank. Officers are awarded some number of hypothetical or “phantom” shares that include specific terms and conditions. At a pre-determined time, the officer receives a cash payment equal to the difference between the original price and the appreciated price. For example, let’s assume the officer receives 1,000 phantom shares with a beginning price of $50. At the end of three years, the bank calculates the phantom stock price to be $75 and then pays the officer any positive difference; in this example, the bank would pay the participant $25,000. The Bottom Line This article highlights the importance of banks reviewing current programs and, where necessary, implementing new benefit plans that address the evolving needs of today’s multi-generational workforce. Based on NFP experience and research, we know that comprehensive benefits packages are key to providing the financial incentives needed to attract, retain and reward top talent and put both employers and employees on the path to success. If your bank has previously implemented some type of non-qualified plan or retention plan, perhaps it’s time to re-evaluate the design and the related benefit agreements. Items to periodically assess include (1) compliance with IRC §409A, (2) revisions to benefit amounts given participant promotions and salary changes, and (3) accounting and tax considerations, including Change in Control (IRC §280G) provisions. Whether your company has supplemental benefit plans in place or not, now is the time to take the next step toward securing your key employees’ financial well-being and your business’s future success. Don’t wait — invest in solutions that drive loyalty and growth today. 1 Source: 2024 National Compensation Survey Report, survey of banks was conducted by Pearl Meyer with data collected as of April 1, 2024 2 Source: 2024 Community Banks Compensation and Benefits Survey, survey of banks was conducted by ABA with data collected as of March 31, 2024 Ken Derks and Trey Deupree are consultants with NFP Executive Benefits. NFP is also a Premier Partner with the ABA. Derks and Deupree are registered representatives with Kestra Investment Services, Member FINRA/SIPC. NFP and Kestra Investment Services are not affiliated. To learn more, contact Ken Derks at ken.derks@nfp.com or Trey Deupree at trey.deupree@nfp.com. View Investor Disclosures at www.kestrafinancial.com. 2024 National Compensation Survey Report 12
By Mark Anderson, Legal and Legislative Assistant, NMBA Following the 2025 presidential election, it became clear that a major factor in Donald Trump’s victory was deep economic dissatisfaction among the American electorate. The overriding themes of Joe Biden’s domestic economic agenda were pervasive inflation, soaring interest rates, housing and healthcare becoming increasingly unaffordable, and wealth inequality continuing to skyrocket. More surface-level indicators like the S&P 500, Dow Jones, GDP and unemployment remained strong under Biden, but the foundational issues that plague the American economy only continued to worsen. In viewing the aftermath of the November election, issue polling indicated that the economy was one of Trump’s strongest issues, with a majority of the electorate indicating that they trusted him to lower prices and generally govern in a fashion similar to his first term in office. However, early in his second administration, Trump has governed in a wildly different fashion from his first term, essentially taking a sledgehammer to key components of the American economy. A lot of people who thought they were voting for economic stability have instead seen economic chaos, destruction and multitudes of what seem to be inexplicable, head-scratching decisions. As a result, Trump is underwater in polling on the issue of the economy, even though his overall approval has remained fairly steady. This is a much different story than his first term, where the economy was consistently Trump’s strongest issue. However, it’s important that the public not chalk up many of the economic decisions early in the second Trump administration as chaos, incompetence or poor judgment but something far more intentional and, if taken to its logical conclusion, possibly sinister. For instance, one of the president’s signature policies is blanket tariffs against Canada, Mexico and China, along with wide-reaching tariffs on other key trading partners. Blanket tariffs can only be described as domestic economic sanctions, essentially shooting yourself in the foot. The entire purpose of tariffs is to spur domestic production and consumption in certain sectors by placing higher prices on foreign goods, but without any specificity or long-term, wide-scale plan to implement domestic manufacturing, the tariffs simply act as an additional tax on Americans. When the American government places economic sanctions on another country, the intent is to weaken and, eventually, destroy the economy of said country, so it’s obvious that domestic economic sanctions like tariffs would have the same effect, whatever the intent is. A recent article from CBS News outlined a frightening burgeoning economic picture as a result of the policies Trump is undertaking. “A new survey from Bank of America shows that global fund managers are moving out of domestic companies in what analysts at the financial giant describe as the ‘biggest drop in U.S. equity allocation ever.’ The reason: growing pessimism about the country’s economic outlook as the Trump administration beats the drum for a trade war with Canada, Mexico, China and other countries,” the article details. “A major shadow over financial markets is the prospect of steep new U.S. tariffs on key trading partners scheduled to take effect on April 2. Those include 25% duties on U.S. imports from Mexico and Canada, as well as even more sweeping matching levies on a number of other countries.” ECONOMIC CHAOS OR SOMETHING MORE SINISTER? 13
