Agencies – Issued host state loan-to-deposit ratios

May 21, 2021 – Agencies issued host State loan-to-deposit ratios they use to determine compliance per section 109 of Riegle-Neal interstate banking and branching efficiency act of 1994.

Ratios replace those from the previous year that were released in June 2020. The act prohibits bank to establish, buy branch outside home State for deposit production. Also prohibits bank branches controlled by out-of-State BHC from operating for deposits.

Compliance process
Test for compliance with act involves a two-step process on loan-to-deposit ratio screen. The first step in the process involves a loan-to-deposit ratio test that compares a bank’s statewide loan-to-deposit ratio, to host State loan-to-deposit ratio for banks in a particular State. The second step conducted if the bank statewide ratio is less than half the State ratio or no data. The second step requires the agency to determine if the bank helps meet the credit needs of the community. If the bank fails both steps, it is a violation of the act, subject to sanction by the relevant agency.

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