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FDIC Federal Register Citations

[Federal Register: April 9, 2001 (Volume 66, Number 68)]
[Proposed Rules]               
[Page 18411-18416]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09ap01-8]                         

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 25

[Docket No. 01-06]
RIN 1557-AB95

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Regulation H; Docket No. R-1099]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 369

RIN 3064-AC36

 
Prohibition Against Use of Interstate Branches Primarily for 
Deposit Production

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); and Federal 
Deposit Insurance Corporation (FDIC).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, the Board, and the FDIC (collectively, the 
``Agencies'') propose to amend the uniform regulations implementing 
section 109 of the Riegle-Neal Interstate Banking and Branching 
Efficiency Act of 1994 (Interstate Act) to effectuate the amendment to 
section 109 contained in the Gramm-Leach-Bliley Act of 1999. Section 
109 prohibits any 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, and provides guidelines for 
determining whether such bank is reasonably helping to meet the credit 
needs of the communities served by these branches. Section 106 of the 
Gramm-Leach-Bliley Act of 1999 expanded the coverage of section 109 of 
the Interstate Act to include any branch of a bank controlled by an 
out-of-State bank holding company. This proposal amends the regulatory 
prohibition against branches being used as deposit production offices 
to include any bank or branch of a bank controlled by an out-of-State 
bank holding company, including a bank consisting only of a main 
office.

DATES: Comments must be received on or before June 8, 2001.

ADDRESSES: Comments should be directed to:
    OCC: Public Information Room, Office of the Comptroller of the 
Currency, 250 E Street, SW., Mailstop 1-5, Washington, DC 20219, 
Attention: Docket No. 01-06. Comments will be available for public 
inspection and photocopying at the same location. You can make an 
appointment to inspect the comments by calling (202) 874-5043. In 
addition, you may send comments by fax to (202) 874-4448, or by 
electronic mail to regs.comments@occ.treas.gov. 
    Board: Jennifer J. Johnson, Secretary, Board of Governors of the 
Federal Reserve System, 20th Street and Constitution Avenue, NW., 
Washington, DC 20551 or mailed electronically to 
regs.comments@federalreserve.gov. Comments should refer to docket 
number R-1099. Comments addressed to Ms. Johnson may also be delivered 
to the Board's mail room between 8:45 a.m. and 5:15 p.m., and to the 
security control room outside of those hours. Both the mail room and 
control room are accessible from the courtyard entrance on 20th Street 
between Constitution Avenue and C Street, NW., Washington, DC. Comments 
may be inspected in room MP-500 between 9 a.m. and 5 p.m., except as 
provided in Sec. 261.14 of the Board's Rules Regarding Availability of 
Information, 12 CFR 261.14.
    FDIC: Send written comments to Robert E. Feldman, Executive 
Secretary, Attention: Comments/OES, Federal Deposit Insurance 
Corporation, 550 17th Street, NW., Washington, DC 20429. Comments may 
be hand delivered to the guard station at the rear of the 550 17th 
Street Building (located on F Street), on business days between 7 a.m. 
and 5 p.m. FAX number: (202) 898-3838. Comments may be inspected and 
photocopied in the FDIC Public Information Center, Room 100, 801 17th 
Street, NW., Washington, DC, between 9 a.m. and 4:30 p.m. on business 
days. Comments may be submitted to the FDIC electronically over the 
Internet at www.fdic.gov. Further information concerning this option 
may be found at ``FDIC's New Electronic Public Comment Site.'' Comments 
also may be submitted electronically to comments@fdic.gov. We may post 
comments at the FDIC's web site.

