States' Loan-to-Deposit RatiosSet Standards for Branch Lending

Federal banking regulators on Thursday released a list of the estimated average loan-to-deposit ratio of banks based in each of the 50 states and the District of Columbia.

The list will be used to evaluate whether out-of-state branches are meeting local credit needs. Under a rule that took effect last October, banks branching across state lines must maintain a loan-to-deposit ratio equal to 50% of the state's average. For example, a bank based in Iowa that branches into Indiana would have to lend at least 45% of its deposits, because Indiana's average loan-to-deposit ratio is 90%.

The lending minimums are required under the 1994 interstate banking law to guard against the out-of-state siphoning of deposits. If an out-of-state branch falls below the required ratio, examiners will look at other factors, such as local loan demand, the bank's performance ratings, and whether it has a high concentration of credit card loans.

If none of these factors mitigate the out-of-state branch's low level of lending, regulators could shut the branch down or bar its parent from opening or acquiring additional branches in the state.

The average loan-to-deposit ratios ranged from 111% in Washington State to 43% in the District of Columbia.