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Federal Reserve Bank
of Dallas

l l★K

HELEN E. HOLCOMB
FIRST VICE PRESIDENT AND
CHIEF OPERATING OFFICER

July 3, 2002

DALLAS, TEXAS
75265-5906

Notice 02-32

TO:

The Chief Executive Officer of each
financial institution and bank holding company
in the Eleventh Federal Reserve District

SUBJECT
Prohibition Against Use of Interstate Branches
Primarily for Deposit Production
DETAILS
The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, and the Federal Deposit Insurance Corporation have issued final regulations amending their
rules that currently prohibit interstate branches from being used primarily for deposit production.
The Riegle-Neal Interstate Banking and Branching Efficiency Act prohibits any bank from
establishing or acquiring a branch outside of its home state primarily for the purpose of deposit production. Section 106 of the Gramm-Leach-Bliley Act expands this prohibition to include any branch of a
bank controlled by an out-of-state bank holding company. To conform their regulations to this statutory
change, the agencies have amended their rules so that the prohibition against deposit production offices
also applies to any bank or branch of a bank controlled by an out-of-state bank holding company.
The final rules become effective October 1, 2002.
ATTACHMENT
A copy of the Board’s notice as it appears on pages 38844–49, Vol. 67, No. 109 of the
Federal Register dated June 6, 2002, is attached.
MORE INFORMATION
For more information, please contact Eugene Coy, Banking Supervision Department, at
(214) 922-6201. Paper copies of this notice or previous Federal Reserve Bank notices can be printed from
our web site at http://www.dallasfed.org/banking/notices/index.html.

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.

38844

Federal Register / Vol. 67, No. 109 / Thursday, June 6, 2002 / Rules and Regulations

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 25
[Docket No. 02–09]
RIN 1557–AB95

FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Regulation H; Docket No. R–1099]

FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 369
RIN 3064–AC36

Prohibition Against Use of Interstate
Branches Primarily for Deposit
Production
AGENCIES: Office of the Comptroller of
the Currency, Treasury (OCC); Board of
Governors of the Federal Reserve

Insurance Corporation (FDIC).
ACTION: Joint final rule.
SUMMARY: The OCC, the Board, and the
FDIC (collectively, the ‘‘Agencies’’) are
amending their uniform regulations
implementing section 109 of the RiegleNeal Interstate Banking and Branching
Efficiency Act of 1994 (Interstate Act) to
effectuate the amendment contained in
section 106 of the Gramm-Leach-Bliley
Act of 1999. Section 109 prohibits any
bank from establishing or acquiring a
branch or branches outside of its home

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State under the Interstate Act primarily
for the purpose of deposit production,
and provides guidelines for determining
whether such bank is reasonably
helping to meet the credit needs of the
communities served by these branches.
Section 106 of the Gramm-Leach-Bliley
Act of 1999 expanded the coverage of
section 109 of the Interstate Act to
include any branch of a bank controlled
by an out-of-State bank holding
company. This final rule amends the
regulatory prohibition against branches
being used as deposit production offices
to include any bank or branch of a bank
controlled by an out-of-State bank
holding company, including a bank
consisting only of a main office.
EFFECTIVE DATE: October 1, 2002.
FOR FURTHER INFORMATION CONTACT:
OCC: Karen Tucker, National Bank
Examiner, Compliance Division, (202)
874–4428; Kathryn Ray, Counsel,
Community and Consumer Law
Division, (202) 874–5750; Patrick T.
Tierney, Attorney, Legislative and
Regulatory Activities Division, (202)
874–5090; or with respect to foreign
banks, Martha Clarke, Acting Assistant
Director, Legislative and Regulatory
Activities Division, (202) 874–5090.
Board: Michael J. O’Rourke, Counsel,
Legal Division, (202) 452–3288; Shawn
McNulty, Assistant Director, Division of
Consumer and Community Affairs, (202)
452–3946; or with respect to foreign
banks, Ann E. Misback, Assistant
General Counsel, Legal Division, (202)
452–3788.
FDIC: Louise Kotoshirodo Kramer,
Policy Analyst, Division of Compliance
and Consumer Affairs, (202) 942–3599;
or Mark Mellon, Counsel, Supervision
and Legislation Section, (202) 898–3884.
SUPPLEMENTARY INFORMATION: The
contents of this preamble are listed in
the following outline:
I. Background
II. Overview of the Comments Received
III. Analysis of the Joint Final Rule
A. Bank Locations Subject to Section 109
as Amended
1. Coverage of Banks’ Main Offices
2. Coverage of Interstate and Intrastate
Branches
B. Multi-Tier Bank Holding Companies
C. Definition of ‘‘Home State’’ for a Bank
Holding Company
D. Foreign Banks and Branches
E. Impact of the Rule
IV. Regulatory Analysis
A. Paperwork Reduction Act
B. Regulatory Flexibility Act
C. OCC Executive Order 12866
D. OCC Unfunded Mandates Reform Act of
1995
E. The Treasury and General Government
Appropriations Act, 1999—Assessment
of Impact of Federal Regulation on
Families