FOR FURTHER INFORMATION CONTACT:   
    OCC: Karen Tucker, National Bank Examiner, Community and Consumer 
Policy (202) 874-4428; Kathryn Ray, Senior Attorney, Community and 
Consumer Law Division (202) 874-5750; Patrick T. Tierney, Attorney, 
Legislative and Regulatory Activities Division (202) 874-5090; or with 
respect to foreign banks, Maureen Cooney, Senior Attorney, Legislative 
and Regulatory Activities Division (202) 874-5090.
    Board: Michael J. O'Rourke, Counsel, Legal Division (202) 452-3288; 
Shawn McNulty, Assistant Director, Division of Consumer and Community 
Affairs (202) 452-3946; or with respect to foreign banks, Sandra L. 
Richardson, Assistant General Counsel, Legal Division (202) 452-6406.
    FDIC: Louise Kotoshirodo Kramer, Review Examiner, Division of 
Compliance and Consumer Affairs, (202) 942-3599; or Marc J. Goldstrom, 
Counsel, Regulations and Legislation Section (202) 898-8807.

SUPPLEMENTARY INFORMATION: The contents of this preamble are listed in 
the following outline:

I. Background
II. Overview of the Proposed Rule
    A. Bank Locations Subject to Section 109 As Amended
    1. Coverage of Banks' Main Offices
    2. Coverage of Interstate and Intrastate Branches
    B. Multi-Tier Bank Holding Companies
    C. Definition of ``Home State'' for a Bank Holding Company
    D. Foreign Banks and Branches
    E. Impact of the Rule
    F. Request for Comment
    G. Plain Language
III. FDIC's Electronic Public Comment Site
IV. Regulatory Analysis
    A. Paperwork Reduction Act
    B. Regulatory Flexibility Act
    C. OCC Executive Order 12866 Determination
    D. OCC Unfunded Mandates Reform Act of 1995 Determination
    E. The Treasury and General Government Appropriations Act, 
1999--Assessment of Impact of Federal Regulation on Families

[[Page 18412]]

I. Background

    The Interstate Act \1\ provides expanded authority for a domestic 
or foreign bank to establish or acquire a branch in a State other than 
the bank's home State. Section 109 of the Interstate Act requires the 
Agencies to prescribe uniform rules that prohibit the use of the Act's 
interstate branching authority primarily for the purpose of deposit 
production.\2\ Congress enacted section 109 to ensure that the new 
interstate branching authority provided by the Interstate Act would not 
result in the taking of deposits from a community without banks 
reasonably helping to meet the credit needs of that community. See H.R. 
Conf. Rep. No. 103-651, at 62 (1994).
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    \1\ Pub. L. 103-328, 108 Stat. 2338.
    \2\ 12 U.S.C. 1835a.
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    As required by section 109, the agencies issued a joint final rule 
implementing section 109. 62 FR 47728 (September 10, 1997). This rule 
provides that, beginning no earlier than one year after a bank 
establishes or acquires a covered interstate branch, the appropriate 
agency will determine whether the bank satisfies a loan-to-deposit 
ratio screen that has been established by section 109.
    The loan-to-deposit ratio screen compares a bank's loan-to-deposit 
ratio within the State where the bank's covered interstate branches are 
located (statewide loan-to-deposit ratio) with the loan-to-deposit 
ratio of all banks chartered or headquartered in that State (host State 
loan-to-deposit ratio).\3\ If the bank's statewide loan-to-deposit 
ratio is at least 50 percent of the host State loan-to-deposit ratio, 
no further analysis is required. If, however, the appropriate agency 
determines that the bank's statewide loan-to-deposit ratio is less than 
50 percent of the host State loan-to-deposit ratio, then the agency 
must perform a credit needs determination. A credit needs determination 
would also be performed if the appropriate agency determines that 
reasonably available data does not exist that permits the agency to 
determine the bank's statewide loan-to-deposit ratio. Under the credit 
needs determination, the appropriate agency reviews the activities of 
the bank, such as its lending activity and its performance under the 
Community Reinvestment Act (CRA), and determines whether the bank is 
reasonably helping to meet the credit needs of the communities served 
by the bank in the host State.
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    \3\ Host State loan-to-deposit ratios, based on reasonably 
available data, are jointly published by the agencies every year.
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    A bank that fails the loan-to-deposit ratio screen and that 
receives a determination that it is not reasonably helping to meet the 
credit needs of the communities served by the bank's interstate 
branches could be subject to sanctions under section 109.
    Section 106 of the Gramm-Leach-Bliley Act of 1999 (GLBA), Pub. L. 
106-102, 113 Stat. 1338 (November 12, 1999), amends section 109 by 
changing the definition of an interstate branch to include any branch 
of a bank controlled by an out-of-State bank holding company (as 
defined in section 2(o)(7) of the Bank Holding Company Act of 1956 (BHC 
Act)). Any branch of a bank controlled by an out-of-State bank holding 
company is an ``interstate branch'' for purposes of section 109. The 
agencies are proposing to conform their uniform regulations made to 
this amendment by the GLBA.

