Federal Reserve Board

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's statewide loan-to-deposit ratio in a state is at least one-half of the published host state loan-to-deposit ratio for that state, the bank has complied with section 109. If the bank's ratio is less than one-half, the second step in section 109 requires the 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.

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-to-Deposit Ratio
(percent)

Alabama

94

Alaska

73

Arizona

79

Arkansas

69

California

88

Colorado

66

Connecticut

88

Delaware

78

District of Columbia

43

Florida

85

Georgia

91

Hawaii

104

Idaho

74

Illinois

86

Indiana

90

Iowa

74

Kansas

68

Kentucky

92

Louisiana

76

Maine

95

Maryland

81

Massachusetts

86

Michigan

98

Minnesota

91

Mississippi

72

Missouri

75

Montana

84

Nebraska

75

Nevada

67

New Hampshire

81

New Jersey

70

New Mexico

63

New York

84

North Carolina

100

North Dakota

73

Ohio

105

Oklahoma

69

Oregon

97

Pennsylvania

92

Rhode Island

67

South Carolina

82

South Dakota

91

Tennessee

91

Texas

69

Utah

96

Vermont

86

Virginia

83

Washington

111

West Virginia

82

Wisconsin

93

Wyoming

83

American Samoa

74

Federated States of Micronesia

56

Guam

71

Puerto Rico

93

Virgin Islands

64

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, 1997. 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 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, 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.


Footnotes

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.

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.

1998 Banking and consumer regulatory policy


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Last update: August 13, 1998, 3:45 PM