Applications and Publication Requirements

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 303

RIN 3064-AB21

Applications and Publication Requirements

AGENCY: Federal Deposit Insurance Corporation.

ACTION: Final rule.

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SUMMARY: The Board of Directors (Board) of the Federal Deposit

Insurance Corporation (FDIC) is revising the application and

publication requirements in its regulations to conform to the

definition and treatment of branch relocations in the recently issued

interagency policy statement on branch closings. The amendments are

generally technical in nature. The intended effect of this rule is to

provide consistent treatment of branch relocations for application and

branch closing notice purposes.

EFFECTIVE DATE: March 2, 1994.

FOR FURTHER INFORMATION CONTACT: Curtis L. Vaughn, Examination

Specialist, Division of Supervision (202/898-6759) or Joseph A.

DiNuzzo, Counsel, Legal Division (202/898-7349), Federal Deposit

Insurance Corporation, Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

No collections of information pursuant to section 3504(h) of the

Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in this

notice. Consequently, no information has been submitted to the Office

of Management and Budget for review.

Regulatory Flexibility Act

The Board hereby certifies that the final rule will not have a

significant economic impact on a substantial number of small entities

within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.). It will not impose burdens on depository institutions of any

size and will not have the type of economic impact addressed by the

Act. Accordingly, the Act's requirements regarding an initial and final

regulatory flexibility analysis (Id. at 603 & 604) are not applicable

here.

The Final Rule

1. Definition and Treatment of Branch Relocations in the Interagency

Policy Statement on Branch Closings

Section 228 of the Federal Deposit Insurance Corporation

Improvement Act of 1991 (Pub. L. 102-242, 105 Stat. 2236) (FDICIA)

added a new section 42 to the Federal Deposit Insurance Act (FDI Act)

(12 U.S.C. 1831r-1), effective upon enactment of FDICIA on December 19,

1991. The law requires each insured depository institution to give 90

days' prior written notice of any branch closing to its primary federal

regulator and to branch customers, to post a notice at the branch site

at least 30 days prior to closing, and to develop a policy with respect

to branch closings.

Effective September 21, 1993, the FDIC, along with the Board of

Governors of the Federal Reserve System, the Office of the Comptroller

of the Currency and the Office of Thrift Supervision, issued a joint

policy statement on section 42 of the FDI Act (58 FR 49083, September

21, 1993). The policy statement defines a branch for purposes of

section 42, clarifies what constitutes a branch closing, and provides

guidance to institutions in identifying customers to be notified in the

event of a branch closing.

The policy statement contains a common method of determining if a

``relocation'' has occurred for purposes of section 42 and makes clear

that a relocation (as defined therein) does not constitute a branch

closing. The policy statement distinguishes between relocations and the

contemporaneous closing of one branch and opening of another. Under the

policy statement a relocation has occurred if the new branch and the

closed branch are within the same immediate neighborhood and the nature

of the business and the customers served by the branch are

substantially unaffected by the move. The policy statement explains

that, generally, relocations will be found to have occurred only when

short distances are involved: for example, moves across the street,

around the corner, or a block or two away. Moves of less than 1,000

feet generally will be considered to be relocations. The policy

statement notes that, in less densely populated areas, where

``neighborhoods'' extend farther and a longer move would not

substantially affect the nature of the business or the customers served

by the branch, a relocation may occur over significantly longer

distances.

2. Revisions to Part 303

A proposed rule to amend part 303 of the FDIC's regulations (12 CFR

part 303) to conform to the treatment of branch relocations in the

interagency policy statement on branch closings was published in the

Federal Register on September 21, 1993 (58 FR 48979). A discussion of

the comments received on the proposed rule is provided below.

A. Applications

Section 18(d)(1) of the FDI Act (12 U.S.C. 1828(d)(1)) requires

state nonmember insured banks to obtain prior written consent from the

FDIC before establishing and operating a new domestic branch or moving

its main office or any domestic branch from one location to another.

Section 303.2 of the FDIC's regulations (12 CFR 303.2) specifies these

application requirements. In essence, it requires that such banks

submit a ``letter form'' application containing information designated

in the regulation. The requirements of Sec. 303.2 do not distinguish

between applications to establish a branch and ones to relocate a

branch.

As noted above, the branch closing policy statement does not apply

to branch relocations (as defined therein); thus, generally, a branch

closing notice is not required when a bank moves from one location to

another in the same immediate neighborhood. Because there is no

definition of branch relocation in Sec. 303.2, however, a bank that

intended to close one branch and, as part of the same transaction, open

another branch outside the immediate neighborhood of the closed branch

may characterize the application as one for a relocation.