II. Overview of the Proposed Rule

    As discussed in the Background section, section 109 prohibits the 
use of the interstate banking and branching authority granted by the 
Interstate Act to engage in interstate branching primarily for the 
purpose of deposit production. Prior to the GLBA, this prohibition 
applied to any bank that established or acquired, directly or 
indirectly, a branch under the authority of the Interstate Act or 
amendments to any other provision of law made by the Interstate Act. In 
accordance with the amendments to section 109 adopted by the GLBA, the 
proposed rule broadens this prohibition to apply not only to branches 
established pursuant to the Interstate Act, but also to any bank or 
branch of a bank controlled by an out-of-State bank holding company. 
Thus, the definition of the term ``covered interstate branch'' would be 
revised to include any bank or branch of a bank controlled by an out-
of-State bank holding company. We further propose to make conforming 
changes to our regulations \4\ to revise the definition of ``host 
state'' and to clarify that the loan-to-deposit ratio screen will be 
applied to a bank, or branch of a bank, controlled by an out-of-State 
bank holding company in the same manner as the screen is applied to a 
covered interstate branch under the current rule.
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    \4\ See 12 CFR 25.62(e) and 25.63(a) (OCC); 12 CFR 208.7(b)(4) 
and 208.7(c)(1) (Federal Reserve); 12 CFR 369.2(d) and 
369.3(a)(FDIC).
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A. Bank Locations Subject to Section 109 as Amended

    Prior to the GLBA, section 109's deposit production office 
prohibition applied only to an interstate branch in a host State that 
is acquired or established by an out-of-State bank pursuant to the 
Interstate Act or any amendment made by the Interstate Act. As amended, 
it now also applies to any branch of a bank controlled by an out-of-
State bank holding company. The legislative history of this amendment 
indicates that Congress intended that this amendment would expand the 
scope of section 109 to cover any bank or branch of a bank controlled 
by an out-of-State bank holding company, as discussed below.
1. Coverage of Banks' Main Offices
    Coverage under the proposed rule extends to banks controlled by 
out-of-State bank holding companies, including banks consisting only of 
a main office. The amendment to section 109 includes banks consisting 
of only a main office because the purpose of the legislation is to 
prevent out-of-State bank holding companies from taking deposits out of 
a community without helping to meet the credit needs of that community. 
See 145 Cong. Rec. H11529 (daily ed. Nov. 4, 1999); 145 Cong. Rec. 
H5217 (daily ed. July 1, 1999); 144 Cong. Rec. H3133 (daily ed. May 13, 
1998). The purpose of the legislation would be negated if banks 
consisting only of a main office were excluded. For example, out-of-
State bank holding companies could take deposits from a host State 
simply by establishing separately chartered, single-office banks in a 
host State. Therefore, we have proposed that banks consisting only of a 
main office and controlled by an out-of-State bank holding company be 
subject to the joint rule.
2. Coverage of Interstate and Intrastate Branches
    The amendment to section 109 expands the scope of the rule to 
include all branches of a bank that is controlled by an out-of-State 
bank holding company. Indeed, Congress intended to apply the section 
109 rule to ``all branches of a bank owned by an out-of-State holding 
company,'' not just to previously exempt branches owned by such banks. 
See H.R. Rep. No. 106-74, pt. 1 at 128 (1999) (emphasis added). Thus, 
the proposed rule applies to all branches of a bank when the bank and 
its controlling bank holding company have different home states.

