§ 1835a. — Prohibition against deposit production offices.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1835a]
TITLE 12--BANKS AND BANKING
CHAPTER 16--FEDERAL DEPOSIT INSURANCE CORPORATION
Sec. 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.
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\1\ See References in Text note below.
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(b) Guidelines for meeting credit needs
Regulations issued under subsection (a) of this section 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) of this section 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 \2\ or
any amendment made by this title \2\ to any other provision of law.
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\2\ See References in Text note below.
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(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 \2\ or any amendment made by this title \2\
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.
(Pub. L. 103-328, title I, Sec. 109, Sept. 29, 1994, 108 Stat. 2362;
Pub. L. 106-102, title I, Sec. 106, Nov. 12, 1999, 113 Stat. 1359.)
References in Text
This title, referred to in subsecs. (a), (d), and (e)(4), is title I
of Pub. L. 103-328, Sept. 29, 1994, 108 Stat. 2339, which enacted this
section and sections 43, 215a-1, and 1831u of this title, amended
sections 30, 36, 215, 215a, 215b, 1462a, 1820, 1828, 1831a, 1831r-1,
1841, 1842, 1846, 2906, 3103 to 3105, and 3106a of this title and
section 1927 of Title 7, Agriculture, enacted provisions set out as
notes under sections 215, 1811, 1828, 3104, 3105, and 3107 of this title
and section 1927 of Title 7, and amended provisions set out as a note
under section 1811 of this title. For complete classification of this
title to the Code, see Tables.
The Community Reinvestment Act of 1977, referred to in subsec.
(c)(2)(D), is title VIII of Pub. L. 95-128, Oct. 12, 1977, 91 Stat.
1147, as amended, which is classified generally to chapter 30 (Sec. 2901
et seq.) of this title. For complete classification of this Act to the
Code, see Short Title note set out under section 2901 of this title and
Tables.
Codification
Section was enacted as part of the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994, and not as part of the Federal
Deposit Insurance Act which comprises this chapter.
Amendments
1999--Subsec. (e)(4). Pub. L. 106-102 inserted before period at end
``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)''.
Effective Date of 1999 Amendment
Amendment by Pub. L. 106-102 effective 120 days after Nov. 12, 1999,
see section 161 of Pub. L. 106-102, set out as a note under section 24
of this title.