1 – From data contained in Call Reports / TFRs, or UBPRs / UTPRs, calculate the average loan-to-deposit ratio since the last examination by adding the quarterly loan-to-deposit ratios and dividing by the number of quarters.
2 – Evaluate whether the institution’s average loan-to-deposit ratio is reasonable in light of information from the performance context including, as applicable, the institution’s capacity to lend, the capacity of other similarly-situated institutions to lend in the assessment area(s), demographic and economic factors present in the assessment area(s), and the lending opportunities available in the institution’s assessment area(s).
3- If the loan to deposit ratio does not appear reasonable in light of the performance context, consider the number and the dollar volume of loans sold to the secondary market, or the innovativeness or complexity of community development loans and qualified investments to assess the extent to which these activities compensate for a low loan-to-deposit ratio or supplement the institution’s lending performance as reflected in its loan-to-deposit ratio.
4 – Discuss the preliminary findings in this section with management.
5 – Summarize in workpapers conclusions regarding the institution’s loan-to-deposit ratio.
SOURCE: Small institution CRA Examination Procedures | OCC, FRB, FDIC and OTS | July 2007