[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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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.
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[[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.
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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