B. Multi-Tier Bank Holding Companies

    Section 106 of the GLBA expands the definition of interstate branch 
to any branch of a bank controlled by an out-of-State bank holding 
company incorporating by reference the BHC Act definition of an ``out-
of-State bank

[[Page 18413]]

holding company.'' 12 U.S.C. 1841(o)(7). We will use the BHC Act 
definition of control to determine the controlling bank holding 
company. This is the top tier bank holding company in a multi-tier bank 
holding company structure.

C. Definition of ``Home State'' for a Bank Holding Company

    The BHC Act defines ``home State'' with respect to a bank holding 
company as the State where total deposits of all banking subsidiaries 
are the greatest as of the later of July 1, 1966 or the date on which a 
company becomes a bank holding company. 12 U.S.C. 1841(o)(4). To 
determine the home State of a bank holding company, the agencies will 
determine, from sources available at the agencies, the State where the 
total deposits of all the banking subsidiaries were the greatest as of 
the later of July 1, 1966 or the date the bank holding company was 
formed. We recognize that, in certain cases, the State where the total 
deposits of all of a bank holding company's subsidiary banks were 
greatest on July 1, 1966 or at the date of formation of the bank 
holding company may not be the same State as where the bank holding 
company subsidiary banks hold the greatest amount of deposits now or at 
a future date. However, the amendment to section 109 made by the GLBA 
adopts the BHC Act definition of ``out-of-State bank holding company,'' 
and the BHC Act definition of ``home State'' is incorporated into that 
definition.

D. Foreign Banks and Branches

    Section 106 of the GLBA also necessitates an amendment to the 
definition of ``home state'' for foreign banks with banking operations 
in the United States. Under U.S. banking law and regulation, foreign 
banks may be treated as banking institutions, bank holding companies, 
or both, depending on the nature of their operations in the United 
States. For purposes of determining whether a U.S. branch of a foreign 
bank is a covered interstate branch, a foreign bank's home state is 
determined under section 5 of the International Banking Act of 1978 (12 
U.S.C. 3103) and section 211.22 of the Federal Reserve's Regulation K 
(12 CFR 211.22). For purposes of determining whether a branch of a U.S. 
bank controlled by a foreign bank is a covered interstate branch, a 
foreign bank's home state is determined in accordance with 12 U.S.C. 
1841(o)(4) as discussed above in section II C. of this preamble 
regarding U.S. bank holding companies. A foreign bank may have 
different home states with respect to direct offices and subsidiary 
banks.

E. Impact of the Rule

    The proposed rule is unlikely to have any impact on the vast 
majority of banks. Consistent with section 109 when it was first 
enacted, the proposed rule does not impose any new record keeping 
requirements on affected institutions. We use existing data to 
determine the loan-to-deposit ratio screen.
    Moreover, there is no additional burden imposed as a result of the 
credit needs determination. In order to make that determination, the 
appropriate agency will review the activities of the bank, such as its 
lending activity and its performance under the CRA,\5\ and evaluate 
whether the bank is reasonably helping to meet the credit needs of the 
communities served by the bank in the host State.
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    \5\ Some entities that could be subject to section 109, 
including certain special purpose banks and uninsured branches of 
foreign banks, are not evaluated for CRA performance by the 
Agencies. For such entities, we will continue to use the CRA 
regulations as guidelines in making a credit needs determination. 
The CRA regulations provide only guidance to assess whether 
activities identified by these institutions help to meet the 
community's credit needs, and do not obligate the institutions to 
have a record of performance under the CRA or require that the 
institutions pass any performance tests in the CRA regulations. We 
also will continue to give substantial weight to the factor relating 
to specialized activities in making a credit needs determination for 
institutions not evaluated under the CRA. For example, most branches 
of foreign banks derive substantially all their deposits from 
wholesale deposit markets, which are generally national or 
international in scope. This approach is consistent with section 
109's overall purpose of preventing banks from using the Interstate 
Act to establish branches primarily to gather deposits in their host 
state without reasonably helping to meet the credit needs of the 
communities served by the bank in the host state. See Prohibition 
Against use of Interstate Branches Primarily for Deposit Production, 
62 FR 47728, 47732-33 (September 10, 1997) (codified at 12 CFR parts 
25, 208, 211, 369).
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    The only circumstance in which the proposed rule would impose a 
burden on banks is if the bank fails both the loan-to-deposit ratio 
screen and the credit needs determination. Accordingly, while the 
statutory amendment and this proposed rule extend the scope of the DPO 
rule, this extended scope is unlikely to affect most institutions.