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Federal Register / Vol. 67, No. 109 / Thursday, June 6, 2002 / Rules and Regulations
F. Plain Language

I. Background
The Interstate Act 1 provides
expanded authority for a domestic or
foreign bank to establish or acquire a
branch in a State other than the bank’s
home State. Section 109 of the Interstate
Act requires the Agencies to prescribe
uniform rules that prohibit the use of
the Act’s interstate branching authority
primarily for the purpose of deposit
production.2 Congress enacted section
109 to ensure that the new interstate
branching authority provided by the
Interstate Act would not result in the
taking of deposits from a community
without banks reasonably helping to
meet the credit needs of that
community. See H.R. Conf. Rep. No.
103–651, at 62 (1994).
As required by section 109, the
Agencies issued a joint final rule
implementing section 109, 62 FR 47728
(September 10, 1997). This rule
provides that, beginning no earlier than
one year after a bank establishes or
acquires a covered interstate branch, the
appropriate agency will determine
whether the bank satisfies a loan-todeposit ratio screen 3 that has been
established by section 109.
If the bank’s statewide loan-to-deposit
ratio is at least 50 percent of the host
State loan-to-deposit ratio, no further
analysis is required. If, however, the
appropriate agency determines that the
bank’s statewide loan-to-deposit ratio is
less than 50 percent of the host State
loan-to-deposit ratio, then the agency
must perform a credit needs
determination.4 Under the credit needs
determination, the appropriate agency
reviews the activities of the bank, such
as its lending activity and its
performance under the Community
Reinvestment Act (CRA), and
determines whether the bank is
reasonably helping to meet the credit
needs of the communities served by the
bank in the host State.
A bank that fails the loan-to-deposit
ratio screen and that receives a
determination that it is not reasonably
helping to meet the credit needs of the
1 Pub.

L. 103–328, 108 Stat. 2338.
U.S.C. 1835a.
3 The loan-to-deposit ratio screen compares a
bank’s loan-to-deposit ratio within the State where
the bank’s covered interstate branches are located
(statewide loan-to-deposit ratio) with the loan-todeposit ratio of all banks chartered or
headquartered in that State (host State loan-todeposit ratio). Host State loan-to-deposit ratios,
based on reasonably available data, are jointly
published by the Agencies every year.
4 A credit needs determination also would be
performed if the appropriate agency determines that
there is no reasonably available data that permits
the agency to determine the bank’s statewide loanto-deposit ratio.
2 12

