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U.S. Code as of:
01/19/04
Section 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
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.
(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.
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