WASHINGTON — The Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, and the Office of the Comptroller of the
Currency today issued the host state loan-to-deposit ratios that the banking
agencies will use to determine compliance with section 109 of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994. These ratios update
data released on June 12, 2007.
In general, section 109 prohibits a bank from establishing or acquiring a branch
or branches outside of its home state primarily for the purpose of deposit
production. Section 109 also prohibits branches of banks controlled by
out-of-state bank holding companies from operating primarily for the purpose of
deposit production.
Section 109 provides a process to test compliance with the statutory
requirements. The first step in the process involves a loan-to-deposit ratio
screen that compares a bank’s statewide loan-to-deposit ratio to the host state
loan-to-deposit ratio for banks in a particular state.
A second step is conducted if a bank’s statewide loan-to-deposit ratio is less
than one-half of the published ratio for that state or if data are not
available at the bank to conduct the first step. The second step requires the
appropriate banking agency to determine whether the bank is reasonably helping
to meet the credit needs of the communities served by the bank’s interstate
branches.
A bank that fails both steps is in violation of section 109 and is subject to
sanctions by the appropriate banking agency.
The updated host state loan-to-deposit ratios are attached.
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Attachment
Media Contacts: |
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Federal Reserve |
Ben Hardaway |
(202) 452-2955 |
FDIC |
David Barr |
(202) 898-6992 |
OCC |
Dean DeBuck |
(202) 874-4876 |