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communities served by the bank’s
interstate branches could be subject to
sanctions under section 109.
Section 106 of the Gramm-LeachBliley Act of 1999 (GLBA), Public Law
106–102, 113 Stat. 1338 (November 12,
1999), amends section 109 by changing
the definition of an ‘‘interstate branch’’
to include any branch of a bank
controlled by an out-of-State bank
holding company (as defined in section
2(o)(7) of the Bank Holding Company
Act of 1956 (BHC Act)). This joint final
rule conforms the Agencies’ uniform
regulations to the GLBA amendment.
II. Overview of the Comments Received
On April 9, 2001, the Agencies
published a notice of proposed
rulemaking in the Federal Register (66
FR 18411). The Agencies received four
comments on the proposal. Two of the
comments were from trade associations
and two were from banks.
There were no objections to the
proposed rule and three of the
comments generally supported it. One
commenter noted that the rule simply
effectuates the amendments required by
the GLBA. Another commenter stated
that the amendment supports the efforts
of community banks and the needs of
businesses and consumers they serve.
One commenter believed that the
proposal should cover institutions that
use brokers to market their certificates
of deposit in communities where the
institution has no intention of lending.
The Agencies believe that such coverage
goes beyond the scope of section 109 of
the Interstate Act as amended. Thus, the
Agencies have not made any changes
from the proposal in response to this
comment.
While not objecting to the rule, one
commenter raised a question about the
definition of a bank holding company’s
‘‘home State.’’ Section 106 of the GLBA
incorporated by reference the BHC Act
definition of ‘‘out-of-State bank holding
company.’’ The proposed rule therefore
tracked the BHC Act definition. It
provided that the home State of a bank
holding company is the State where the
total deposits of all the banking
subsidiaries were the largest as of the
later of July 1, 1966 or the date on
which the company becomes a bank
holding company. The commenter
noted that because deposit levels change
over time, using this definition to
determine the home State of a bank
holding company would lead to
distortions that would become more and
more pronounced. However, as the
commenter recognized, the Agencies are
obligated to use the Bank Holding
Company Act’s definition due to its

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38845

incorporation into section 106 of the
GLBA.5
III. Analysis of the Joint Final Rule
As discussed in the Background
section, section 109 prohibits the use of
the interstate banking and branching
authority granted by the Interstate Act to
engage in interstate branching primarily
for the purpose of deposit production.
Prior to the GLBA, this prohibition
applied to any bank that established or
acquired, directly or indirectly, a branch
under the authority of the Interstate Act
or amendments to any other provision
of law made by the Interstate Act. In
accordance with the amendment to
section 109 adopted by the GLBA, the
final rule broadens this prohibition to
apply not only to branches established
pursuant to the Interstate Act, but also
to any bank or branch of a bank
controlled by an out-of-State bank
holding company. Thus, the final rule
amends the definition of the term
‘‘covered interstate branch’’ to include
any bank or branch of a bank controlled
by an out-of-State bank holding
company. We also have made
conforming changes to our respective
regulations 6 to revise the definition of
‘‘host State’’ and to clarify that the loanto-deposit ratio screen will be applied to
a bank, or branch of a bank, controlled
by an out-of-State bank holding
company in the same manner as the
screen is applied to a covered interstate
branch. The final rule is substantively
identical to the proposed rule. We have
made only technical changes to each
agency’s proposed regulations.
A. Bank Locations Subject to Section
109 as Amended
Prior to the GLBA, section 109’s
deposit production office prohibition
applied only to an interstate branch in
a host State that is acquired or
5 The same commenter reiterated certain
comments it previously made in the original
rulemaking implementing section 109, 62 FR 47728
(September 10, 1997). The commenter noted that
the Agencies use Summary of Deposit Reports and
Call Reports to produce the annual host State loanto-deposit ratios. The commenter does not believe
that the method used to calculate the host State
loan-to-deposit ratios is accurate. The commenter
suggested that the Agencies should require banks to
report deposits and loans by State and that many
banks would already have this information
available. Additionally, the commenter stated that
use of the June 30th Call Reports to calculate ratios
may understate agricultural loan volume, which
peaks in the September 30th Call Report. The
commenter recommended that the Agencies take
the cyclical nature of agricultural lending into
consideration when calculating these ratios. Both of
these comments are beyond the scope of the current
rulemaking.
6 See 12 CFR 25.62(e) and 25.63(a) (OCC); 12 CFR
208.7(b)(4) and 208.7(c)(1) (Federal Reserve); 12
CFR 369.2(d) and 369.3(a) (FDIC).

