Joint agencies issued host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios replace the prior year’s ratios, which were released on June 29, 2015.
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, and
- branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.
Section 109 also provides a process to test compliance with the statutory requirements. A bank that fails both steps is in violation of section 109 and is subject to sanctions by the appropriate agency.
The updated host state loan-to-deposit ratios may be found
here.
Article originally appeared on Banking Spectrum (https://www.bankingspectrum.com/).
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