[SECTION 109 HOST STATE LOAN-TO-DEPOSIT RATIOS]{.underline}

The Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, and the Office of the Comptroller of the
Currency (the agencies) today are making public the host state
loan-to-deposit ratios[^1] that the agencies will use to determine
compliance with section 109 of the Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 (Interstate Act). 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 106 of the Gramm-Leach-Bliley Act of 1999 (GLB Act)
amended coverage of section 109 of the Interstate Act to include any
branch of a bank controlled by an out-of-state bank holding company.[^2]

To determine compliance with section 109, the appropriate agency first
compares a bank's statewide loan-to-deposit ratio[^3] to the 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. A second
step is conducted if a bank's 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 conduct the first step. The second step
requires the appropriate banking agency to determine whether the bank is
reasonably helping to meet the credit needs of the communities served by
the bank's interstate branches. A bank that fails both steps is in
violation of section 109 and subject to sanctions by the appropriate
agency.

The agencies will update the host state loan-to-deposit ratios on an
annual basis.

+-------------------------------------+--------------------------------+
| Section 109 of the Interstate       |                                |
| Banking and Branching Efficiency    |                                |
| Act                                 |                                |
|                                     |                                |
| 2002 Host State Loan-to-Deposit     |                                |
| Ratios                              |                                |
|                                     |                                |
| Using Data as of June 30, 2001      |                                |
+=====================================+================================+
| (Excludes wholesale or limited      |                                |
| purpose CRA-designated banks,       |                                |
| credit card banks, and special      |                                |
| purpose banks)                      |                                |
+-------------------------------------+--------------------------------+
| **State or U.S. Territory**         | **Host State Loan-to-Deposit   |
|                                     | Ratio**                        |
+-------------------------------------+--------------------------------+
| Alabama                             | 93%                            |
+-------------------------------------+--------------------------------+
| Alaska                              | 74%                            |
+-------------------------------------+--------------------------------+
| Arizona                             | 58%                            |
+-------------------------------------+--------------------------------+
| Arkansas                            | 78%                            |
+-------------------------------------+--------------------------------+
| California                          | 92%                            |
+-------------------------------------+--------------------------------+
| Colorado                            | 80%                            |
+-------------------------------------+--------------------------------+
| Connecticut                         | 82%                            |
+-------------------------------------+--------------------------------+
| Delaware                            | 80%                            |
+-------------------------------------+--------------------------------+
| District of Columbia                | 90%                            |
+-------------------------------------+--------------------------------+
| Florida                             | 81%                            |
+-------------------------------------+--------------------------------+
| Georgia                             | 89%                            |
+-------------------------------------+--------------------------------+
| Hawaii                              | 91%                            |
+-------------------------------------+--------------------------------+
| Idaho                               | 77%                            |
+-------------------------------------+--------------------------------+
| Illinois                            | 90%                            |
+-------------------------------------+--------------------------------+
| Indiana                             | 119%                           |
+-------------------------------------+--------------------------------+
| Iowa                                | 80%                            |
+-------------------------------------+--------------------------------+
| Kansas                              | 80%                            |
+-------------------------------------+--------------------------------+
| Kentucky                            | 88%                            |
+-------------------------------------+--------------------------------+
| Louisiana                           | 76%                            |
+-------------------------------------+--------------------------------+
| Maine                               | 92%                            |
+-------------------------------------+--------------------------------+
| Maryland                            | 84%                            |
+-------------------------------------+--------------------------------+
| Massachusetts                       | 83%                            |
+-------------------------------------+--------------------------------+
| Michigan                            | 103%                           |
+-------------------------------------+--------------------------------+
| Minnesota                           | 105%                           |
+-------------------------------------+--------------------------------+
| Mississippi                         | 79%                            |
+-------------------------------------+--------------------------------+
| Missouri                            | 82%                            |
+-------------------------------------+--------------------------------+
| Montana                             | 81%                            |
+-------------------------------------+--------------------------------+
| Nebraska                            | 85%                            |
+-------------------------------------+--------------------------------+
| Nevada                              | 75%                            |
+-------------------------------------+--------------------------------+
| New Hampshire                       | 78%                            |
+-------------------------------------+--------------------------------+
| New Jersey                          | 70%                            |
+-------------------------------------+--------------------------------+
| New Mexico                          | 64%                            |
+-------------------------------------+--------------------------------+
| New York                            | 90%                            |
+-------------------------------------+--------------------------------+
| North Carolina                      | 91%                            |
+-------------------------------------+--------------------------------+
| North Dakota                        | 105%                           |
+-------------------------------------+--------------------------------+
| Ohio                                | 114%                           |
+-------------------------------------+--------------------------------+
| Oklahoma                            | 78%                            |
+-------------------------------------+--------------------------------+
| Oregon                              | 85%                            |
+-------------------------------------+--------------------------------+
| Pennsylvania                        | 79%                            |
+-------------------------------------+--------------------------------+
| Rhode Island                        | 77%                            |
+-------------------------------------+--------------------------------+
| South Carolina                      | 84%                            |
+-------------------------------------+--------------------------------+
| South Dakota                        | 130%                           |
+-------------------------------------+--------------------------------+
| Tennessee                           | 89%                            |
+-------------------------------------+--------------------------------+
| Texas                               | 66%                            |
+-------------------------------------+--------------------------------+
| Utah                                | 92%                            |
+-------------------------------------+--------------------------------+
| Vermont                             | 88%                            |
+-------------------------------------+--------------------------------+
| Virginia                            | 76%                            |
+-------------------------------------+--------------------------------+
| Washington                          | 114%                           |
+-------------------------------------+--------------------------------+
| West Virginia                       | 81%                            |
+-------------------------------------+--------------------------------+
| Wisconsin                           | 99%                            |
+-------------------------------------+--------------------------------+
| Wyoming                             | 84%                            |
+-------------------------------------+--------------------------------+
| American Samoa                      | 79%                            |
+-------------------------------------+--------------------------------+
| Federated States of Micronesia      | 75%                            |
+-------------------------------------+--------------------------------+
| Guam                                | 69%                            |
+-------------------------------------+--------------------------------+
| Puerto Rico                         | 65%                            |
+-------------------------------------+--------------------------------+
| Virgin Islands                      | 70%                            |
+-------------------------------------+--------------------------------+