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established by an out-of-State bank
pursuant to the Interstate Act or any
amendment made by the Interstate Act.
As amended, the prohibition also
applies to any branch of a bank
controlled by an out-of-State bank
holding company. The legislative
history of this amendment indicates that
Congress intended that this amendment
would expand the scope of section 109
to cover any bank or branch of a bank
controlled by an out-of-State bank
holding company, as discussed below.
1. Coverage of Banks’ Main Offices
Coverage of the final rule extends to
banks controlled by out-of-State bank
holding companies, including banks
consisting only of a main office. The
Agencies determined that extension of
the regulation to cover a bank’s main
office, whether or not the bank also has
branches, is appropriate because the
purpose of the legislation is to prevent
out-of-State bank holding companies
from taking deposits out of a community
without helping to meet the credit needs
of that community. See 145 Cong. Rec.
H11529 (daily ed. Nov. 4, 1999); 145
Cong. Rec. H5217 (daily ed. July 1,
1999); 144 Cong. Rec. H3133 (daily ed.
May 13, 1998). This purpose would be
negated if banks consisting only of a
main office were excluded. For
example, out-of-State bank holding
companies could take deposits from a
host State simply by establishing
separately chartered, single-office banks
in a host State. Therefore, banks
consisting only of a main office and
controlled by an out-of-State bank
holding company are subject to the joint
final rule.
2. Coverage of Interstate and Intrastate
Branches
The amendment to section 109
expands the scope of the rule to include
all branches of a bank that is controlled
by an out-of-State bank holding
company. Indeed, Congress intended to
apply the section 109 rule to ‘‘all
branches of a bank owned by an out-ofState holding company,’’ not just to
previously exempt branches owned by
such banks. See H.R. Rep. No. 106–74,
pt. 1 at 128 (1999) (emphasis added).
Thus, the final rule applies to all
branches of a bank when the bank and
its controlling bank holding company
have different home States.
B. Multi-Tier Bank Holding Companies
Section 106 of the GLBA expands the
definition of ‘‘interstate branch’’ to any
branch of a bank controlled by an outof-State bank holding company and
incorporates by reference the BHC Act
definition of an ‘‘out-of-State bank

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holding company.’’ 12 U.S.C. 1841(o)(7).
We have used the BHC Act definition of
‘‘control’’ to determine the controlling
bank holding company. This is the top
tier bank holding company in a multitier bank holding company structure.
C. Definition of ‘‘Home State’’ for a
Bank Holding Company
The BHC Act defines ‘‘home State’’
with respect to a bank holding company
as the State where total deposits of all
banking subsidiaries of each bank
holding company are the largest on the
later of July 1, 1966 or the date on
which a company becomes a bank
holding company. 12 U.S.C. 1841(o)(4).
To determine the home State of a bank
holding company, the Agencies will
determine, from sources available at the
Agencies, the State where the total
deposits of all the banking subsidiaries
were the largest as of the later of July 1,
1966, or the date the bank holding
company was formed. We recognize
that, in certain cases, the State where
the total deposits of all of a bank
holding company’s subsidiary banks
were largest on July 1, 1966, or at the
date of formation of the bank holding
company, may not be the same State in
which the bank holding company’s
subsidiary banks hold the largest
amount of deposits now or at a future
date. However, the amendment to
section 109 made by the GLBA adopts
the BHC Act definition of ‘‘out-of-State
bank holding company,’’ and the BHC
Act definition of ‘‘home State’’ is
incorporated into that definition.
D. Foreign Banks and Branches
Section 106 of the GLBA also
necessitates an amendment to the
definition of ‘‘home State’’ for foreign
banks with banking operations in the
United States. Under U.S. banking law
and regulation, foreign banks may be
treated as banking institutions, bank
holding companies, or both, depending
on the nature of their operations in the
United States. For purposes of
determining whether a U.S. branch of a
foreign bank is a covered interstate
branch, a foreign bank’s home State is
determined under section 5 of the
International Banking Act of 1978 (12
U.S.C. 3103), § 211.22 of the Federal
Reserve’s Regulation K (12 CFR 211.22),
§ 28.11(o) of the OCC regulations, and
§ 347.202(j) of the FDIC regulations. For
purposes of determining whether a
branch of a U.S. bank controlled by a
foreign bank is a covered interstate
branch, a foreign bank’s home State is
determined in accordance with 12
U.S.C. 1841(o)(4) as discussed above in
section III. C. of this preamble regarding
U.S. bank holding companies. A foreign

