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Banking agencies issue 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 today issued 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 30, 2011.

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, and prohibits branches of banks controlled by out-of-state holding companies from operating primarily for the purpose of deposit production. 

However, section 109 provides a process to test compliance with the statutory requirements, and requires the appropriate banking agency to determine whether the bank is helping to meet the credit needs of the communities served by the bank's interstate branches.

If a bank violates section 109, it is subject to sanctions by the appropriate banking agency. Click here to view the updated host state loan-to-deposit ratios.

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