The Federal Reserve Board, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency issued their updated host state loan-to-deposit ratios they will use to determine banks' compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.

Section 109 generally prohibits banks from establishing or acquiring branches outside of their home states if the branches are going to be used to primarily produce deposits. The Gramm-Leach-Bliley Act of 1999 amended the section by including any branch of a bank controlled by an out-of-state bank holding company.

The regulators will compare a bank's estimated statewide loan-to-deposit ratio to the estimated host state's loan-to-deposit ratio to determine compliance with the rule. If the bank's ratio is at least one-half of the host state's ratio, then the bank is determined to be in compliance with the rule. Otherwise, the regulators will determine whether the bank is reasonably addressing the credit needs of the community served by its interstate branches.

If a bank fails both steps, then it will be penalized by the appropriate federal agency.

Utah has the highest estimated loan-to-deposit ratio at 105%, followed by Rhode Island at 104%, New Jersey at 102% and Maryland at 101%. Virgin Islands has the lowest ratio at 46%, followed by Delaware at 58%, Puerto Rico at 63% and New Mexico at 64%.

The three regulators did not collect additional information from banks to implement section 109 due to the law's legislative intent of preventing regulatory burden.