Agencies issue host state loan-to-deposit ratios

On May 19, 2023, the Board of Governors of the Federal Reserve System (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) published the new 2023 host state loan-to-deposit ratios which are used „to evaluate compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.“
According to section 109 of the Acts, a bank is prohibited „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.“ The process to ensure compliance with these requirements is as follows:
(1) a bank’s estimated statewide loan-to-deposit ratio is compared to the estimated 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.
(2) if a bank’s estimated 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 determine the ratio, an individual analysis is conducted by the appropriate banking regulator.
The new ratios replace the old ones issued in June 2022 and are included in Link Background.