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Agencies issue host state loan-to-deposit ratios

June 21, 2017 / Source: FRB

Joint Press Release

June 21, 2017

Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency

For release at 11:00 a.m. EDT

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today issued the host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios replace the prior year's ratios, which were released on June 17, 2016.

In general, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. Section 109 also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.

Section 109 provides a process to test compliance with the statutory requirements. The first step in the process involves a loan-to-deposit ratio test that compares an out-of-state bank's loan-to-deposit ratio in a host state to the average loan-to-deposit ratio in the host state.

A second step is conducted if a bank's statewide loan-to-deposit ratio is less than one-half of the published ratio for that state or if data are not available at the bank to conduct the first step. The second step requires the appropriate agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank's interstate branches.

A bank that fails both steps is in violation of section 109 and is subject to sanctions by the appropriate agency.

The updated host state loan-to-deposit ratios are attached.

Section 109 Host State Loan-to-Deposit Ratios (PDF)

Media Contacts:

Federal Reserve Board  Susan Stawick  202-452-2955
FDIC Greg Hernandez 202-898-6984
OCC William Grassano 202-649-6870

Last Update: June 21, 2017