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bank may have different home States
with respect to direct offices and
subsidiary banks.
E. Impact of the Rule
The final rule is unlikely to have any
impact on the vast majority of banks.
Consistent with section 109 when it was
first enacted, the final rule does not
impose any new recordkeeping
requirements on affected institutions.
We use existing data to determine the
loan-to-deposit ratio screen.
Moreover, there is no additional
burden imposed as a result of the credit
needs determination. In order to make
that determination, the appropriate
agency will review the activities of the
bank, such as its lending activity and its
performance under the CRA,7 and
evaluate whether the bank is reasonably
helping to meet the credit needs of the
communities served by the bank in the
host State.
The only circumstance in which the
final rule would impose a burden on a
bank is if the bank fails both the loanto-deposit ratio screen and the credit
needs determination. Accordingly,
while the statutory amendment and this
final rule extend the scope of the DPO
rule, this extended scope is unlikely to
affect most institutions.
IV. Regulatory Analysis
A. Paperwork Reduction Act
The Agencies have determined that
this final rule does not involve a
collection of information pursuant to
the provisions of the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.
B. Regulatory Flexibility Act
OCC: Pursuant to section 605(b) of the
Regulatory Flexibility Act, the OCC
7 Some entities that could be subject to section
109, including certain special purpose banks and
uninsured branches of foreign banks, are not
evaluated for CRA performance by the Agencies.
For such entities, we will continue to use the CRA
regulations as a guideline in making a credit needs
determination. The CRA regulations provide only
guidance to assess whether activities identified by
these institutions help to meet the community’s
credit needs, and do not obligate these institutions
to have a record of performance under the CRA or
require that these institutions pass any performance
tests in the CRA regulations. We also will continue
to give substantial weight to the factor relating to
specialized activities in making a credit needs
determination for institutions not evaluated under
the CRA. For example, most branches of foreign
banks derive substantially all their deposits from
wholesale deposit markets, which are generally
national or international in scope. This approach is
consistent with section 109’s overall purpose of
preventing banks from using the Interstate Act to
establish branches primarily to gather deposits in
their host State without reasonably helping to meet
the credit needs of the communities served by the
bank in the host State. See Prohibition Against Use
of Interstate Branches Primarily for Deposit
Production, 62 FR 47728, 47732–33 (September 10,
1997) (codified at 12 CFR parts 25, 208, 211, 369).