F. Request for Comment

    We invite public comment on all aspects of the proposed rule. In 
particular, we request comment on the coverage of main offices and 
interstate and intrastate branches, the treatment of multi-tier bank 
holding companies, the definition of ``home state'' for an out-of-state 
bank holding company, and the treatment of foreign banks and branches. 
Each of these issues is discussed elsewhere in this preamble, and we 
invite comment on the views expressed therein.
    The Agencies also seek comments on the impact of this proposal on 
community banks. Community banks operate with more limited resources 
than larger institutions and may present a different risk profile. We 
believe that this rule will not have a significant impact on community 
banks. Nevertheless we specifically request comment on the impact of 
the proposal on community banks' current resources and available 
personnel with the requisite expertise, and whether the goals of the 
proposed regulation could be achieved, for community banks, through an 
alternative approach.

G. Plain Language

    Section 722 of the GLBA (12 U.S.C. 4809) requires each federal 
banking agency to use plain language in all proposed and final rules 
published after January 1, 2000. To this end, we invite your comments 
on how to make the changes proposed by this rulemaking easier to 
understand.

III. FDIC's Electronic Public Comment Site

    The FDIC has included a page on its web site to facilitate the 
submission of electronic comments in response to this general 
solicitation (the EPC site). The EPC site provides an alternative to 
the written letter and may be a more convenient way for you to submit 
your comments. Commenting through the EPC site helps the FDIC more 
accurately and efficiently analyze comments submitted electronically. 
If you submit your comments through the EPC site your comments will 
receive the same consideration that they would receive if submitted in 
hard copy to the FDIC's street address. Information provided through 
the EPC site will be used by the FDIC only to assist in its analysis of 
the proposed regulation. The FDIC will not use an individual's name or 
any other personal identifier of an individual to retrieve records or 
information submitted through the EPC site. Like comments submitted in 
hard copy to the FDIC's street address, EPC site comments will be made 
available in their entirety (including the commenter's name and address 
if the commenter chooses to provide them) for public inspection.
    The EPC site will be available on the FDIC's home page at http://
www.fdic.gov. You will be able to provide comments directly on any of 
the sections of the proposed regulation. You will also be able to view 
the regulation and Supplementary Information sections that relate to 
your comments

[[Page 18414]]

directly on the site. The FDIC encourages you to provide written 
comments in the spaces provided. Written comments enable the FDIC to 
thoughtfully consider possible changes to the proposed regulation.
    The FDIC is also interested in your feedback on the EPC site. We 
have provided a space for you to comment on the site itself. Answers to 
this question will help the FDIC evaluate the EPC site for use in 
future rulemaking.
    At the conclusion of the EPC site, you will have an opportunity to 
provide us with your name, indicate whether you are an individual, 
bank, trade association, or government agency, and provide the name of 
the organization you represent, if applicable. Whether you choose to 
respond to these questions is entirely up to you. Any responses 
received may help the FDIC to better understand the public comments it 
receives.

