A. Any bank or savings and loan association designated as a depository by the proper treasurer, board of finance or board of control, prior to the delivery of securities of the kind specified in Section 6-10-16 N.M. Stat. Ann. to secure that deposit, shall enter into a written agreement with the state board of finance or the board of finance of the county, municipality or board of control whose money it desires to receive and hold on deposit. The depository shall provide for a security interest in the deposited securities in favor of the proper treasurer, board of finance or board of control and shall follow all procedures and comply with all provisions necessary to assure that the security interest is not avoidable under any provisions of law or regulations, including the federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, and the Federal Deposit Insurance Act, as amended. These provisions and procedures shall be incorporated in the terms of the agreement, and the proper treasurer, board of control or board of finance shall take such steps as are necessary to verify compliance by the depository with all necessary provisions and procedures.

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B. In case any bank or savings and loan association holding public money on deposit shall, upon proper demand therefor, default in the payment of any such money or the agreed interest on the money or in the performance of its obligations under the written agreement, the payment thereof being secured in whole or in part by a deposit of securities of the kind specified in Section 6-10-16 N.M. Stat. Ann., the treasurer, board of finance or board of control shall instruct the custodial bank in possession of the securities to transfer the securities or such portion of the securities as may be required to the treasurer or other official or its designated agent for disposition in accordance with Subsection C or D of this section.

C. The treasurer or other official or agent, upon delivery of the securities from the custodial bank, may sell the securities at public auction at the state capitol, courthouse or city hall or where the office of the official may be to the highest bidder for cash after thirty days’ notice of the time and place and terms of the sale, which notice shall be given by publication thereof in a newspaper published in the county in which the sale is to take place; provided that the board of finance or board of control interested in the sale may become a purchaser at any such sale at not less than ninety-five percent of the market value of the securities.

D. The treasurer or other official or agent, upon delivery of securities from the custodial bank, may sell the securities at public or private sale at a broker’s board or on any securities exchange in a manner that is customary in the securities industry for the types of securities being sold.

E. The proceeds realized from the sale under Subsection C or D of this section, after payment therefrom of the expenses of the sale, shall be applied to the payment of the amount of public money in which the bank or savings and loan association is in default and for which the securities so sold were pledged, and the remainder, if any, of the proceeds shall be paid over to the bank or savings and loan association. Upon any and all such sales, the securities sold shall be delivered to the purchaser thereof, the official or agent conducting the sale having first caused it to be endorsed in a manner or done other things as may be necessary to vest the title thereto in the purchaser.