“The size, speed and breadth of U.S. tariff hike announcements since January is staggering,” Brian Coulton, chief economist with Fitch Ratings, said in an email. The CBS News article further details, “The Organization for Economic Co-operation and Development downgraded its forecast for U.S. and global growth, citing the risk of escalating trade disputes. Over the first three months of 2025, the country’s gross domestic product is growing at a rate of 1.2%, S&P Global Market Intelligence estimates. That is markedly slower than the 2.3% recorded in the final quarter of last year. For all of 2024, the economy grew 2.8% on the strength of healthy corporate earnings, frisky job growth and resilient consumer spending.” Following the official implementation of the blanket tariffs on April 2, which Trump termed “Liberation Day,” the markets have reacted as expected, with brutally sharp declines. According to a recent CNN article, “The S&P 500 has lost over 15% of its value since Inauguration Day, and two-thirds of the fall have been since Liberation Day.” The losses in the financial markets due to blanket tariffs have surpassed even those during the 2008 financial crisis and the beginning of the COVID-19 pandemic in 2020. The key difference in this instance is that these losses are self-imposed by President Trump, as according to the same CNN article, “He inherited a bull market, as the S&P 500 gained 23% in 2024.” Also, Trump is bringing into question manipulation of the financial markets and insider trading. Over the course of his second term, he has already implemented and rescinded blanket tariffs multiple times, causing enormous shocks to the financial markets. On a local level, Trump’s tariffs will have potentially devastating impacts on New Mexico. According to a recent study by the Senate Finance Committee, “New Mexico is ranked second most vulnerable to tariffs and second most at risk for retaliatory tariffs. The state imported $2.5 billion from Mexico in 2023, alongside $3.61 billion of imports from China, Canada and India. New Mexico also exported $4.9 billion in goods globally in 2023, with $3.4 billion (70%) going to Mexico. Federal tariffs could reduce New Mexico GDP growth by up to 1.5%, according to the Tax Policy Center.” It is simply a fact that nearly every New Mexican’s economic situation will be tangibly worse due to these tariffs, and poverty and all of its consequences will be massively exacerbated. So, given this information, what are Trump’s motivations for issuing blanket tariffs? The more charitable reading would be the president sincerely, if foolishly, believes that it’s an effective tool to spur long-term domestic manufacturing and investment through short-term pain. However, there’s little evidence that the tariffs are being deployed for these ends, as the Trump administration has laid out zero plans to implement wide-scale domestic manufacturing across vast swaths of industry. Importantly, that would require massive government investment. The second reading would be that the Trump administration is attempting to intentionally destroy the American economy. Frankly, there is far more evidence pointing to the second reading than the first, and that should frighten virtually every American. What is particularly remarkable about Trump’s seemingly intentional destruction of financial markets, which have lost trillions in value since his inauguration, is that his first term was largely centered around the success of the same financial markets. Many of the people who voted for Trump in 2024 expecting strong economic gains were likely harkening back to his first term, where the president consistently boasted of a 14
record-high Dow Jones and S&P 500, extremely low inflation, low unemployment, low interest rates and continual GDP growth. However, Trump seems positively impervious to those metrics this time around, if not outright hostile. Which begs the question, “Why the change?” One would only be comfortable, even outright pleased, with sharply declining economic metrics if that was ultimately the goal. This begs the question, why would Trump want to intentionally destroy the economy? When one examines what Trump and the Department of Government Efficiency (DOGE), led by Elon Musk, have been doing since Inauguration Day, it becomes pretty clear. Under the guise of “eliminating waste, fraud and abuse,” Musk and his DOGE team have essentially taken a sledgehammer to the federal government, eliminating anything they don’t approve of on a whim. However, when one looks a little deeper, it becomes obvious that “eliminating waste, fraud and abuse” and making the government more efficient is merely a fig leaf for an entirely different agenda. According to data from the Treasury Department, federal spending in February stood at $603 billion. This stands in stark contrast to Musk’s claim of saving over $100 billion. While at the same time federal spending isn’t going down, Musk and Trump are eliminating entire departments of the government on a whim while also conducting mass layoffs of federal employees. Meanwhile, Musk is continuing to reward himself with enormous military contracts, something he doesn’t deem as wasteful or abusive of government funds. When looking at the bigger picture, it becomes apparent that Musk and Trump are trying to destroy the federal government through wide-scale layoffs and make it completely unable to fulfill even basic functions. For example, Trump and Musk have laid off half of the staff of the Social Security Administration, and for the first time in the history of Social Security, senior citizens have started missing their checks. The plan here is obvious: to make people think that Social Security no longer functions and to transfer those funds into the private market, away from the federal government, where it can be raided by oligarchs. This is why members of the Trump administration have been spreading the widely debunked falsehood that people who have been dead for 50 years or more are still receiving Social Security checks. It’s simply a pretext to do what they want to do, which is eliminate Social Security altogether. Americans have a true fight on their hands with their own government essentially performing a hostile takeover of its own population. Given how brazenly Trump and Musk are destroying the administrative state, it is not far-fetched