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OCC Bulletin 2023-14
May 19, 2023
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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; 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) issued on May 19, 2023, the host state loan-to-deposit (LTD) ratios. The OCC is issuing this bulletin to inform banks1 about how these ratios are used to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA).
This bulletin rescinds OCC Bulletin 2022-17, “Prohibition Against Interstate Deposit: Annual Host State Loan-to-Deposit Ratios,” published June 28, 2022.
Section 109 of the IBBEA applies to community banks that have covered interstate branches.
Section 109 does not apply to federal savings associations.
Section 109 of the IBBEA prohibits the use of interstate branches primarily for deposit production. The OCC’s CRA regulation, specifically, 12 CFR 25, subpart E, “Prohibition Against Use of Interstate Branches Primarily for Deposit Production,” implements the requirements of IBBEA, section 109. The regulation includes specific tests for determining whether an interstate bank is lending appropriately in host states where it has branches.
Section 109 of the IBBEA and 12 CFR 25, subpart E, provide 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 with 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 OCC 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 subject to sanctions by the OCC.
The LTD ratios are published annually and comply with the requirements of IBBEA section 109.
Please contact your supervisory office or the OCC’s CRA and Fair Lending Policy staff at (202) 649-5470.
Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy
1 “Banks” refers collectively to national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.