Establishment and Relocation of Branches and Offices

FEDERAL DEPOSIT INSURANCE CORPORATION <CFR>12 CFR Parts 303 and 345</CFR> <RIN>RIN 3064-AG10</RIN> <SUBJECT>Establishment and Relocation of Branches and Offices</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Deposit Insurance Corporation. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Deposit Insurance Corporation (FDIC) proposes to amend the processes for an insured State nonmember bank to establish a branch or relocate a main office or branch by eliminating certain filing requirements, reducing processing timelines, and updating public notice procedures, and by making corresponding changes to the procedures applicable to the relocation of an insured branch of a foreign bank. The FDIC seeks comment on all aspects of the proposed rule. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Send comments on or before September 16, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Interested parties are invited to submit written comments, identified by RIN 3064-AG10, by any of the following methods: • <E T="03">Agency website: https://www.fdic.gov/resources/regulations/federal-registerpublications/.</E> Follow the instructions for submitting comments on the agency website. • <E T="03">Email: comments@fdic.gov.</E> Include RIN 3064-AG10 in the subject line of the message. • <E T="03">Mail:</E> Jennifer Jones, Deputy Executive Secretary, Attention: Comments RIN 3064-AG10, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. • <E T="03">Hand Delivery:</E> Comments may be hand delivered to the guard station at the rear of the 550 17th Street NW building (located on F Street NW) on business days between 7 a.m. and 5 p.m. • <E T="03">Public Inspection:</E> Comments received, including any personal information provided, may be posted without change to <E T="03">https://www.fdic.gov/resources/regulations/federal-register-publications/.</E> Commenters should submit only information that the commenter wishes to make available publicly. The FDIC may review, redact, or refrain from posting all or any portion of any comment that it may deem to be inappropriate for publication, such as irrelevant or obscene material. The FDIC may post only a single representative example of identical or substantially identical comments, and in such cases will generally identify the number of identical or substantially identical comments represented by the posted example. All comments that have been redacted, as well as those that have not been posted, that contain comments on the merits of this document will be retained in the public comment file and will be considered as required under all applicable laws. All comments may be accessible under the Freedom of Information Act. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Sandra Macias, Chief, (202) 898-3642, <E T="03">smacias@fdic.gov;</E> Scott Leifer, Senior Review Examiner, (781) 794-5645, <E T="03">sleifer@fdic.gov,</E> Division of Risk Management Supervision; Tara Oxley, Associate Director, (202) 898-6722, <E T="03">toxley@FDIC.gov,</E> Division of Depositor and Consumer Protection; Benjamin Klein, Supervisory Counsel, (202) 898-7027, <E T="03">bklein@FDIC.gov;</E> Karlyn Hunter, (202) 515-6831, <E T="03">kahunter@FDIC.gov;</E> Julia Dempewolf, Senior Attorney, (202) 898-3645, <E T="03">jdempewolf@FDIC.gov,</E> Legal Division; Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Policy Objectives</HD> The objectives of the proposed rule are to improve the speed and certainty of, and reduce the regulatory burden associated with, the filing process under 12 CFR part 303 of the FDIC Rules and Regulations  <SU>1</SU> <FTREF/> for insured State nonmember banks seeking to establish a branch or relocate a main office or branch and for foreign banks seeking to relocate an insured branch. The proposed rule would also make certain definitional clarifications. <FTNT> <SU>1</SU>  12 CFR part 303, subpart C (insured State nonmember banks) and subpart J (insured branches of foreign banks). </FTNT> As discussed further in sections III.A and III.C of this Supplementary Information, the FDIC's experience with branch filings has demonstrated that aspects of the filing process should be modified or removed. For example, through its supervisory programs, the FDIC already has access to much of the information that must be provided by applicants under the existing regulation. In addition, branch filings are subject to a public comment process that is not mandated by statute, causes a meaningful delay in the amount of time to render a final decision, and typically does not yield information that materially aids the FDIC's evaluation of the statutory factors pursuant to which these filings are considered. The FDIC also has found that the agency's review of certain branch