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Federal Reserve Bank
of Dallas

DALLAS, TEXAS
75265-5906

April 12, 2000

Notice 2000-25
TO: The Chief Executive Officer of each
state member bank and others concerned
in the Eleventh Federal Reserve District
SUBJECT
Host State Loan-to-Deposit Ratios
DETAILS
The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency have 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).
These ratios update data released on September 3, 1999 (see this Bank’s Notice 99-81).
Section 109 prohibits any bank from establishing or acquiring a branch or branches
outside of its home state primarily for deposit production. The Gramm-Leach-Bliley Act expanded the coverage of Section 109 to include any branch of a bank controlled by an out-of-state
bank holding company.
Section 109 provides a process to test compliance with the statutory requirements.
The first step in the process 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.
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 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.

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.

-2ATTACHMENT
A copy of the host state loan-to-deposit ratios is attached.
MORE INFORMATION
For more information, please contact Eugene Coy, Banking Supervision Department,
at (214) 922-6201. For additional copies of this Bank’s notice, contact the Public Affair
Department at (214) 922-5254 or access District Notices on our web site at
http://www.dallasfed.org/banking/notices/index.html.

SECTION 109 HOST STATE LOAN-TO-DEPOSIT RATIOS
The Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, 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 primarily for the purpose of deposit production. Effective March 11, 2000, Title I of
the Gramm-Leach-Bliley Act expanded the coverage of Section 109 to include any branch
of a bank controlled by an out-of-state bank holding company.
Section 109 provides a process to test compliance with the statutory requirements.
The first step involves a loan-to-deposit ratio screen that compares a bank’ statewide
s
loan-to-deposit ratio2 to the host state loan-to-deposit ratio for a particular state. If the
bank’ statewide loan-to-deposit ratio is at least one-half of the published host state loans
to-deposit ratio for that state, the bank has complied with Section 109. A second step is
conducted if a bank’ statewide loan-to-deposit ratio is less than one-half of the published
s
ratio for that state or if data are not available at the bank to conduct the first step. 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’ interstate branches. A bank
s
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.
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Section 109 of the Interstate Banking and
Branching Efficiency Act
Host State Loan-to-Deposit Ratios
As of June 30, 1999
(Excludes wholesale or limited purpose CRA-designated
banks and credit card banks.)
State

Host State Loan-toDeposit Ratio

Alabama

97%

Alaska

74%

Arizona

95%

Arkansas

71%

California

88%

Colorado

62%

Connecticut

84%

Delaware

72%

District of Columbia

77%

Florida

86%

Georgia

101%

Hawaii

102%

Idaho

75%

Illinois

94%

Indiana

92%

Iowa

76%

Kansas

73%

Kentucky

93%

Louisiana

77%

Maine

92%

Maryland

86%

Massachusetts

82%

Michigan

100%

Minnesota

100%

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Section 109 of the Interstate Banking and
Branching Efficiency Act
Host State Loan-to-Deposit Ratios
As of June 30, 1999
(Excludes wholesale or limited purpose CRA-designated
banks and credit card banks.)
State

Host State Loan-toDeposit Ratio

Mississippi

78%

Missouri

82%

Montana

81%

Nebraska

80%

Nevada

75%

New Hampshire

80%

New Jersey

73%

New Mexico

67%

New York

96%

North Carolina

103%

North Dakota

96%

Ohio

114%

Oklahoma

71%

Oregon

78%

Pennsylvania

98%

Rhode Island

74%

South Carolina

83%

South Dakota

102%

Tennessee

89%

Texas

69%

Utah

104%

Vermont

84%

Virginia

84%

Washington

115%

West Virginia

83%

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Section 109 of the Interstate Banking and
Branching Efficiency Act
Host State Loan-to-Deposit Ratios
As of June 30, 1999
(Excludes wholesale or limited purpose CRA-designated
banks and credit card banks.)
State

Host State Loan-toDeposit Ratio

Wisconsin

93%

Wyoming

99%

American Samoa

84%

Federated States of Micronesia

67%

Guam

81%

Puerto Rico

93%

Virgin Islands

74%

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 host state
loan-to-deposit ratios directly, the agencies used a proxy to estimate the ratios.
Accordingly, 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, 1999.
For each home state bank, the agencies calculated the percentage of the bank’ total
s
deposits attributable to branches located in its home state (determined from the Summary
of Deposits), and applied this percentage to the bank’ total domestic loans (determined
s
from the Call Report) to 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,

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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.

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