(a) Purpose and scope.
(1) Purpose. The purpose of this section is to implement section 109 (12 USC
1835a) of the Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 (Interstate Act).
(2) Scope.
(i) This section applies to any state
member bank that has operated a covered interstate branch for a period
of at least one year, and any foreign bank that has operated a covered
interstate branch licensed by a state for a period of at least one
year.
(ii) This section
describes the requirements imposed under 12 USC 1835a, which requires
the appropriate federal banking agencies (the Board, the Office of
the Comptroller of the Currency, and the Federal Deposit Insurance
Corporation) to prescribe uniform rules that prohibit a bank from
using any authority to engage in interstate branching pursuant to
the Interstate Act, or any amendment made by the Interstate Act to
any other provision of law, primarily for the purpose of deposit production.
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(b) Definitions. For purposes of this section, the following definitions apply:
(1) Bank means, unless
the context indicates otherwise—
(i) a state member bank
as that term is defined in 12 USC 1813(d)(2); and
(ii) a foreign bank as that term is
defined in 12 USC 3101(7) and 12 CFR 211.21.
(2) Covered interstate
branch means—
(i) any branch of a state member bank,
and any uninsured branch of a foreign bank licensed by a state, that—
(A) is established or acquired outside the bank’s home state pursuant
to the interstate branching authority granted by the Interstate Act
or by any amendment made by the Interstate Act to any other provision
of law; or
(B) could not
have been established or acquired outside of the bank’s home state
but for the establishment or acquisition of a branch described in
paragraph (b)(2)(i) of this section; and
(ii) any bank or branch
of a bank controlled by an out-of-state bank holding company.
(3) Home state means—
(i) with respect to a state bank, the state that chartered the bank;
(ii) with respect to
a national bank, the state in which the main office of the bank is
located;
(iii) with
respect to a bank holding company, the state in which the total deposits
of all banking subsidiaries of such company are the largest on the
later of—
(A) July 1, 1966; or
(B) the date on which the company becomes
a bank holding company under the Bank Holding Company Act.
(iv) with respect to
a foreign bank—
(A) for purposes of determining whether a
U.S. branch of a foreign bank is a covered interstate branch, the
home state of the foreign bank as determined in accordance with 12
USC 3103(c) and 12 CFR 211.22; and
(B) for purposes of determining whether a
branch of a U.S. bank controlled by a foreign bank is a covered interstate
branch, the state in which the total deposits of all banking subsidiaries
of such foreign bank are the largest on the later of—
(1) July 1, 1966; or
(2) the date on which
the foreign bank becomes a bank holding company under the Bank Holding
Company Act.
(4) Host state means
a state in which a covered interstate branch is established or acquired.
(5) Host state loan-to-deposit
ratio generally means, with respect to a particular host state,
the ratio of total loans in the host state relative to total deposits
from the host state for all banks (including institutions covered
under the definition of “bank” in 12 USC 1813(a)(1)) that have that
state as their home state, as determined and updated periodically
by the appropriate federal banking agencies and made available to
the public.
(6) Out-of-state
bank holding company means, with respect to any state, a bank
holding company whose home state is another state.
(7) State means state as that term
is defined in 12 USC 1813(a)(3).
(8) Statewide loan-to-deposit ratio means, with respect to a bank, the ratio of the bank’s loans to
its deposits in a state in which the bank has one or more covered
interstate branches, as determined by the Board.
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(c) Loan-to-deposit ratio screen.
(1) Application
of screen. Beginning no earlier than one year after a covered
interstate branch is acquired or established, the Board will consider
whether the bank’s statewide loan-to-deposit ratio is less than 50
percent of the relevant host state loan-to-deposit ratio.
(2) Results of screen.
(i) If the Board determines that the
bank’s statewide loan-to-deposit ratio is 50 percent or more of the
host-state loan-to-deposit ratio, no further consideration under this
section is required.
(ii) If the Board determines that the bank’s statewide loan-to-deposit
ratio is less than 50 percent of the host-state loan-to-deposit ratio,
or if reasonably available data are insufficient to calculate the
bank’s statewide loan-to-deposit ratio, the Board will make a credit-needs
determination for the bank as provided in paragraph (d) of this section.
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(d) Credit-needs
determination.
(1) In general. The Board will review the loan portfolio of the bank and determine
whether the bank is reasonably helping to meet the credit needs of
the communities in the host state that are served by the bank.
(2) Guidelines. The Board will use the following
considerations as guidelines when making the determination pursuant
to paragraph (d)(1) of this section:
(i) whether covered
interstate branches were formerly part of a failed or failing depository
institution;
(ii)
whether covered interstate branches were acquired under circumstances
where there was a low loan-to-deposit ratio because of the nature
of the acquired institution’s business or loan portfolio;
(iii) whether covered interstate
branches have a high concentration of commercial or credit card lending,
trust services, or other specialized activities, including the extent
to which the covered interstate branches accept deposits in the host
state;
(iv) the
Community Reinvestment Act ratings received by the bank, if any, under
12 USC 2901 et seq.;
(v) economic conditions, including the level of loan demand, within
the communities served by the covered interstate branches;
(vi) the safe and sound
operation and condition of the bank; and
(vii) the Board’s Regulation BB, Community
Reinvestment, (12 CFR 228) and interpretations of that regulation.
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(e) Sanctions.
(1) In general. If the Board determines that a bank is not reasonably
helping to meet the credit needs of the communities served by the
bank in the host state, and that the bank’s statewide loan-to-deposit
ratio is less than 50 percent of the host-state loan-to-deposit ratio,
the Board—
(i) may order that a bank’s covered
interstate branch or branches be closed unless the bank provides reasonable
assurances to the satisfaction of the Board, after an opportunity
for public comment, that the bank has an acceptable plan under which
the bank will reasonably help to meet the credit needs of the communities
served by the bank in the host state; and
(ii) will not permit the bank to open
a new branch in the host state that would be considered to be a covered
interstate branch unless the bank provides reasonable assurances to
the satisfaction of the Board, after an opportunity for public comment,
that the bank will reasonably help to meet the credit needs of the
community that the new branch will serve.
(2) Notice prior
to closure of a covered interstate branch. Before exercising
the Board’s authority to order the bank to close a covered interstate
branch, the Board will issue to the bank a notice of the Board’s intent
to order the closure and will schedule a hearing within 60 days of
issuing the notice.
(3) Hearing. The Board will conduct
a hearing scheduled under paragraph (e)(2) of this section in accordance
with the provisions of 12 USC 1818(h) and 12 CFR 263.