filings provide little supervisory value, such as where a branch changes its address and the surviving branch resides in approximately the same location. Accordingly, the proposal would accelerate expedited processing for well-rated institutions that satisfy certain criteria, remove certain information elements required of applicants, eliminate the public comment process, and exclude certain <E T="03">de minimis</E> branch facility changes in approximately the same location provided that the FDIC and customers of the branch receive reasonably advance notice of such change. The revisions set forth in the proposal are expected to reduce the volume of branch filings and the resources required by banks and the FDIC to engage in the filing process. <HD SOURCE="HD1">II. Background Information</HD> <HD SOURCE="HD2">A. Statutory Requirements</HD> Section 18(d)(1) of the Federal Deposit Insurance Act (FDI Act) requires the FDIC's prior written consent for an insured State nonmember bank to establish and operate a new domestic branch or to move its main office or any domestic branch from one location to another. <SU>2</SU> <FTREF/> This section also prohibits a foreign bank from moving an insured branch from one location to another without the FDIC's prior written consent. <FTNT> <SU>2</SU>  12 U.S.C. 1828(d)(1). </FTNT> When considering whether to grant or withhold such consent, the FDIC must consider the factors listed in section 6 of the FDI Act (statutory factors). The statutory factors are as follows: (1) the bank's financial history and condition; (2) the adequacy of the bank's capital structure; (3) the bank's future earnings prospects; (4) the general character and fitness of the bank's management; (5) the risk presented by the bank to the Deposit Insurance Fund; (6) the convenience and needs of the community to be served by the bank; and (7) whether the bank's corporate powers are consistent with the purposes of the FDI Act. In addition, when evaluating an application to establish a branch, relocate a branch, or relocate a main office, the Community Reinvestment Act (CRA) requires the FDIC to take into consideration “the institution's record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution.”  <SU>3</SU> <FTREF/> Section 38 of the FDI Act imposes additional requirements and restrictions on undercapitalized institutions seeking to establish a branch. <FTNT> <SU>3</SU>  12 U.S.C. 2903(a). </FTNT> <HD SOURCE="HD2">B. FDIC Rules and Regulations</HD> Subpart C of 12 CFR part 303 of the FDIC Rules and Regulations (subpart C) implements section 18(d) of the FDI Act and sets forth the filing requirements and procedures for insured State nonmember banks to establish a branch, relocate a branch or main office, and retain existing branches after the interstate relocation of a main office. Subpart C requires all insured State nonmember banks to submit an application to the appropriate FDIC office prior to establishing a new branch, relocating a branch or a main office, or retaining a branch after the interstate relocation of a main office subject to approval by the FDIC. <SU>4</SU> <FTREF/> All applicants are required to submit the same information regardless of the type of proposed change and regardless of the bank's supervisory history, except that, consistent with section 38 of the FDI Act, undercapitalized institutions are required to submit relatively more information. Further, the FDIC retains the right to request additional information to complete processing. <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>  12 CFR 303.42(a). </FTNT> <FTNT> <SU>5</SU>   <E T="03">See</E> 12 CFR 303.42(b) through (d). </FTNT> The application processing timeline depends primarily upon whether the bank meets the definition of an “eligible depository institution.”  <SU>6</SU> <FTREF/> An application submitted by an “eligible depository institution” is generally subject to expedited processing, and applications submitted by all other insured State nonmember banks are subject to standard processing. The FDIC defines an “eligible depository institution” as a depository institution that meets the following criteria: (1) received an FDIC-assigned composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (UFIRS) as a result of its most recent Federal or State examination; (2) received a satisfactory or better CRA rating from its primary Federal regulator at its most recent examination, if the depository institution is subject to examination under 12 CFR part 345 of the FDIC Rules and Regulations; (3) received a compliance rating of 1 or 2 from its primary Federal regulator at its most recent examination; (4) is well-capitalized as defined in the ap ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 97k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━