12 USC 1835a – Prohibition against deposit production offices
(a) Regulations
The appropriate Federal banking agencies shall prescribe uniform regulations effective June 1, 1997, which prohibit any out-of-State bank from using any authority to engage in interstate branching pursuant to this title,1 or any amendment made by this title 1 to any other provision of law, primarily for the purpose of deposit production.
(b) Guidelines for meeting credit needs
Terms Used In 12 USC 1835a
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- appropriate Federal banking agency: means &mdash. See 12 USC 1813
- bank holding company: has the meaning given to such term in section 1841 of this title. See 12 USC 1813
- Community Reinvestment Act: The Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. It was enacted by the Congress in 1977. Source: OCC
- deposit: means &mdash. See 12 USC 1813
- depository institution: means any bank or savings association. See 12 USC 1813
- Federal banking agency: means the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, or the Federal Deposit Insurance Corporation. See 12 USC 1813
- foreign bank: has the meaning given to such term by section 1(b)(7) of the International Banking Act of 1978 [12 U. See 12 USC 1813
- National Bank: A bank that is subject to the supervision of the Comptroller of the Currency. The Office of the Comptroller of the Currency is a bureau of the U.S. Treasury Department. A national bank can be recognized because it must have "national" or "national association" in its name. Source: OCC
- State: means any State of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands. See 12 USC 1813
- State bank: means any bank, banking association, trust company, savings bank, industrial bank (or similar depository institution which the Board of Directors finds to be operating substantially in the same manner as an industrial bank), or other banking institution which&mdash. See 12 USC 1813
Regulations issued under subsection (a) shall include guidelines to ensure that interstate branches operated by an out-of-State bank in a host State are reasonably helping to meet the credit needs of the communities which the branches serve.
(c) Limitation on out-of-State loans
(1) Limitation
Regulations issued under subsection (a) shall require that, beginning no earlier than 1 year after establishment or acquisition of an interstate branch or branches in a host State by an out-of-State bank, if the appropriate Federal banking agency for the out-of-State bank determines that the bank’s level of lending in the host State relative to the deposits from the host State (as reasonably determinable from available information including the agency’s sampling of the bank’s loan files during an examination or such data as is otherwise available) is less than half the average of total loans in the host State relative to total deposits from the host State (as determinable from relevant sources) for all banks the home State of which is such State—
(A) the appropriate Federal banking agency for the out-of-State bank shall review the loan portfolio of the bank and determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank in the host State; and
(B) if the agency determines that the out-of-State bank is not reasonably helping to meet those needs—
(i) the agency may order that an interstate branch or branches of such bank in the host State be closed unless the bank provides reasonable assurances to the satisfaction of the appropriate Federal banking agency that the bank has an acceptable plan that will reasonably help to meet the credit needs of the communities served by the bank in the host State, and
(ii) the out-of-State bank may not open a new interstate branch in the host State unless the bank provides reasonable assurances to the satisfaction of the appropriate Federal banking agency that the bank will reasonably help to meet the credit needs of the community that the new branch will serve.
(2) Considerations
In making a determination under paragraph (1)(A), the appropriate Federal banking agency shall consider—
(A) whether the interstate branch or branches of the out-of-State bank were formerly part of a failed or failing depository institution;
(B) whether the interstate branch was 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;
(C) whether the interstate branch or branches of the out-of-State bank have a higher concentration of commercial or credit card lending, trust services, or other specialized activities;
(D) the ratings received by the out-of-State bank under the Community Reinvestment Act of 1977 [12 U.S.C. 2901 et seq.];
(E) economic conditions, including the level of loan demand, within the communities served by the interstate branch or branches of the out-of-State bank; and
(F) the safe and sound operation and condition of the out-of-State bank.
(3) Branch closing procedure
(A) Notice required
Before exercising any authority under paragraph (1)(B)(i), the appropriate Federal banking agency shall issue to the bank a notice of the agency’s intention to close an interstate branch or branches and shall schedule a hearing.
(B) Hearing
Section 1818(h) of this title shall apply to any proceeding brought under this paragraph.
(d) Application
This section shall apply with respect to any interstate branch established or acquired in a host State pursuant to this title 1 or any amendment made by this title 1 to any other provision of law.
(e) Definitions
For the purposes of this section, the following definitions shall apply:
(1) Appropriate Federal banking agency, bank, State, and State bank
The terms “appropriate Federal banking agency”, “bank”, “State”, and “State bank” have the same meanings as in section 1813 of this title.
(2) Home State
The term “home State” means—
(A) in the case of a national bank, the State in which the main office of the bank is located; and
(B) in the case of a State bank, the State by which the bank is chartered.
(3) Host State
The term “host State” means a State in which a bank establishes a branch other than the home State of the bank.
(4) Interstate branch
The term “interstate branch” means a branch established pursuant to this title 1 or any amendment made by this title 1 to any other provision of law and any branch of a bank controlled by an out-of-State bank holding company (as defined in section 1841(o)(7) of this title).
(5) Out-of-State bank
The term “out-of-State bank” means, with respect to any State, a bank the home State of which is another State and, for purposes of this section, includes a foreign bank, the home State of which is another State.