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Federal Register / Vol. 67, No. 109 / Thursday, June 6, 2002 / Rules and Regulations
certifies that this final rule will not have
a significant economic impact on a
substantial number of small entities.
The rule would extend coverage of
section 109 to some additional
institutions, including small entities.
However, based on previous
examination experience, we expect very
few institutions will experience any cost
in connection with complying with the
rule. Review for compliance with
section 109 is conducted at the same
time that the Community Reinvestment
Act review is performed. Section 109
requires that the Agencies use only
available information to conduct their
analyses. Consistent with this
requirement, this final rule does not
impose any additional paperwork or
regulatory reporting requirements.
Accordingly, we have concluded that
the final rule would not have a
significant economic impact on a
substantial number of small entities.
BOARD: Pursuant to section 605(b) of
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.), the Board certifies that the
final rule will not have a significant
economic impact on a substantial
number of small entities. The rule
would extend coverage of section 109 to
some additional institutions, including
small entities. Review for compliance
with section 109 is conducted at the
same time that the Community
Reinvestment Act review is performed.
Consistent with the requirement that the
Agencies use only available information
to conduct a section 109 review, the
final rule does not impose any
additional regulatory burden on banks
beyond what is required by statute. The
burden to conduct the review and use
only available data is on the banking
regulatory Agencies. Thus, the final rule
will not have a significant economic
impact on a substantial number of small
entities.
FDIC: Pursuant to section 605(b) of
the Regulatory Flexibility Act (5 U.S.C.
601 et seq.), the FDIC certifies that the
final rule will not have a significant
economic impact on a substantial
number of small entities. The rule
would extend coverage of section 109 to
some additional institutions, including
small entities. However, based on
previous examination experience, we
estimate that one or fewer institutions
per year will experience any cost in
connection with complying with the
rule. Thus, the final rule will not have
a significant economic impact on a
substantial number of small entities.
C. OCC Executive Order 12866
The OCC has determined that its
portion of the final rule is not a

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significant regulatory action under
Executive Order 12866.

Mortgages, Reporting and recordkeeping
requirements, Securities.

D. OCC Unfunded Mandates Reform Act
of 1995
Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 104–4 (Unfunded Mandates Act)
requires that an agency prepare a
budgetary impact statement before
promulgating a rule that includes a
Federal mandate that may result in
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
in any one year. If a budgetary impact
statement is required, section 205 of the
Unfunded Mandates Act also requires
an agency to identify and consider a
reasonable number of regulatory
alternatives before promulgating a rule.
The OCC has determined that this final
rule will not result in expenditures by
State, local, and tribal governments, or
by the private sector, of $100 million or
more. Accordingly, the OCC has not
prepared a budgetary impact statement
or specifically addressed the regulatory
alternatives considered.

12 CFR Part 369

E. The Treasury and General
Government Appropriations Act, 1999—
Assessment of Impact of Federal
Regulation on Families
The FDIC has determined that this
final rule will not affect family wellbeing within the meaning of section 654
of the Treasury and General
Government Appropriations Act, 1999,
Public Law 105–277, 112 Stat. 2681.
F. Plain Language
Section 722 of the GLBA (12 U.S.C.
4809) requires each federal banking
agency to use plain language in all
proposed and final rules published after
January 1, 2000. Toward this end we
have used a variety of ‘‘plain language’’
techniques such as topical headings, a
table of contents, and the use of
pronouns as appropriate. We
specifically invited comments on how
to make the changes proposed by this
rulemaking easier to understand. No
commenters addressed this issue.
Accordingly, we made no changes to the
proposed style or format.
List of Subjects
12 CFR Part 25
Community development, Credit,
Investments, National banks, Reporting
and recordkeeping requirements.
12 CFR Part 208
Accounting, Agriculture, Banks,
banking, Confidential business
information, Crime, Currency, Federal
Reserve System, Investments,

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Banks, banking, Community
development.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the joint
preamble, the Office of the Comptroller
of the Currency amends part 25 of
chapter I of title 12 of the Code of
Federal Regulations as follows:
PART 25—COMMUNITY
REINVESTMENT ACT AND
INTERSTATE DEPOSIT PRODUCTION
REGULATIONS
1. The authority citation for part 25
continues to read as follows:
Authority: 12 U.S.C. 21, 22, 26, 27, 30, 36,
93a, 161, 215, 215a, 481, 1814, 1816, 1828(c),
1835a, 2901 through 2907, and 3101 through
3111.

2. In § 25.62:
A. Paragraphs (b), (d), and (e) are
revised;
B. Paragraphs (g) and (h) are
redesignated as paragraphs (h) and (i),
respectively; and
C. A new paragraph (g) is added to
read as follows:
§ 25.62

Definitions.

