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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 (GLB Act) 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.2

To determine compliance with section 109, the appropriate agency compares a bank's statewide loan-to-deposit ratio3 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 loan-to-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.

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


2001 Host State Loan-to-Deposit Ratios
Using Data as of June 30, 2000
(Excludes wholesale or limited purpose CRA-designated
banks, credit card banks, and special purpose banks)


State or U.S. Territory Host State Loan-to-Deposit Ratio
Alabama 98%
Alaska 78%
Arizona 83%
Arkansas 76%
California 91%
Colorado 75%
Connecticut 84%
Delaware 80%
District of Columbia 80%
Florida 82%
Georgia 96%
Hawaii 102%
Idaho 82%
Illinois 107%
Indiana 106%
Iowa 82%
Kansas 78%
Kentucky 96%
Louisiana 82%
Maine 97%
Maryland 90%
Massachusetts 85%
Michigan 108%
Minnesota 108%
Mississippi 81%
Missouri 88%
Montana 83%
Nebraska 85%
Nevada 69%
New Hampshire 81%
New Jersey 78%
New Mexico 73%
New York 108%
North Carolina 103%
North Dakota 102%
Ohio 123%
Oklahoma 77%
Oregon 86%
Pennsylvania 95%
Rhode Island 91%
South Carolina 89%
South Dakota 120%
Tennessee 91%
Texas 74%
Utah 94%
Vermont 91%
Virginia 80%
Washington 119%
West Virginia 89%
Wisconsin 100%
Wyoming 56%
American Samoa 79%
Federated States of Micronesia 72%
Guam 82%
Puerto Rico 100%
Virgin Islands 78%

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, 2000. 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, 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.

As outlined in the preamble to the final rule, the agencies committed to publicize any change in the way the ratios are calculated. Accordingly, the agencies have also decided to exclude special purpose banks, including bankers' banks, from the host state loan-to-deposit calculation because these banks do not engage in traditional deposit taking or lending. Inclusion of these banks could distort the ratios, thus hindering their use in carrying out the intent of the legislation. This change is reflected in the 2001 ratios.

The host state loan-to-deposit ratios, and any changes in the way the ratios are calculated, will be publicized 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 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 On April 9, 2001, the agencies jointly published in the Federal Register a proposal to amend the uniform regulations implementing section 109 of the Interstate Act to conform to the requirements of section 106 of the GLB Act. Prohibition Against Use of Interstate Branches Primarily for Deposit Production, 66 Fed. Reg. 18411 (2001) (to be codified at 12 CFR Part 25, 12 CFR Part 208, and 12 CFR Part 369) (proposed Apr. 9, 2001). The proposal would amend 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. This proposed rulemaking would not affect the calculation of the host state loan-to-deposit ratios.

3 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.

Last Updated 06/28/2001 communications@fdic.gov