District Circular Letters
April 14, 2000
BANKING SUPERVISION AND REGULATION:
SECTION 109 OF THE RIEGLE-NEAL ACT
AND
REVISIONS TO REGULATION Z
To State Member Banks, Bank
Holding Companies, U.S. Branches and
Agencies of Foreign Banks, and Others Concerned
in the Twelfth Federal Reserve District
Host State Loan-to-Deposit Ratios
The Federal Reserve Board, the Office of the Comptroller of the Currency,
and the Federal Deposit Insurance Corporation have issued the enclosed
host state loan-to-deposit ratios. The banking agencies will use these
ratios to determine compliance with section 109 of the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (Interstate Act). These ratios
update the data that was released on September 3, 1999 (see our letter
dated September 10, 1999). The Gramm-Leach-Bliley Act expanded the coverage
of Section 109 to include any branch of a bank controlled by an out-of-state
bank holding company.
Section 109 prohibits any bank from establishing or acquiring a branch
or branches outside of its home state under the Interstate Act primarily
for the purpose of deposit production and provides a two-step process
to test compliance with the statutory requirements. The two steps are:
- a loan-to-deposit ratio screen that compares a bank's statewide loan-to-deposit
ratio to the host state loan-to-deposit ratio for banks in a particular
state, and
- a requirement that banking agencies must determine if 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 banking agencies.
Revisions to Regulation Z: Truth in Lending (R-1050)
The Federal Reserve Board has made revisions to its Regulation Z official
staff commentary, which applies and interprets the requirements of the
regulation. The commentary revisions address cash advances commonly called
"payday loans." The Board has published technical corrections to the regulation
and commentary. The revisions are effective immediately. Compliance is
optional until October 1, 2000, when compliance becomes mandatory.
Copies
Copies of the Board's notices (Host
state loan-to-deposit ratios and Docket
R-1050) are available from our Corporate Services Department.
To request copies to be sent via mail, please call (415) 974-2060.
To request copies to be sent via fax, please call (415) 974-3333,
and specify, for host loan-to-deposit ratios, document number 4114;
and for Docket R-1050, document number 4163.
Additional Information
For additional information regarding the host state loan-to-deposit ratios,
please contact our Banking Supervision and Regulation Department at either
(415) 974-2953 or (415) 974-2955; for
additional information regarding Regulation Z, please call (415)
974-2967, also of our Banking Supervision and Regulation Department.
FEDERAL RESERVE BANK OF SAN FRANCISCO
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