Federal Agencies Find Utah has the Highest Loan-to-Deposit Ratios and Delaware has the Lowest

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

The agencies reported that Utah had the highest loan-to-deposit ratio at 101 percent, while Delaware had the lowest ratio at 47 percent.  Maine came in with the second highest loan-to-deposit ratio at 100 percent, with New Jersey not too far behind at 94 percent. Hawaii (57 percent), New Mexico (59 percent), Wyoming (59 percent), and South Dakota (65 percent) round out the bottom five with the lowest loan-to-deposit ratios.

According to the agencies, section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production, and also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.

The agencies gauge compliance with section 109 by comparing a bank’s estimated statewide loan-to-deposit ratio to the estimated host state loan-to-deposit ratio for a particular state, the release says. If the bank’s statewide loan-to-deposit ratio is at least one-half of the published host state loan-to-deposit ratio, the bank is considered in compliance with section 109. However, if the bank’s estimated statewide loan-to-deposit ratio is less than one-half of the published ratio for that state or if data is unavailable the appropriate agency must determine whether the bank is actually helping to meet the credit needs of the communities served by the bank’s interstate branches. If the bank fails both compliance tests is in direct violation of section 109 and is subject to sanctions by the appropriate agency.

Click here to view the Agencies list of Loan-to-Deposit Ratio list.