[Federal Register Volume 59, Number 20 (Monday, January 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1982]


[[Page Unknown]]

[Federal Register: January 31, 1994]


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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