Aside from the publication requirements of Sec. 303.6, discussed

below, prior to the issuance of the branch closing policy statement it

made no difference, for application purposes, whether such an

application was designated as one to relocate a branch or to establish

a new branch; both required the same information in a letter-form

application. Because the branch closing policy statement provides a

narrow definition of relocation, however, without a conforming

definition to Sec. 303.2, an application under Sec. 303.2 to move a

branch outside its immediate neighborhood could be characterized and

considered a branch relocation application, but would be treated as a

branch opening and closing under the branch closing policy statement,

necessitating compliance with section 42.

Because of this inconsistent and potentially confusing treatment of

branch relocations, the Board is revising Sec. 303.2 to conform to the

definition of relocation in the branch closing policy statement. The

revisions to Sec. 303.2 make no substantive changes to the application

requirements. The only changes are the inclusion in Sec. 303.2 of the

policy statement definition of branch relocation and the requirement

that applications indicate whether they are to establish and operate a

new branch, move a main office, relocate a remote service facility or

relocate a branch other than a remote service facility.

Because main office moves are not within the scope of section 42

and the branch closing policy statement, they are not encompassed

within the relocation definition and would be treated separately under

Sec. 303.2. Also, remote service facilities are deemed not to be

branches under section 42; thus, they are excluded from the new

definition of branch relocations in Sec. 303.2.

In situations where the FDIC determines that an application

designated as a relocation does not qualify as a move within the same

immediate neighborhood, the FDIC will notify the applicant about

resubmitting (or authorizing the FDIC to redesignate) the application

as one to establish and operate a new branch.

B. Publications

Section 303.6 of the FDIC's regulations (12 CFR 303.6), among other

things, imposes publication and posting requirements in connection with

certain applications filed with the FDIC. The final rule amends

Sec. 303.6 (a) and (f) to conform to the definition and treatment of

branch relocations in the branch closing policy statement and the

above-described conforming revisions to Sec. 303.2. It also reduces

from two to one the number of times an applicant must publish a notice

to relocate a branch (other than a remote service facility). The reason

for this revision is that upon receipt of an application designated as

a relocation application the FDIC will determine whether the proposed

branch move is within the same neighborhood and would affect the nature

or customers of the branch. In situations where the FDIC determines

that an application designated as a relocation application does not

qualify as such under the new definition of relocations in Sec. 303.2,

the FDIC will notify the applicant about resubmitting (or authorizing

the FDIC to redesignate) the application as one to establish and

operate a new branch.

The proposed one-time notice requirement will provide the public

with, among other things, the opportunity to question the

characterization of the application as a branch relocation application.

Because the definition of relocations is narrowly drawn to encompass

only moves within the ``immediate neighborhood'', the Board believes

that continuing to require two publication requirements would be an

unnecessary burden on the industry.

Consistent with the revisions to the publication requirements in

Sec. 303.6, the final rule also reduces from 21 to 15 days the time

periods for: (1) The required posting of notice of a proposed branch

relocation (as newly defined) in the public lobby of the branch; and

(2) the public to comment on branch relocation applications (as newly

defined).

Comments on the Proposed Rule

The FDIC received three comments on the proposed rule, all from

industry trade groups. All the comments supported the proposed

revisions. One noted that the revisions will ``reduce the confusion

that would have occurred with conflicting statements''. Another noted

that the amendments to the application requirements of part 303 ``will

ensure a more efficient application process''.

One of the comment letters suggested that the one-time publication

requirement and reduced notice requirements for branch relocations be

extended to include short-distance relocations of main offices of state

nonmember banks. Regulatory revisions concerning the application,

publication and notice requirements for relocating main offices are

outside the scope of this rulemaking, but the FDIC believes these

suggestions may be worthwhile and will consider them in future

revisions to part 303. The same letter requested that the FDIC consider

allowing branch relocations by simply requiring the filing of an

advance notice with the FDIC, instead of an application. The FDIC is

aware of the benefits from streamlining application requirements where

permissible and desirable. Thus, the FDIC staff is currently

considering ways to lessen, where appropriate, the application,

publication and notice requirements in part 303 and will consider this

comment in the course of that effort.

List of Subjects in 12 CFR Part 303

Administrative practice and procedure, Authority delegations

(Government agencies), Bank deposit insurance, Banks, banking,

Reporting and recordkeeping requirements, Savings associations.