to view seemingly head-scratching economic decisions as a deliberate attempt to dismantle the American economy. After all, in the event of an extreme economic downturn, Musk, Trump and other extraordinarily wealthy individuals are the only people in society who stand to benefit in any form or fashion. We are currently witnessing the complete destruction of the American administrative state, America’s global standing and its economic power by a group of completely self-interested, megalomaniacal robber barons. This is no longer a hypothetical but an immediate reality. It’s safe to say that most Americans, no matter what they’re political persuasion, will not approve of that reality once it is actually presented to them in living, breathing terms. However, the first step is understanding what is actually happening. We are seeing the destruction of both the rule of law and the Constitution in real-time, and the real question is, “What comes next?” Americans have a true fight on their hands with their own government essentially performing a hostile takeover of its own population. If there’s anything that can shake Americans out of a sense of complacency, it will be the coming years of true economic and social upheaval. America has been through many tough times before, so we can certainly weather these as well if millions of Americans are willing to unite. That remains to be seen. Personalized Financial Consulting for Your Business Growth Small Business Commercial Real Estate Government Fiscal Analysis & Legislative Advocacy Interested in working together? Visit www.ponderosaeconomics.com or call (505) 699-1841. Financial & Management Consulting Firm 15
Capra Bank President Andres Garcia recently announced the assembly of a local Advisory Board of Directors that includes business and civic leaders, bankers and native New Mexicans. “I am incredibly proud of the impact our Capra Bank team has been able to have on our community in the past seven months. Our board members have played an instrumental role in that success,” Garcia said. “Bringing together these community leaders and industry experts is, without a doubt, a proud and meaningful moment. With this group of elite community and business leaders flying the Capra flag, we will create exciting momentum as we continue to build our presence in New Mexico.” The Advisory Board will provide strategic advice, current knowledge of market conditions, critical thinking and access to varied business networks to maximize Capra Bank’s impact in New Mexico. Capra Bank’s local Advisory Board of Directors is comprised of the following individuals: • Sam Baca — senior vice president and co-owner at AUI Inc. • Tom Briones — attorney and CEO at Briones Business Law Consulting • Adam Ciepiela, AIF, CSSA, CRC — partner at Charles Stephen • Cole Flanagan, CPA — CEO at Flanagan Investment Real Estate • Rudy Guzman — president at Guzman Construction • Shauna Kastle — president and CEO at Goodwill Industries of New Mexico • Mike Mechenbier — CEO at 4 Daughters Land & Cattle, Sundance Mechanical; co-founder at El Ranchito De Los Niños • Kellie Mixon — CEO at New Mexico Mutual • Rebecca Sanford — CEO at Adelante Development Center • Rick Wadley — retired president of Bank of America New Mexico, KIIT Board of Directors, KIIT Renewable Energy BOD and Akal Security BOD “With the continued engagement and leadership from our board, the sky is the limit for Capra Bank in New Mexico. We look forward to continuing to deliver banking without compromise for our clients, shareholders and our dynamic community,” Garcia said. Baca says he joined the board to champion the New Mexico construction community and because the bank pursues endeavors that align with his priorities, like investing locally. “The banking industry is continuously changing with mergers, technology, regulatory changes and economic uncertainty. Through the uncertainty and continuous changes, community banks like Capra are extremely important to the support, stability and success of New Mexicans and New Mexico Businesses,” board member Sam Baca, senior vice president and co-owner at AUI Inc., said. “Capra Bank focuses on relationship-based banking, local decision-making power and loyalty — three particularly important values that my company looks for in a banking relationship. It is New Mexico money that is reinvested into the community.” “Serving on the Capra Advisory Board offers me a platform to be a voice for the New Mexico construction community. Our industry plays a vital role by creating jobs, improving infrastructure and contributing to economic growth and development,” Baca added. Shauna Kastle, also a board member and community leader in her role as president and CEO of Goodwill Industries of New Mexico, said she joined the Advisory Board because Capra Bank has insights and specialized knowledge of the local market, unlike banks that aren’t locally run. “I’m proud to serve on Capra Bank’s Advisory Board because I believe a locally run community bank is essential to New Mexico’s nonprofit and entrepreneurial ecosystem,” Kastle said. “Their deep understanding of our market allows them to provide the kind of tailored financial solutions and trusted partnerships that help organizations and businesses not just survive but truly thrive.” NEW MEXICO’S CAPRA BANK HARNESSES LOCAL EXPERTISE WITH ADVISORY BOARD OF DIRECTORS By Sharon Brooks, Editor-in-Chief, Albuquerque Business First 16
At Housing New Mexico, we’re committed to preserving communities and keeping them safe, affordable, and energy-efficient. In fiscal year 2024, we invested over $16.8 million to preserve 1,108 homes ensuring families have stable and healthy living spaces. Preserving Homes, Strengthening Communities Scan for more information on our Home Rehabilitation and Weatherization programs! 18,981 Families served 5,769 Homes produced, financed or preserved 940 New rental and single-family homes financed $736,970,000 Total funding administered 2024 Production Highlights Over $3 million provided to rehabilitate 256 homes Over $13.8 million provided to weatherize 852 homes
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