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OCC BULLETIN 2014-34
Subject: Prohibition Against Interstate Deposit Production
Date: July 21, 2014
To: Chief Executive Officers and Compliance Officers of All National Banks, Department and Division Heads, All Examining Personnel, and Other Interested Parties
Description: Annual Host State Loan-to-Deposit Ratios
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) on July 2 issued the host state loan-to-deposit ratios that they 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 of the Interstate Act prohibits any bank from establishing or acquiring a branch or branches outside of its home state 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 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 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 agency.
Please direct questions regarding this bulletin to the OCC’s Compliance Policy Division at (202) 649-5470.
Grovetta N. Gardineer