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
24, 2002.
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 banks
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 banks 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
banks 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.
Attachment
Federal Reserve Susan Stawick (202)
452-2955
FDIC David
Barr (202)
898-6992
OCC Dean
DeBuck (202) 874-5770