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Federal Reserve Bank of Dallas
2200 N. PEARL ST.
DALLAS, TX 75201-2272

September 7, 2004

Notice 04-59

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 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. These ratios
update data released on May 22, 2003.
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 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 onehalf of the published ratio for that state or if data are not available at the bank to conduct the first

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.

-2step. The second step requires the appropriate banking 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 banking agency.
ATTACHMENTS
The updated host state loan-to-deposit ratios are attached.
MORE INFORMATION
For more information, please contact Eugene Coy, (214) 922-6201, or Diane van
Gelder, (214) 922-6282, Banking Supervision Department. Paper copies of this notice or previous Federal Reserve Bank notices can be printed from our web site at 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). 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
106 of the Gramm-Leach-Bliley Act of 1999 amended coverage of section 109 of the Interstate
Act to include any branch of a bank controlled by an out-of-state bank holding company.
To determine compliance with section 109, the appropriate agency first compares a
bank’s statewide loan-to-deposit ratio2 to the host state loan-to-deposit ratio for a particular state.
If the bank’s statewide loan-to-deposit ratio is at least one-half of the published host state loanto-deposit ratio, the bank has complied with section 109. 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
banking 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 subject to sanctions by the appropriate agency.

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 state-chartered 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’s main office is located. The home state of a foreign bank is determined by 12 USC 3103(c) and applicable
agency regulations at 12 CFR 28.11(o) (OCC), 12 CFR 211.22 (Board), and 12 CFR 346.1(j) (FDIC).
2

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

Section 109 of the Interstate Banking and
Branching Efficiency Act
2004 Host State Loan-to-Deposit Ratios
Using Data as of June 30, 2003
(Excludes wholesale or limited purpose CRA-designated
banks, credit card banks, and special purpose banks)
State or U.S. Territory

Host State Loan-toDeposit Ratio

Alabama

96%

Alaska

64%

Arizona

63%

Arkansas

77%

California

105%

Colorado

72%

Connecticut

82%

Delaware

85%

District of Columbia

83%

Florida

81%

Georgia

102%

Hawaii

72%

Idaho

81%

Illinois

80%

Indiana

163%

Iowa

71%

Kansas

79%

Kentucky

87%

Louisiana

75%

Maine

95%

Maryland

81%

Massachusetts

72%

Michigan

101%

Minnesota

89%

Mississippi

77%

Page 2 of 5


Section 109 of the Interstate Banking and
Branching Efficiency Act
2004 Host State Loan-to-Deposit Ratios
Using Data as of June 30, 2003
(Excludes wholesale or limited purpose CRA-designated
banks, credit card banks, and special purpose banks)
State or U.S. Territory

Host State Loan-toDeposit Ratio

Missouri

83%

Montana

81%

Nebraska

81%

Nevada

71%

New Hampshire

76%

New Jersey

58%

New Mexico

69%

New York

86%

North Carolina

82%

North Dakota

107%

Ohio

119%

Oklahoma

80%

Oregon

88%

Pennsylvania

69%

Rhode Island

80%

South Carolina

89%

South Dakota

120%

Tennessee

91%

Texas

68%

Utah

92%

Vermont

77%

Virginia

71%

Washington

105%

West Virginia

77%

Wisconsin

95%

Page 3 of 5


Section 109 of the Interstate Banking and
Branching Efficiency Act
2004 Host State Loan-to-Deposit Ratios
Using Data as of June 30, 2003
(Excludes wholesale or limited purpose CRA-designated
banks, credit card banks, and special purpose banks)
State or U.S. Territory

Host State Loan-toDeposit Ratio

Wyoming

65%

American Samoa

85%

Federated States of Micronesia

22%

Guam

64%

Puerto Rico

66%

Virgin Islands

54%

Due to the legislative intent against imposing regulatory burden, no additional data were
collected from 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, 2003. For each home state bank, the agencies calculated the percentage of the
bank’s total deposits attributable to branches located in its home state (determined from the
summary of deposits), and applied this percentage to the bank’s total domestic loans (determined
from the call reports) 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.
Section 109 of the Interstate Act directs the agencies to determine, from relevant sources,
the host state loan-to-deposit ratios. As discussed in the preamble to the joint final rule,

Page 4 of 5

Prohibition Against Use of Interstate Branches Primarily for Deposit Production (62 FR 47728,
47731, September 10, 1997), implementing section 109, 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. Likewise, credit card banks, which typically have large loan
portfolios but few deposits, were also excluded, regardless of whether they had a limited purpose
designation for CRA purposes. Beginning in 2001, special purpose banks, including bankers’
banks, were excluded because these banks do not engage in traditional deposit taking or lending.
The host state loan-to-deposit ratios, and any changes in the way the ratios are calculated,
will be publicized on an annual basis.

Page 5 of 5

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