IV. Regulatory Analysis

A. Paperwork Reduction Act

    The agencies have determined that this proposal does not involve a 
collection of information pursuant to the provisions of the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

B. Regulatory Flexibility Act

    OCC: Pursuant to section 605(b) of the Regulatory Flexibility Act, 
the OCC certifies that this proposal will not have a significant 
economic impact on a substantial number of small entities. Section 109 
requires that the agencies use only available information to conduct 
their analyses. Consistent with this requirement, this proposal does 
not impose any additional paperwork or regulatory reporting 
requirements.
    Board: Pursuant to section 605(b) of the Regulatory Flexibility Act 
(5 U.S.C. 601 et seq.), the Board certifies that the proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Review for compliance with section 109 is conducted at the 
same time that the Community Reinvestment Act review is performed. 
Consistent with the requirement that the agencies use only available 
information to conduct a section 109 review, the proposed rule does not 
impose any additional regulatory burden on banks beyond what is 
required by statute. The burden to conduct the review and use only 
available data is on the banking regulatory agencies. Thus, the 
proposed rule will not have a significant economic impact on a 
substantial number of small entities.
    FDIC: Pursuant to section 605(b) of the Regulatory Flexibility Act 
(5 U.S.C. 601 et seq.), the FDIC certifies that the proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. The rule would extend coverage of section 109 to some 
additional institutions, including small entities. However, based on 
previous examination experience, we estimate that one or fewer 
institutions per year will experience any cost in connection with 
complying with the rule. Thus, the proposed rule will not have a 
significant economic impact on a substantial number of small entities.

C. OCC Executive Order 12866 Determination

    The OCC has determined that its portion of the proposed rulemaking 
is not a significant regulatory action under Executive Order 12866.

D. OCC Unfunded Mandates Reform Act of 1995 Determination

    Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 
104-4 (Unfunded Mandates Act) requires that an agency prepare a 
budgetary impact statement before promulgating a rule that includes a 
Federal mandate that may result in expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires an 
agency to identify and consider a reasonable number of regulatory 
alternatives before promulgating a rule. The OCC has determined that 
this final rule will not result in expenditures by State, local, and 
tribal governments, or by the private sector, of $100 million or more. 
Accordingly, the OCC has not prepared a budgetary impact statement or 
specifically addressed the regulatory alternatives considered.

E. The Treasury and General Government Appropriations Act, 1999--
Assessment of Impact of Federal Regulation on Families

    The FDIC has determined that this proposed rule will not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 
2681.

List of Subjects

12 CFR Part 25

    Community development, Credit, Investments, National banks, 
Reporting and recordkeeping requirements.

12 CFR Part 208

    Accounting, Agriculture, Banks, banking, Confidential business 
information, Crime, Currency, Federal Reserve System, Mortgages, 
Reporting and recordkeeping requirements, Securities.

12 CFR Part 369

    Banks, banking, Community development.

Department of the Treasury

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set forth in the joint preamble, the Office of the 
Comptroller of the Currency proposes to amend part 25 of chapter I of 
title 12 of the Code of Federal Regulations as follows:

PART 25--COMMUNITY REINVESTMENT ACT AND INTERSTATE DEPOSIT 
PRODUCTION REGULATIONS

    1. The authority citation for part 25 continues to read as follows:

    Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36, 93a, 161, 215, 
215a, 481, 1814, 1816, 1828(c), 1835a, 2901 through 2907, and 3101 
through 3111.

    2. Amend Sec. 25.62 by:
    A. Revising paragraphs (b), (d) and (e);
    B. Redesignating paragraphs (g) and (h) as paragraphs (h) and (i) 
respectively; and
    C. Adding a new paragraph (g) to read as follows:


Sec. 25.62  Definitions.

* * * * *
    (b) Covered interstate branch means:
    (1) Any branch of a national bank, and any Federal branch of a 
foreign bank, that:
    (i) Is established or acquired outside the bank's home state 
pursuant to the interstate branching authority granted by the 
Interstate Act or by any amendment made by the Interstate Act to any 
other provision of law; or
    (ii) Could not have been established or acquired outside of the 
bank's home state but for the establishment or acquisition of a branch 
described in paragraph (b)(1)(i) of this section; or
    (2) Any bank or branch of a bank controlled by an out-of-state bank 
holding company.
* * * * *
    (d) Home state means:
    (1) With respect to a state bank, the state that chartered the 
bank,
    (2) With respect to a national bank, the state in which the main 
office of the bank is located;
    (3) With respect to a bank holding company, the state in which the 
total