*

*
*
*
*
(b) Covered interstate branch means:
(1) Any branch of a national bank, and
any Federal branch of a foreign bank,
that:
(i) Is established or acquired outside
the bank’s home State pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(ii) Could not have been established
or acquired outside of the bank’s home
State but for the establishment or
acquisition of a branch described in
paragraph (b)(1)(i) of this section; and
(2) Any bank or branch of a bank
controlled by an out-of-State bank
holding company.
*
*
*
*
*
(d) Home State means:
(1) With respect to a State bank, the
State that chartered the bank, (2) With
respect to a national bank, the State in
which the main office of the bank is
located;
(3) With respect to a bank holding
company, the State in which the total
deposits of all banking subsidiaries of

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such company are the largest on the
later of:
(i) July 1, 1966; or
(ii) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining
whether a U.S. branch of a foreign bank
is a covered interstate branch, the home
State of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 28.11(o); and
(ii) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the State in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(A) July 1, 1966; or
(B) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.
(e) Host State means a State in which
a covered interstate branch is
established or acquired.
*
*
*
*
*
(g) Out-of-State bank holding
company means, with respect to any
State, a bank holding company whose
home State is another State.
*
*
*
*
*
3. In § 25.63, paragraph (a) is revised
to read as follows:
§ 25.63

Loan-to-deposit ratio screen.

(a) Application of screen. Beginning
no earlier than one year after a covered
interstate branch is acquired or
established, the OCC will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host State loan-to-deposit
ratio.
*
*
*
*
*
Dated: April 23, 2002
John D. Hawke, Jr.,
Comptroller of the Currency.

Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the joint
preamble, the Board of Governors of the
Federal Reserve System amends part
208 of chapter II of title 12 of the Code
of Federal Regulations as follows:
PART 208—MEMBERSHIP OF STATE
BANKING INSITUTIONS IN THE
FEDERAL RESERVE SYSTEM
(REGULATION H)
1. The authority citation for part 208
continues to read as follows:
Authority: 12 U.S.C. 24, 36, 92a, 93a,
248(a), 248(c), 321–338a, 371d, 461, 481–486,

VerDate May<23>2002

11:49 Jun 05, 2002

Jkt 197001

601, 611, 1814, 1816, 1818, 1820(d)(9),
1823(j), 1828(o), 1831, 1831o, 1831p–1,
1831r–1, 1831w, 1835a, 1882, 2901–2907,
3105, 3310, 3331–3351, and 3906–3909; 15
U.S.C. 78b, 781(b), 781(g), 781(i), 78o-4(c)(5),
78q, 78q–1, and 78w; 31 U.S.C. 5318, 42
U.S.C. 4012a, 4104a, 4104b, 4106 and 4128.

2. In § 208.7, redesignate existing
paragraphs (b)(6) and (b)(7) as (b)(7) and
(b)(8), respectively, revise paragraphs
(b)(2), (b)(3), (b)(4) and (c)(1), and add
new paragraph (b)(6) to read as follows:
§ 208.7 Prohibition against use of
interstate branches primarily for deposit
production.

*

*
*
*
*
(b) * * *
(2) Covered interstate branch means:
(i) Any branch of a State member
bank, and any uninsured branch of a
foreign bank licensed by a State, that:
(A) Is established or acquired outside
the bank’s home State pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(B) Could not have been established
or acquired outside of the bank’s home
State but for the establishment or
acquisition of a branch described in
paragraph (b)(2)(i) of this section; and
(ii) Any bank or branch of a bank
controlled by an out-of-State bank
holding company.
(3) Home State means:
(i) With respect to a State bank, the
State that chartered the bank;
(ii) With respect to a national bank,
the State in which the main office of the
bank is located;
(iii) With respect to a bank holding
company, the State in which the total
deposits of all banking subsidiaries of
such company are the largest on the
later of:
(A) July 1, 1966; or
(B) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act.
(iv) With respect to a foreign bank:
(A) For purposes of determining
whether a U.S. branch of a foreign bank
is a covered interstate branch, the home
State of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 211.22; and
(B) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the State in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(1) July 1, 1966; or
(2) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.

