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§ 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.



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