---
kind: "section"
citation: "12 U.S.C. § 1835a"
title: "12"
title_heading: "Banks and Banking"
number: "1835a"
heading: "Prohibition against deposit production offices"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1835a"
units:
  - "Chapter 16 — Federal Deposit Insurance Corporation"
---

# §1835a. Prohibition against deposit production offices

- (a) **Regulations—** The [appropriate Federal banking agencies](/usc/12/1813.md?p=q) shall prescribe uniform regulations effective June 1, 1997, which prohibit any out-of-[State bank](/usc/12/1813.md?p=a-2) 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](/usc/12/1813.md?p=l) production.
- (b) **Guidelines for meeting credit needs—** Regulations issued under [subsection (a)](#a) shall include guidelines to ensure that interstate branches operated by an out-of-[State bank](/usc/12/1813.md?p=a-2) in a host [State](/usc/12/1813.md?p=a-3) are reasonably helping to meet the [credit](/usc/12/5481.md?p=7) needs of the communities which the branches serve.
- (c) **Limitation on out-of-State loans—**
  - (1) **Limitation—** Regulations issued under [subsection (a)](#a) shall require that, beginning no earlier than 1 year after establishment or acquisition of an interstate branch or branches in a host [State](/usc/12/1813.md?p=a-3) by an out-of-[State bank](/usc/12/1813.md?p=a-2), if the [appropriate Federal banking agency](/usc/12/1813.md?p=q) for the out-of-[State bank](/usc/12/1813.md?p=a-2) determines that the [bank](/usc/12/1813.md?p=a-1)’s level of lending in the host [State](/usc/12/1813.md?p=a-3) relative to the [deposits](/usc/12/1813.md?p=l) from the host [State](/usc/12/1813.md?p=a-3) (as reasonably determinable from available information [including](/usc/12/1813.md?p=t-1) the agency’s sampling of the [bank](/usc/12/1813.md?p=a-1)’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](/usc/12/1813.md?p=a-3) relative to total [deposits](/usc/12/1813.md?p=l) from the host [State](/usc/12/1813.md?p=a-3) (as determinable from relevant sources) for all [banks](/usc/12/1813.md?p=a-1) the home [State](/usc/12/1813.md?p=a-3) of which is such [State](/usc/12/1813.md?p=a-3)—
    - (A) the [appropriate Federal banking agency](/usc/12/1813.md?p=q) for the out-of-[State bank](/usc/12/1813.md?p=a-2) shall review the loan portfolio of the [bank](/usc/12/1813.md?p=a-1) and determine whether the [bank](/usc/12/1813.md?p=a-1) is reasonably helping to meet the [credit](/usc/12/5481.md?p=7) needs of the communities served by the [bank](/usc/12/1813.md?p=a-1) in the host [State](/usc/12/1813.md?p=a-3); and
    - (B) if the agency determines that the out-of-[State bank](/usc/12/1813.md?p=a-2) is not reasonably helping to meet those needs—
      - (i) the agency may order that an interstate branch or branches of such [bank](/usc/12/1813.md?p=a-1) in the host [State](/usc/12/1813.md?p=a-3) be closed unless the [bank](/usc/12/1813.md?p=a-1) provides reasonable assurances to the satisfaction of the [appropriate Federal banking agency](/usc/12/1813.md?p=q) that the [bank](/usc/12/1813.md?p=a-1) has an acceptable plan that will reasonably help to meet the [credit](/usc/12/5481.md?p=7) needs of the communities served by the [bank](/usc/12/1813.md?p=a-1) in the host [State](/usc/12/1813.md?p=a-3), and
      - (ii) the out-of-[State bank](/usc/12/1813.md?p=a-2) may not open a new interstate branch in the host [State](/usc/12/1813.md?p=a-3) unless the [bank](/usc/12/1813.md?p=a-1) provides reasonable assurances to the satisfaction of the [appropriate Federal banking agency](/usc/12/1813.md?p=q) that the [bank](/usc/12/1813.md?p=a-1) will reasonably help to meet the [credit](/usc/12/5481.md?p=7) needs of the community that the new branch will serve.
  - (2) **Considerations—** In making a determination under [paragraph (1)(A)](#c-1-A), the [appropriate Federal banking agency](/usc/12/1813.md?p=q) shall consider—