PO 00000

Frm 00008

Fmt 4700

Sfmt 4700

(4) Host State means a State in which
a covered interstate branch is
established or acquired.
*
*
*
*
*
(6) Out-of-State bank holding
company means, with respect to any
State, a bank holding company whose
home State is another State.
*
*
*
*
*
(c)(1) Application of screen.
Beginning no earlier than one year after
a covered interstate branch is acquired
or established, the Board will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host State loan-to-deposit
ratio.
*
*
*
*
*
By order of the Board of Governors of the
Federal Reserve System, May 30, 2002.
Jennifer J. Johnson,
Secretary of the Board.

Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the joint
preamble, the Board of Directors of the
Federal Deposit Insurance Corporation
amends part 369 of chapter III of title 12
of the Code of Federal Regulations to
read as follows:
PART 369—PROHIBITION AGAINST
USE OF INTERSTATE BRANCHES
PRIMARILY FOR DEPOSIT
PRODUCTION
1. The authority citation for part 369
continues to read as follows:
Authority: 12 U.S.C. 1819 (Tenth) and
1835a.

2. In § 369.2, redesignate paragraphs
(f) and (g) as (g) and (h), respectively;
revise paragraphs (b), (c) and (d); and
add new paragraph (f) to read as
follows.
§ 369.2

Definitions.

*

*
*
*
*
(b) Covered interstate branch means:
(1) Any branch of a State nonmember
bank, and any insured branch of a
foreign bank licensed by a State, that:
(i) Is established or acquired outside
the bank’s home State pursuant to the
interstate branching authority granted
by the Interstate Act or by any
amendment made by the Interstate Act
to any other provision of law; or
(ii) Could not have been established
or acquired outside of the bank’s home
State but for the establishment or
acquisition of a branch described in
paragraph (b)(1)(i) of this section; and

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Federal Register / Vol. 67, No. 109 / Thursday, June 6, 2002 / Rules and Regulations
(2) Any bank or branch of a bank
controlled by an out-of-State bank
holding company.
(c) Home State means:
(1) With respect to a State bank, the
State that chartered the bank;
(2) With respect to a national bank,
the State in which the main office of the
bank is located;
(3) With respect to a bank holding
company, the State in which the total
deposits of all banking subsidiaries of
such company are the largest on the
later of:
(i) July 1, 1966; or
(ii) The date on which the company
becomes a bank holding company under
the Bank Holding Company Act;
(4) With respect to a foreign bank:
(i) For purposes of determining
whether a U.S. branch of a foreign bank
is a covered interstate branch, the home
State of the foreign bank as determined
in accordance with 12 U.S.C. 3103(c)
and 12 CFR 347.202(j); and
(ii) For purposes of determining
whether a branch of a U.S. bank
controlled by a foreign bank is a covered
interstate branch, the State in which the
total deposits of all banking subsidiaries
of such foreign bank are the largest on
the later of:
(A) July 1, 1966; or
(B) The date on which the foreign
bank becomes a bank holding company
under the Bank Holding Company Act.
(d) Host State means a State in which
a covered interstate branch is
established or acquired.
*
*
*
*
*
(f) Out-of-State bank holding
company means, with respect to any
State, a bank holding company whose
home State is another State.
*
*
*
*
*
3. In § 369.3, revise paragraph (a) to
read as follows:
§ 369.3

Loan-to-deposit ratio screen.

(a) Application of screen. Beginning
no earlier than one year after a covered
interstate branch is acquired or
established, the FDIC will consider
whether the bank’s statewide loan-todeposit ratio is less than 50 percent of
the relevant host State loan-to-deposit
ratio.
*
*
*
*
*
By order of the Board of Directors.
Dated at Washington, D.C., this 1st day of
March, 2002.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 02–14130 Filed 6–5–02; 8:45 am]
BILLING CODE 4810–33–P; 6210–01–P; 6714–01–P

38849

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