[[Page 18415]]

deposits of all banking subsidiaries of such company are the largest on 
the later of:
    (i) July 1, 1966; or
    (ii) The date on which the company becomes a bank holding company 
under the Bank Holding Company Act;
    (4) With respect to a foreign bank:
    (i) For purposes of determining whether a U.S. branch of a foreign 
bank is a covered interstate branch, the home state of the foreign bank 
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 211.22; 
and
    (ii) For purposes of determining whether a branch of a U.S. bank 
controlled by a foreign bank is a covered interstate branch, the state 
in which the total deposits of all banking subsidiaries of such foreign 
bank are the largest on the later of:
    (A) July 1, 1966; or
    (B) The date on which the foreign bank becomes a bank holding 
company under the Bank Holding Company Act.
    (e) Host state means a state in which a covered interstate branch 
is established or acquired.
* * * * *
    (g) Out-of-state bank holding company means, with respect to any 
state, a bank holding company whose home state is another state.
* * * * *
    3. In Sec. 25.63, paragraph (a) is revised to read as follows:


Sec. 25.63  Loan-to-deposit ratio screen

    (a) Application of screen. Beginning no earlier than one year after 
a covered interstate branch is acquired or established, the OCC will 
consider whether the bank's statewide loan-to-deposit ratio is less 
than 50 percent of the relevant host State loan-to-deposit ratio.
* * * * *

    Dated: March 29, 2001.
John D. Hawke, Jr.,
Comptroller of the Currency.

Federal Reserve System

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board of 
Governors of the Federal Reserve System proposes to amend part 208 of 
chapter II of title 12 of the Code of Federal Regulations as follows:

PART 208--MEMBERSHIP OF STATE BANKING INSITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

    1. The authority citation for part 208 continues to read as 
follows:

    Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a, 
371d, 461, 481-486, 601, 611, 1814, 1816, 1818, 1820(d)(9), 1823(j), 
1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1835a, 1882, 2901-
2907, 3105, 3310, 3331-3351, and 3906-3909; 15 U.S.C. 78b, 781(b), 
781(g), 781(i), 78o-4(c)(5), 78q, 78q-1, and 78w; 31 U.S.C. 5318, 42 
U.S.C. 4012a, 4104a, 4104b, 4106 and 4128.

    2. In Sec. 208.7, redesignate existing paragraphs (b)(6) and (b)(7) 
as (b)(7) and (b)(8), respectively, revise paragraphs (b)(2), (b)(3), 
(b)(4) and (c)(1), and add new paragraph (b)(6) to read as follows:


Sec. 208.7  Prohibition against use of interstate branches primarily 
for deposit production.

* * * * *
    (b) * * *
    (2) Covered interstate branch means:
    (i) Any branch of a state member bank, and any uninsured branch of 
a foreign bank licensed by a state, that:
    (A) Is established or acquired outside the bank's home state 
pursuant to the interstate branching authority granted by the 
Interstate Act or by any amendment made by the Interstate Act to any 
other provision of law; or
    (B) Could not have been established or acquired outside of the 
bank's home state but for the establishment or acquisition of a branch 
described in paragraph (b)(2)(i) of this section; or
    (ii) Any bank or branch of a bank controlled by an out-of-state 
bank holding company.
    (3) Home state means:
    (i) With respect to a state bank, the state that chartered the 
bank;
    (ii) With respect to a national bank, the state in which the main 
office of the bank is located;
    (iii) With respect to a bank holding company, the state in which 
the total deposits of all banking subsidiaries of such company are the 
largest on the later of:
    (A) July 1, 1966; or
    (B) The date on which the company becomes a bank holding company 
under the Bank Holding Company Act.
    (iv) With respect to a foreign bank:
    (A) For purposes of determining whether a U.S. branch of a foreign 
bank is a covered interstate branch, the home state of the foreign bank 
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 211.22; 
and
    (B) For purposes of determining whether a branch of a U.S. bank 
controlled by a foreign bank is a covered interstate branch, the state 
in which the total deposits of all banking subsidiaries of such foreign 
bank are the largest on the later of:
    (1) July 1, 1966; or
    (2) The date on which the foreign bank becomes a bank holding 
company under the Bank Holding Company Act.
    (4) Host state means a state in which a covered interstate branch 
is established or acquired.
* * * * *
    (6) Out-of-state bank holding company means, with respect to any 
state, a bank holding company whose home state is another state.
* * * * *
    (c)(1) Application of screen. Beginning no earlier than one year 
after a covered interstate branch is acquired or established, the Board 
will consider whether the bank's statewide loan-to-deposit ratio is 
less than 50 percent of the relevant host state loan-to-deposit ratio.
* * * * *

