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86 FR 71339, Dec. 15, 2021, unless otherwise noted. Redesignated and revised at 89 FR 7165, Feb. 1, 2024.
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86 FR 71339, Dec. 15, 2021, unless otherwise noted. Redesignated and revised at 89 FR 7165, Feb. 1, 2024.
(a) Purpose. The purpose of this subpart is to implement section 109 (12 U.S.C. 1835a) of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Act).
(b) Scope.
(1) This subpart applies to any national bank or savings association that has operated a covered interstate branch for a period of at least one year, and any foreign bank or savings association that has operated a covered interstate branch that is a Federal branch for a period of at least one year.
(2) This subpart describes the requirements imposed under 12 U.S.C. 1835a, which requires the appropriate Federal banking agencies (the OCC, the Board of Governors of the Federal Reserve System, and the FDIC) to prescribe uniform rules that prohibit a bank or savings association 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.
For purposes of this subpart, the following definitions apply:
(a) Bank and savings association means, unless the context indicates otherwise:
(1) A national bank or savings association; and
(2) A foreign bank or savings association as that term is defined in 12 U.S.C. 3101(7) and 12 CFR 28.11(i).
(b) Covered interstate branch means:
(1) Any branch of a national bank or savings association, and any Federal branch of a foreign bank or savings association, that:
(i) Is established or acquired outside the bank's or savings association'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
(ii) Could not have been established or acquired outside of the bank's or savings association's home State but for the establishment or acquisition of a branch described in paragraph (b)(1)(i) of this section; and
(2) Any bank or savings association or branch of a bank or savings association controlled by an out-of-State bank or savings association holding company.
(c) Federal branch means Federal branch as that term is defined in 12 U.S.C. 3101(6) and 12 CFR 28.11(h).
(d) Home State means:
(1) With respect to a State bank or savings association, the State that chartered the bank or savings association;
(2) With respect to a national bank or savings association, the State in which the main office of the bank or savings association is located;
(3) With respect to a bank or savings association holding company, the State in which the total deposits of all banking subsidiaries of such company are the largest on the later of:
(i) July 1, 1966; or
(ii) The date on which the company becomes a bank or savings association holding company under the Bank Holding Company Act;
(4) With respect to a foreign bank or savings association:
(i) For purposes of determining whether a U.S. branch of a foreign bank or savings association is a covered interstate branch, the home State of the foreign bank or savings association as determined in accordance with 12 U.S.C. 3103(c) and 12 CFR 28.11(n); and
(ii) For purposes of determining whether a branch of a U.S. bank or savings association controlled by a foreign bank or savings association is a covered interstate branch, the State in which the total deposits of all banking subsidiaries of such foreign bank or savings association are the largest on the later of:
(A) July 1, 1966; or
(B) The date on which the foreign bank or savings association becomes a bank or savings association holding company under the Bank Holding Company Act.
(e) Host State means a State in which a covered interstate branch is established or acquired.
(f) 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 or savings associations (including institutions covered under the definition of “ bank or savings association” in 12 U.S.C. 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.
(g) Out-of-State bank or savings association holding company means, with respect to any State, a bank or savings association holding company whose home State is another State.
(h) State means state as that term is defined in 12 U.S.C. 1813(a)(3).
(i) Statewide loan-to-deposit ratio means, with respect to a bank or savings association, the ratio of the bank's or savings association's loans to its deposits in a state in which the bank or savings association has one or more covered interstate branches, as determined by the OCC.
(a) Application of screen. Beginning no earlier than one year after a covered interstate branch is acquired or established, the OCC will consider whether the bank's or savings association's statewide loan-to-deposit ratio is less than 50 percent of the relevant host State loan-to-deposit ratio.
(b) Results of screen.
(1) If the OCC determines that the bank's or savings association's statewide loan-to-deposit ratio is 50 percent or more of the host state loan-to-deposit ratio, no further consideration under this subpart is required.
(2) If the OCC determines that the bank's or savings association'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 or savings association's statewide loan-to-deposit ratio, the OCC will make a credit needs determination for the bank or savings association as provided in § 25.64.
(a) In general. The OCC will review the loan portfolio of the bank or savings association and determine whether the bank or savings association is reasonably helping to meet the credit needs of the communities in the host state that are served by the bank or savings association.
(b) Guidelines. The OCC will use the following considerations as guidelines when making the determination pursuant to paragraph (a) of this section:
(1) Whether covered interstate branches were formerly part of a failed or failing depository institution;
(2) 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;
(3) 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;
(4) The CRA ratings received by the bank or savings association, if any;
(5) Economic conditions, including the level of loan demand, within the communities served by the covered interstate branches;
(6) The safe and sound operation and condition of the bank or savings association; and
(7) The OCC's CRA regulations (subparts A through D of this part) and interpretations of those regulations.
(a) In general. If the OCC determines that a bank or savings association is not reasonably helping to meet the credit needs of the communities served by the bank or savings association in the host state, and that the bank's or savings association's statewide loan-to-deposit ratio is less than 50 percent of the host state loan-to-deposit ratio, the OCC:
(1) May order that a bank's or savings association's covered interstate branch or branches be closed unless the bank or savings association provides reasonable assurances to the satisfaction of the OCC, after an opportunity for public comment, that the bank or savings association has an acceptable plan under which the bank or savings association will reasonably help to meet the credit needs of the communities served by the bank or savings association in the host state; and
(2) Will not permit the bank or savings association to open a new branch in the host state that would be considered to be a covered interstate branch unless the bank or savings association provides reasonable assurances to the satisfaction of the OCC, after an opportunity for public comment, that the bank or savings association will reasonably help to meet the credit needs of the community that the new branch will serve.
(b) Notice prior to closure of a covered interstate branch. Before exercising the OCC's authority to order the bank or savings association to close a covered interstate branch, the OCC will issue to the bank or savings association a notice of the OCC's intent to order the closure and will schedule a hearing within 60 days of issuing the notice.
(c) Hearing. The OCC will conduct a hearing scheduled under paragraph (b) of this section in accordance with the provisions of 12 U.S.C. 1818(h) and 12 CFR part 19.