Due to the legislative intent against imposing regulatory burden, no
additional data were collected from institutions to implement section
109. However, since insufficient lending data were available on a
geographic basis to calculate the host state loan-to-deposit ratios
directly, the agencies used a proxy to estimate the ratios. Accordingly,
the agencies calculated the host state loan-to-deposit ratios using data
obtained from the call reports and summary of deposits reports, as of
June 30, 2001. For each home state bank, the agencies calculated the
percentage of the bank's total deposits attributable to branches located
in its home state (determined from the summary of deposits), and applied
this percentage to the bank's total domestic loans (determined from the
call reports) to estimate the amount of loans attributable to the home
state. The host state loan-to-deposit ratio was then calculated by
separately totaling the loans and deposits for the home state banks, and
then dividing the sum of the loans by the sum of the deposits.

Section 109 of the Interstate Act directs the agencies to determine,
from relevant sources, the host state loan-to-deposit ratios. As
discussed in the preamble to the joint final rule, Prohibition Against
Use of Interstate Branches Primarily for Deposit Production (62 FR
47728, 47731, September 10, 1997), implementing section 109, banks
designated as limited purpose or wholesale banks under the Community
Reinvestment Act (CRA) were excluded from the host state loan-to-deposit
calculation, recognizing that these banks could have very large loan
portfolios, but few, if any, deposits. Likewise, credit card banks,
which typically have large loan portfolios but few deposits, were also
excluded, regardless of whether they had a limited purpose designation
for CRA purposes. Beginning in 2001, special purpose banks, including
bankers' banks, were excluded because these banks do not engage in
traditional deposit taking or lending.

The host state loan-to-deposit ratios, and any changes in the way the
ratios are calculated, will be publicized on an annual basis.

[^1]: The host state loan-to-deposit ratio is the ratio of total loans
    in a state to total deposits from the state for all banks that have
    that state as their home state. For state-chartered banks and
    FDIC-supervised savings banks, the home state is the state where the
    bank was chartered. For national banks, the home state is the state
    where the bank's main office is located. The home state of a foreign
    bank is determined by 12 USC 3103(c) and applicable agency
    regulations at 12 CFR 28.11(o) (OCC), 12 CFR 211.22 (Board), and 12
    CFR 346.1(j) (FDIC).

[^2]: On June 6, 2002, the agencies jointly published in the *Federal
    Register* a final rule to amend the uniform regulations implementing
    section 109 of the Interstate Act to conform to the requirements of
    section 106 of the GLB Act. Prohibition Against Use of Interstate
    Branches Primarily for Deposit Production, 67 Fed. Reg. 38844 (2002)
    (to be codified at 12 CFR Part 25, 12 CFR Part 208, and 12 CFR Part
    369) (final rule June 6, 2002). The final rule amends the regulatory
    prohibition against using interstate branches as deposit production
    offices to include any bank or branch of a bank controlled by an
    out-of-state bank holding company, including a bank consisting only
    of a main office. This rulemaking does not affect the calculation of
    the host state loan-to-deposit ratios.

[^3]: The statewide loan-to-deposit ratio relates to an individual bank
    and is the ratio of a bank's loans to its deposits in a particular
    state where the bank has interstate branches.