The Federal Reserve
Board, along with the Office of the Comptroller of the Currency and the
Federal Deposit Insurance Corporation, today issued the host state loan-to-deposit
ratios that the banking agencies will use to determine compliance with
section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (Interstate Act).
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 a two-step process to test compliance with the
The first step involves
a loan-to-deposit ratio screen that compares a bank=s statewide loan-to-deposit
ratio to the host state loan-to-deposit ratio for a particular state.
The second step requires
the banking agencies to determine if the bank is reasonably helping to
meet the credit needs of the communities served by the bank=s interstate
A bank that fails
both steps is in violation of section 109 and is subject to sanctions
by the banking agencies.
The host state loan-to-deposit
ratios are attached.