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OCC Bulletin 2016-40 | November 9, 2016

Prohibition Against Interstate Deposit Production: Annual Host State Loan-to-Deposit Ratios


Chief Executive Officers and Compliance Officers of All National Banks, Department and Division Heads, All Examining Personnel, and Other Interested Parties


The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) on June 17, 2016, issued the host state loan-to-deposit (LTD) ratios that they will use to determine compliance with section 109 of the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA).

Note for Community Banks

Section 109 of the IBBEA applies to national banks that have covered interstate branches. Section 109 does not apply to federal savings associations.


These ratios

  • provide host state LTD ratios using data as of June 30, 2015. The data exclude wholesale or limited purpose banks designated for Community Reinvestment Act purposes, credit card banks, and special purpose banks.
  • update data last released on June 29, 2015.


Regulation H, “Membership of State Banking Institutions in the Federal Reserve System” (12 CFR 208), prohibits the use of interstate branches primarily for deposit production. Specifically, 12 CFR 208.7 implements the requirements of IBBEA section 109. The regulation includes specific tests for determining whether interstate banks are lending appropriately in states where they have branches.    

Section 109 provides a process to test compliance with the statutory requirements. The first step in the process involves an LTD ratio test that compares a bank’s statewide LTD ratio to the host state LTD ratio for banks in a particular state.

A second step is conducted if a bank’s statewide LTD 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 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 is subject to sanctions by the appropriate agency.

National banks are subject to section 109, which applies to any “bank” (as defined under 12 USC 1841(c)) regulated by the federal banking agencies. Federal savings associations, including federal savings banks, are not “banks” under this definition and therefore are not subject to section 109.  

Further Information

Please direct questions regarding this bulletin to the OCC’s Compliance Policy Division at (202) 649-5470.


Grovetta N. Gardineer
Senior Deputy Comptroller for Compliance and Community Affairs


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