On 2 July 2014, the Federal Reserve Board, the Federal Deposit Insurance Corporation (“FDIC”), and the Office of the Comptroller of the Currency (“OCC”) issued an updated list of host state loan-to-deposit ratios. Host state loan-to-deposit ratios are used to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1995 (“section 109”).
Generally, section 109 prohibits: (i) a bank from establishing or acquiring branches outside of its home state primarily for the purpose of deposit production and (ii) branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production. To ensure compliance, section 109 provides a two-step process utilizing loan-to-deposit ratios to determine compliance with the statutory requirements. A bank that fails both steps is held to be in violation of section 109 and is subject to sanctions by the appropriate agency.
The updated host state loan-to-deposit ratios are available at: http://www.federalreserve.gov/newsevents/press/bcreg/bcreg20140702a1.pdf.