    By order of the Board of Governors of the Federal Reserve 
System, March 30, 2001.
Robert deV. Frierson,
Associate Secretary of the Board.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the joint preamble, the Board of 
Directors of the Federal Deposit Insurance Corporation proposes to 
amend part 369 of chapter III of title 12 of the Code of Federal 
Regulations to read as follows:

PART 369--PROHIBITION AGAINST USE OF INTERSTATE BRANCHES PRIMARILY 
FOR DEPOSIT PRODUCTION

    1. The authority citation for part 369 continues to read as 
follows:

    Authority: 12 U.S.C. 1819 (Tenth) and 1835a.

    2. In Sec. 369.2, redesignate paragraphs (f) and (g) as (g) and 
(h), respectively; revise paragraphs (b), (c) and (d); and add new 
paragraph (f) to read as follows.


Sec. 369.2  Definitions.

* * * * *
    (b) Covered interstate branch means:
    (1) Any branch of a state nonmember bank, and any insured branch of 
a foreign bank licensed by a state, that:
    (i) Is established or acquired outside the bank's home state 
pursuant to the interstate branching authority granted by the 
Interstate Act or by any amendment made by the Interstate Act to any 
other provision of law; or
    (ii) Could not have been established or acquired outside of the 
bank's home state but for the establishment or acquisition of a branch 
described in paragraph (b)(1)(i) of this section; or

[[Page 18416]]

    (2) Any bank or branch of a bank controlled by an out-of state bank 
holding company.
    (c) Home state means:
    (1) With respect to a state bank, the state that chartered the 
bank,
    (2) With respect to a national bank, the state in which the main 
office of the bank is located;
    (3) With respect to a bank holding company, the state in which the 
total deposits of all banking subsidiaries of such company are the 
largest on the later of:
    (i) July 1, 1966; or
    (ii) The date on which the company becomes a bank holding company 
under the Bank Holding Company Act;
    (4) With respect to a foreign bank:
    (i) For purposes of determining whether a U.S. branch of a foreign 
bank is a covered interstate branch, the home State of the foreign bank 
as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 211.22; 
and
    (ii) For purposes of determining whether a branch of a U.S. bank 
controlled by a foreign bank is a covered interstate branch, the State 
in which the total deposits of all banking subsidiaries of such foreign 
bank are the largest on the later of:
    (A) July 1, 1966; or
    (B) The date on which the foreign bank becomes a bank holding 
company under the Bank Holding Company Act.
    (d) Host state means a state in which a covered interstate branch 
is established or acquired.
* * * * *
    (f) Out-of-State bank holding company means, with respect to any 
state, a bank holding company whose home state is another state.
* * * * *
    3. In Sec. 369.3, revise paragraph (a) to read as follows:


Sec. 369.3  Loan-to-deposit ratio screen.

    (a) Application of screen. Beginning no earlier than one year after 
a covered interstate branch is acquired or established, the FDIC will 
consider whether the bank's statewide loan-to-deposit ratio is less 
than 50 percent of the relevant host State loan-to-deposit ratio.
* * * * *

    By order of the Board of Directors.

    Dated at Washington, D.C., this 26th day of March, 2001.

    Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 01-8642 Filed 4-6-01; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P

Last Updated 04/09/2001 regs@fdic.gov