    - (A) whether the interstate branch or branches of the out-of-[State bank](/usc/12/1813.md?p=a-2) were formerly part of a failed or failing [depository institution](/usc/12/1813.md?p=c-1);
    - (B) whether the interstate branch was acquired under circumstances where there was a low loan-to-[deposit](/usc/12/1813.md?p=l) 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](/usc/12/1813.md?p=a-2) have a higher concentration of commercial or [credit](/usc/12/5481.md?p=7) card lending, trust services, or other specialized activities;
    - (D) the ratings received by the out-of-[State bank](/usc/12/1813.md?p=a-2) under the Community Reinvestment Act of 1977 [[12 U.S.C. 2901](/usc/12/2901.md) et seq.];
    - (E) economic conditions, [including](/usc/12/1813.md?p=t-1) the level of loan demand, within the communities served by the interstate branch or branches of the out-of-[State bank](/usc/12/1813.md?p=a-2); and
    - (F) the safe and sound operation and condition of the out-of-[State bank](/usc/12/1813.md?p=a-2).
  - (3) **Branch closing procedure—**
    - (A) **Notice required—** Before exercising any authority under [paragraph (1)(B)(i)](#c-1-B-i), the [appropriate Federal banking agency](/usc/12/1813.md?p=q) shall issue to the [bank](/usc/12/1813.md?p=a-1) 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](/usc/12/1818.md?p=h) 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](/usc/12/1813.md?p=a-3) pursuant to this title[^1] or any amendment made by this title[^1] 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](/usc/12/1813.md?p=q)”, “[bank](/usc/12/1813.md?p=a-1)”, “[State](/usc/12/1813.md?p=a-3)”, and “[State bank](/usc/12/1813.md?p=a-2)” have the same meanings as in [section 1813 of this title](/usc/12/1813.md).
  - (2) **Home State—** The term “home [State](/usc/12/1813.md?p=a-3)” means—
    - (A) in the case of a national [bank](/usc/12/1813.md?p=a-1), the [State](/usc/12/1813.md?p=a-3) in which the main office of the [bank](/usc/12/1813.md?p=a-1) is located; and
    - (B) in the case of a [State bank](/usc/12/1813.md?p=a-2), the [State](/usc/12/1813.md?p=a-3) by which the [bank](/usc/12/1813.md?p=a-1) is chartered.
  - (3) **Host State—** The term “host [State](/usc/12/1813.md?p=a-3)” means a [State](/usc/12/1813.md?p=a-3) in which a [bank](/usc/12/1813.md?p=a-1) establishes a branch other than the home [State](/usc/12/1813.md?p=a-3) of the [bank](/usc/12/1813.md?p=a-1).
  - (4) **Interstate branch—** The term “interstate branch” means a branch established pursuant to this title[^1] or any amendment made by this title[^1] to any other provision of law and any branch of a [bank](/usc/12/1813.md?p=a-1) controlled by an out-of-[State bank](/usc/12/1813.md?p=a-2) holding [company](/usc/12/1813.md?p=w-7) (as defined in [section 1841(o)(7)](/usc/12/1841.md?p=o-7) of this title).
  - (5) **Out-of-State bank—** The term “out-of-[State bank](/usc/12/1813.md?p=a-2)” means, with respect to any [State](/usc/12/1813.md?p=a-3), a [bank](/usc/12/1813.md?p=a-1) the home [State](/usc/12/1813.md?p=a-3) of which is another [State](/usc/12/1813.md?p=a-3) and, for purposes of this section, [includes](/usc/12/1813.md?p=t-1) a [foreign bank](/usc/12/1813.md?p=s-1), the home [State](/usc/12/1813.md?p=a-3) of which is another [State](/usc/12/1813.md?p=a-3).

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Pub. L. 103–328, title I, § 109, Sept. 29, 1994, 108 Stat. 2362; Pub. L. 106–102, title I, § 106, Nov. 12, 1999, 113 Stat. 1359.)

## Notes

### Editorial Notes

### 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, which is classified generally to chapter 30 (§ 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)”.

### Statutory Notes and Related Subsidiaries

### 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.