Banking agencies update ‘host state’ loan-to-deposit ratios for 2019, replacing 2018 figures

State loan-to-deposit ratios for 2019 are now public, replacing the 2018 ratios, which help to determine whether a bank may establish or buy a branch (or branches) without triggering prohibitions on doing so primarily for producing deposits.

The ratios, released by the federal banking agencies (the Federal Reserve, the Federal Deposit Insurance Corp. [FDIC], and the Office of the Comptroller of the Currency [OCC]), inform a process the agencies use to test compliance with statutory requirements. (Those requirements also prohibit branches of banks controlled by out-of-state bank holding companies from operating primarily for the production of deposits). The ratios are based on data collected as of June 30, 2018.

A second step in determining compliance 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 agencies stated. The second step requires the appropriate federal 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 failing both steps is in violation of section 109 and is subject to sanctions by the appropriate agency, according to the agencies.

Utah has among the highest of the ratios, at 105%; New Mexico has among the lowest at 64%.

Agencies issue host state loan-to-deposit ratios