Home > News & Events > Inactive Financial Institution Letters 




Inactive Financial Institution Letters 


SECTION 109 HOST STATE LOAN-TO-DEPOSIT RATIOS

The Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and the Office of the Comptroller of the Currency ("the agencies") today are making public the host state loan-to-deposit ratios that the agencies will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Act). Section 109 of the Interstate Act prohibits a bank from establishing or acquiring a branch or branches outside of its home state under the Interstate Act primarily for the purpose of deposit production.

Section 109 provides a two-step process to test compliance with the statutory requirements. The first step 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 a particular state. If the bank’s statewide loan-to-deposit ratio in a state is at least one-half of the published host state loan-to-deposit ratio for that state, the bank has complied with section 109. If the bank’s ratio is less than one-half, the second step in section 109 requires the agencies to determine if the bank is reasonably helping to meet the credit needs of the communities served by the bank. A bank that fails both steps is in violation of section 109 and subject to sanctions by the agencies.

The agencies will update the host state loan-to-deposit ratios on an annual basis.

Section 109 of the Interstate Banking and Branching Efficiency Act

Host State Loan-to-Deposit Ratios

(Excludes wholesale or limited purpose CRA-designated banks and credit card banks.)
State
Host State Loan-to-Deposit Ratio
Alabama
94%
Alaska
73%
Arizona
79%
Arkansas
69%
California
88%
Colorado
66%
Connecticut
88%
Delaware
78%
District of Columbia
43%
Florida
85%
Georgia
91%
Hawaii
104%
Idaho
74%
Illinois
86%
Indiana
90%
Iowa
74%
Kansas
68%
Kentucky
92%
Louisiana
76%
Maine
95%
Maryland
81%
Massachusetts
86%
Michigan
98%
Minnesota
91%
Mississippi
72%
Missouri
75%
Montana
84%
Nebraska
75%
Nevada
67%
New Hampshire
81%
New Jersey
70%
New Mexico
63%
New York
84%
North Carolina
100%
North Dakota
73%
Ohio
105%
Oklahoma
69%
Oregon
97%
Pennsylvania
92%
Rhode Island
67%
South Carolina
82%
South Dakota
91%
Tennessee
91%
Texas
69%
Utah
96%
Vermont
86%
Virginia
83%
Washington
111%
West Virginia
82%
Wisconsin
93%
Wyoming
83%
American Samoa
74%
Federated States of Micronesia
56%
Guam
71%
Puerto Rico
93%
Virgin Islands
64%

 

Due to the legislative intent against imposing regulatory burden, no additional data were collected from the institutions to implement section 109. However, since insufficient lending data were available on a geographic basis to calculate the statewide ratios directly, the agencies used a proxy to estimate the host state loan-to-deposit ratio. The agencies calculated the host state loan-to-deposit ratios using data obtained from the Call Reports and Summary of Deposits reports, as of June 30, 1997. For each home state bank, the agencies calculated the percentage of the bank’s total deposits attributable to branches located in its home state (determined from the Summary of Deposits), and applied this percentage to the bank’s total domestic loans (determined from the Call Report) to estimate the amount of loans attributable to the home state. The host state loan-to-deposit ratio was then calculated by separately totaling the loans and deposits for the home state banks, and then dividing the sum of the loans by the sum of the deposits. Banks designated as limited purpose or wholesale banks under the Community Reinvestment Act (CRA) were excluded from the host state loan-to-deposit calculation, recognizing that these banks could have very large loan portfolios, but few, if any, deposits. Credit card banks, which typically have large loan portfolios but few deposits, were also excluded, regardless of whether they had a limited purpose CRA-designation.

The host state loan-to-deposit ratios, and any changes in the way the ratio is calculated, will be made publicly available on an annual basis.

Last Updated 07/16/1999 communications@fdic.gov