The Board of Directors of the Federal Deposit Insurance Corporation

hereby amends part 303 of title 12 of the Code of Federal Regulations

as follows:

PART 303--APPLICATIONS, REQUESTS, SUBMITTALS, DELEGATIONS OF

AUTHORITY, AND NOTICES REQUIRED TO BE FILED BY STATUTE OR

REGULATION

1. The authority citation for Part 303 continues to read as

follows:

Authority: 12 U.S.C. 378, 1813, 1815, 1816, 1817(j), 1818, 1819

(``Seventh'' and ``Tenth''), 1828, 1831e, 1831o; 15 U.S.C. 1607.

2. Section 303.2 is amended by revising the section heading and

introductory text of paragraph (a) to read as follows:

Sec. 303.2 Applications by insured state nonmember bank to establish a

branch, move its main office or relocate a branch.

(a) Application by an insured state nonmember bank (except a

District bank) to establish and operate a new branch2 (including a

remote service facility), to move its main office, or relocate a branch

should be filed with the appropriate regional director. For purposes of

this requirement, a branch relocation (other than the relocation of a

remote service facility) is a move within the same immediate

neighborhood that does not substantially affect the nature of the

business of the branch or the customers of the branch. Under this

paragraph, situations where an insured state nonmember bank closes a

branch (other than a remote service facility) in one location and opens

a branch in another location outside the immediate neighborhood of the

closed branch are considered the establishment of a new branch and the

closing of an existing branch. Applications filed under this paragraph

shall indicate whether they are to establish and operate a new branch,

move a main office, relocate a remote service facility or relocate a

branch office other than a remote service facility. The application

shall be mailed or delivered to the regional director on the date on

which the notice required in Sec. 303.6(f)(1) is published or not more

than 30 days subsequent to the first required publication of notice.

The application shall be in letter form and shall contain the following

information:

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\2\ The term branch includes any domestic branch or foreign

branch as those terms are defined in section 3(o) of the Act, as

amended (12 U.S.C. 1813(o)).

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* * * * *

3. Section 303.6 is amended by revising paragraph (a)(3), the last

sentence of the introductory text of paragraph (f)(1)(ii), the heading

of paragraph (f)(1)(ii)(B), paragraph (f)(2), the first two sentences

of paragraph (f)(3), and the second parenthetical of the notice in

paragraph (f)(4) to read as follows:

Sec. 303.6 Application procedures.

(a) * * *

(3) Applications by insured state nonmember banks to move their

main office or relocate their branch offices, including remote service

facilities;

* * * * *

(f) * * *

(1) * * *

(ii) * * * Publication of notice shall be made at least once each

week on the same day for two consecutive weeks for applications to move

a main office or relocate a remote service facility and once for other

applications described in paragraph (a) of this section and shall be in

a newspaper of general circulation in the communities referred to

below:

* * * * *

(B) Applications to move a main office and relocate a branch

(including a remote service facility). * * *

* * * * *

(2) Notice by posting. In the case of applications to move a main

office or relocate a branch (including a remote service facility), in

addition to the notice by publication described in paragraph (f)(1) of

this section, notice of the publication shall be posted in the public

lobby of the office(s) to be moved or relocated, if such public lobby

exists, for at least 21 days beginning with the date of the last

published notice required by paragraph (f)(1) of this section for

applications to move a main office or relocate a remote service

facility; and for at least 15 days beginning with the date of the

publication notice required by paragraph (f)(1) of this section for

applications to relocate a branch other than a remote service facility.

(3) Comments. Anyone who wishes to comment on an application may do

so by filing comments in writing with the regional director any time

before the FDIC has completed processing the application. Processing

will be completed, for applications other than applications to move a

main office, to relocate a remote service facility and to merge, not

less than 15 days after the publication of the notice required by

paragraph (f)(1) of this section or 15 days after the FDIC's receipt of

the application, whichever is later; for applications to move a main

office or relocate a remote service facility, not less than 21 days

after the last publication or 21 days after FDIC's receipt of the

application, whichever is later; for merger applications, not less than

30 days after the first publication or 30 days after FDIC's receipt of

the application, whichever is later. * * *

(4) Notice of right to comment. * * *

* * * (main office moves and remote service facility relocations--

21st, mergers--30th, other applications described in paragraph (a) of

this section--15th) * * *

* * * * *

By order of the Board of Directors.

Dated at Washington, DC, this 24th day of January, 1994.

Federal Deposit Insurance Corporation

Robert E. Feldman,

Acting Executive Secretary.

[FR Doc. 94-1982 Filed 1-28-94; 8:45 am]

BILLING CODE 6714-01-P