Skip to main content
U.S. flag
An official website of the United States government
Dot gov
The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.
Https
The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

[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]


 

========================================================================

Proposed Rules

Federal Register

________________________________________________________________________


 

This section of the FEDERAL REGISTER contains notices to the public of

the proposed issuance of rules and regulations. The purpose of these

notices is to give interested persons an opportunity to participate in

the rule making prior to the adoption of the final rules.


 

========================================================================




 

[[Page 18411]]




 

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.


 

-----------------------------------------------------------------------


 

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).

---------------------------------------------------------------------------


 

\1\ Pub. L. 103-328, 108 Stat. 2338.

\2\ 12 U.S.C. 1835a.

---------------------------------------------------------------------------


 

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.

---------------------------------------------------------------------------


 

\3\ Host State loan-to-deposit ratios, based on reasonably

available data, are jointly published by the agencies every year.

---------------------------------------------------------------------------


 

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.

---------------------------------------------------------------------------


 

\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).

---------------------------------------------------------------------------


 

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.

---------------------------------------------------------------------------


 

\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).

---------------------------------------------------------------------------


 

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