Reference: Bulletin 2026-19
Official publication: Read the full Bulletin 2026-19 on the agency website
On May 1, 2026, the Office of the Comptroller of the Currency (OCC), in conjunction with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC), released the annual host state loan-to-deposit (LTD) ratios. Formally issued as OCC Bulletin 2026-19, this regulatory update provides the essential benchmarks used to evaluate whether banks with interstate branches are fulfilling their statutory obligation to meet the credit needs of the communities where they operate. For senior executives and compliance officers, these ratios represent more than simple financial metrics; they are the primary mechanism through which federal regulators enforce Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, ensuring that interstate expansion does not result in the systematic withdrawal of capital from host states.
Executive Summary
- Regulatory Benchmark: The 2026 ratios determine if a bank’s host state loan-to-deposit ratio is at least 50 percent of the relevant host state statewide ratio, a threshold that triggers secondary scrutiny if not met.
- Statutory Mandate: Compliance is required under Section 109 of the Riegle-Neal Act, which prohibits banks from establishing or acquiring branches outside their home state primarily for the purpose of deposit production.
- The Two-Step Test: Regulators employ a rigorous two-step process, starting with a mathematical ratio comparison and potentially moving to a qualitative assessment of the bank’s efforts to meet local credit needs.
- Enforcement Risks: Failure to meet the statutory requirements can lead to severe administrative sanctions, including the closure of branches and the denial of future interstate expansion applications.
- Data Foundations: The ratios are calculated using 2025 Call Report and Summary of Deposits data, reflecting the most recent full-year picture of the interstate banking landscape.
What the Regulator Issued
The OCC, along with its fellow federal banking agencies, published the 2026 Host State Loan-to-Deposit Ratios on May 1, 2026. The official announcement, which can be found at OCC Bulletin 2026-19, fulfills the agencies’ annual requirement to update the benchmarks used for Section 109 compliance. As stated in the release, “The OCC is issuing this bulletin to inform banks about how these ratios are used to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994.”
Section 109 of the Riegle-Neal Act was designed to maintain a balance between the benefits of a national banking system and the necessity of local credit availability. The act prohibits any bank from establishing or acquiring a branch outside of its home state under the Riegle-Neal Act primarily for the purpose of deposit production. To enforce this, the law requires the agencies to perform an annual review of the lending and deposit activities of banks with interstate branches. The issuance of these ratios is the first step in that oversight process, providing a statewide average against which individual institutional performance is measured.
Who Is Impacted
The requirements detailed in OCC Bulletin 2026-19 apply to all national banks, federal savings associations, and state-chartered banks that operate at least one branch in a state other than their “home state.” For a national bank, the home state is defined as the state in which the main office of the bank is located. For a state bank, it is the state by which the bank is chartered.
Specifically, the following entities must prioritize this update:
- Multi-State Commercial Banks: Institutions with a physical footprint spanning multiple jurisdictions must compare their performance in each host state against the new 2026 benchmarks.
- Banks with Recent Interstate Acquisitions: Entities that have expanded through merger or acquisition across state lines in the past year are subject to these reviews immediately upon the establishment of the interstate branch.
- Compliance and Risk Committees: Board-level oversight is essential to ensure that the bank’s strategic plan for deposit growth in host states is matched by a commensurate lending strategy.
- CRA Officers: Because the second step of the Section 109 test relies heavily on Community Reinvestment Act (CRA) performance, officers must ensure that their host state lending data is accurately reflected in both sets of regulatory filings.
Key Dates and Deadlines
The 2026 Host State Loan-to-Deposit Ratios are effective immediately upon their release on May 1, 2026. These ratios will be utilized by the OCC, FDIC, and Federal Reserve in all examinations and application reviews conducted throughout the 2026-2027 cycle, until the issuance of the 2027 ratios. Banks are expected to incorporate these new benchmarks into their internal compliance monitoring systems without delay. While there is no specific “filing deadline” for banks regarding these ratios, they are used as a look-back metric during regularly scheduled safety and soundness examinations.
