Host State Loan-to-Deposit Ratios Issued
June 4, 2003
Circular No. 11515

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

In a joint press release, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced the issuance of 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 June 24, 2002 (see Circular # 11451) and are attached.

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. A bank that is in violation of section 109 is subject to sanctions by the appropriate banking agency.

Questions on this matter may be directed at this Bank to Robert Gutierrez, Examining Officer, Legal and Compliance Risk Department.