View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

l l★K

Federal Reserve Bank
of Dallas

September 16, 1999

DALLAS, TEXAS
75265-5906

Notice 99-81

TO: The Chief Executive Officer of each
financial institution and others concerned
in the Eleventh Federal Reserve District
SUBJECT
Host State Loan-to-Deposit Ratios
DETAILS
The Board of Governors, the Office of the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation have issued the host state loan-to-deposit ratios. The
banking agencies will use the ratios to determine compliance with section 109 of the Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994. Section 109 prohibits any bank from
establishing or acquiring a branch or branches outside its home state under the Interstate Act
primarily for deposit production. Also, it provides a two-step process to test compliance with the
statutory requirements.
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 banks in 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 branches. A bank that fails
both steps is in violation of section 109 and is subject to sanctions by the banking agencies.
ATTACHMENT
The host state ratios are attached.
MORE INFORMATION
For more information, please contact Eugene Coy in the Banking Supervision
Department at (214) 922-6201. For additional copies of this Bank’s notice, please contact
the Public Affairs Department at (214) 922-5254.

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012;
Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

SECTION 109 HOST STATE LOAN-TO-DEPOSIT RATIOS
The Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board,
and the Office of the Comptroller of the Currency (“the agencies”) today are making
public the host state loan-to-deposit ratios1 that the 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 of the Interstate Act prohibits a 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.
Section 109 provides a two-step process to test compliance with the statutory
requirements. The first step involves a loan-to-deposit ratio screen that compares a bank’
s
statewide loan-to-deposit ratio2 to the host state loan-to-deposit ratio for a particular
state. If the bank’ statewide loan-to-deposit ratio in a state is at least one-half of the
s
published host state loan-to-deposit ratio for that state, the bank has complied with section
109. If the bank’ ratio is less than one-half, the second step in section 109 requires the
s
agencies to determine if the bank is reasonably helping to meet the credit needs of the
communities served by the bank. A bank that fails both steps is in violation of section 109
and subject to sanctions by the agencies.
The agencies will update the host state loan-to-deposit ratios on an annual basis.

1

The host state loan-to-deposit ratio is the ratio of total loans in a state to total
deposits from the state for all banks that have that state as their home state. For statechartered banks and FDIC-supervised savings banks, the home state is the state where the
bank was chartered. For national banks, the home state is the state where the bank’ main
s
office is located.
2

The statewide loan-to-deposit ratio relates to an individual bank and is the ratio
of a bank’ loans to its deposits in a particular state where the bank has interstate
s
branches.
1 of 5

Section 109 of the Interstate Banking and
Branching Efficiency Act
Host State Loan-to-Deposit Ratios
(Excludes wholesale or limited purpose CRA-designated
banks and credit card banks.)
State

Host State Loan-toDeposit Ratio

Alabama

95%

Alaska

76%

Arizona

79%

Arkansas

71%

California

87%

Colorado

62%

Connecticut

79%

Delaware

80%

District of Columbia

71%

Florida

95%

Georgia

93%

Hawaii

100%

Idaho

74%

Illinois

84%

Indiana

90%

Iowa

74%

Kansas

71%

Kentucky

92%

Louisiana

79%

Maine

96%

Maryland

82%

Massachusetts

84%

Michigan

97%

Minnesota

101%

Mississippi

73%

2 of 5

Section 109 of the Interstate Banking and
Branching Efficiency Act
Host State Loan-to-Deposit Ratios
(Excludes wholesale or limited purpose CRA-designated
banks and credit card banks.)
State

Host State Loan-toDeposit Ratio

Missouri

75%

Montana

84%

Nebraska

78%

Nevada

68%

New Hampshire

85%

New Jersey

70%

New Mexico

68%

New York

88%

North Carolina

100%

North Dakota

90%

Ohio

106%

Oklahoma

68%

Oregon

80%

Pennsylvania

97%

Rhode Island

69%

South Carolina

80%

South Dakota

93%

Tennessee

88%

Texas

66%

Utah

100%

Vermont

83%

Virginia

84%

Washington

115%

West Virginia

83%

Wisconsin

92%

Wyoming

73%

3 of 5

Section 109 of the Interstate Banking and
Branching Efficiency Act
Host State Loan-to-Deposit Ratios
(Excludes wholesale or limited purpose CRA-designated
banks and credit card banks.)
State

Host State Loan-toDeposit Ratio

American Samoa

81%

Federated States of Micronesia

52%

Guam

68%

Puerto Rico

93%

Virgin Islands

68%

Due to the legislative intent against imposing regulatory burden, no additional data
were collected from the institutions to implement section 109. However, since insufficient
lending data were available on a geographic basis to calculate the statewide ratios directly,
the agencies used a proxy to estimate the host state loan-to-deposit ratio. The agencies
calculated the host state loan-to-deposit ratios using data obtained from the Call Reports
and Summary of Deposits reports, as of June 30, 1998. For each home state bank, the
agencies calculated the percentage of the bank’ total deposits attributable to branches
s
located in its home state (determined from the Summary of Deposits), and applied this
percentage to the bank’ total domestic loans (determined from the Call Report) to
s
estimate the amount of loans attributable to the home state. The host state loan-to-deposit
ratio was then calculated by separately totaling the loans and deposits for the home state
banks, and then dividing the sum of the loans by the sum of the deposits. Banks designated
as limited purpose or wholesale banks under the Community Reinvestment Act (CRA)
were excluded from the host state loan-to-deposit calculation, recognizing that these
banks could have very large loan portfolios, but few, if any, deposits. Credit card banks,
which typically have large loan portfolios but few deposits, were also excluded, regardless
of whether they had a limited purpose CRA-designation.
The host state loan-to-deposit ratios, and any changes in the way the ratio is
calculated, will be made publicly available on an annual basis.
4 of 5

5 of 5


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102