Practical Action Checklist
To ensure alignment with the expectations set forth in OCC Bulletin 2026-19, financial institutions should consider the following operational steps:
- Benchmark Synchronization: Download the full 2026 Host State LTD Ratio table and update all internal compliance dashboards with the new statewide percentages for every host state where the bank maintains a branch.
- Internal Step 1 Calculation: Perform an internal calculation for each host state by dividing the bank’s total host state loans by its total host state deposits. Use the same data sources (Call Reports and Summary of Deposits) utilized by the regulators.
- Threshold Analysis: Compare the internal host state ratio against 50 percent of the relevant 2026 host state statewide ratio. If the institution falls below this 50 percent mark, it will trigger “Step 2” of the regulatory review.
- Step 2 Preparation: For any host state where the Step 1 test is failed, immediately assemble the documentation required for a “credit needs determination.” This includes evidence of the bank’s lending to small businesses, small farms, and housing-related initiatives in that state.
- CRA Rating Review: Verify the bank’s most recent CRA rating in each host state. A strong CRA rating is a primary factor in a favorable Step 2 determination.
- Lending Strategy Calibration: If a host state ratio is trending downward, evaluate whether the bank needs to implement new lending products or outreach programs specifically targeted at that host state to rebalance its loan-to-deposit profile.
- Digital Deposit Audit: Review how digital and mobile deposits are attributed to host state branches. Ensuring accurate geographic attribution is critical for a fair Step 1 calculation.
- Board Reporting: Provide a formal update to the Risk Committee of the Board regarding the bank’s compliance status under the 2026 ratios, particularly for host states with high deposit growth and lagging loan demand.
- Affiliate Activity Assessment: Determine if the lending activities of any bank affiliates should be considered in the Step 2 analysis, as regulators may permit the inclusion of affiliate loans under certain conditions.
- Economic Context Documentation: In host states with unique economic challenges or limited loan demand, maintain a record of these external factors to provide context during the Step 2 review process.
Open Questions / Watch Items
While OCC Bulletin 2026-19 provides the necessary data points for compliance, several areas remain subject to regulatory interpretation and future adjustment. First, the impact of digital banking continues to complicate the traditional host state LTD ratio calculation. As more consumers deposit funds through mobile apps rather than physical branches, the “Summary of Deposits” data may not perfectly reflect the economic reality of where capital is being sourced. Industry advocates continue to monitor whether the agencies will eventually update the calculation methodology to account for the modern digital landscape.
Additionally, institutions should watch for how the agencies weigh “credit needs” in the context of emerging economic sectors. The Step 2 determination is inherently qualitative, and there is ongoing discussion regarding how lending for green energy projects or specialized technology sectors will be credited against the Riegle-Neal requirements. Finally, as the banking sector enters a potentially volatile interest rate environment, the pressure on deposit retention may lead some institutions to shift strategies in ways that could inadvertently skew their LTD ratios, requiring proactive management to avoid Section 109 triggers.
My Law Tampa publishes this regulatory memorandum as part of its ongoing commitment to providing the financial services industry with sophisticated legal and compliance analysis. We provide these updates to ensure that regulated entities remain informed of the shifting expectations of federal and state oversight bodies.
This memorandum is provided for informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by the publication, receipt, or review of this information. Each institution’s compliance obligations under Section 109 of the Riegle-Neal Act are unique, and banks should consult with qualified legal counsel to address their specific regulatory profile and risk management needs.
Source Materials
- Official publication: Bulletin 2026-19
- Regulator archive: OCC memo archive
- Memo library: browse the full regulatory memo archive
- Related memo: OCC Issues Interim Final Order Preempting Illinois Interchange Fee Prohibition Act
- Related memo: OCC Interim Final Rule Clarifies National Bank Authority Over Non-Interest Fees and Interchange
- Related memo: OCC Proposes Deregulatory Streamlining of Public Welfare, CLO Risk Retention, and FSA Nondiscrimination Rules
