Establishment and Relocation of Branches and Offices

<RULE> 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> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Federal Deposit Insurance Corporation (FDIC) is amending the processes by which an insured State nonmember bank may establish a branch or relocate a main office or branch by eliminating certain filing requirements, reducing processing timelines, and updating public notice procedures. The FDIC is also making corresponding changes to procedures applicable to the relocation of an insured branch of a foreign bank. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The final rule will be effective February 27, 2026. </EFFDATE> <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, Senior Counsel, (202) 898-7027, <E T="03">bklein@fdic.gov;</E> Julia Dempewolf, Acting Supervisory Counsel, (202) 898-3645, <E T="03">jdempewolf@fdic.gov;</E> Kali Fleming, Attorney, (571) 637-1896, <E T="03">kfleming@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 final rule are to improve the speed and certainty of, and reduce the regulatory burden associated with, the filing process 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 (collectively, FDIC-supervised banks). The final rule also makes certain definitional clarifications to further improve regulatory efficiency and certainty. As discussed further in sections III.A and III.C of this <E T="02">Supplementary Information</E> , the FDIC's experience with branch filings has demonstrated that aspects of the filing process should be modified or eliminated. For example, through its supervisory programs, the FDIC has access to much of the information an applicant must provide 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 branch filings generally present minimal supervisory concerns, particularly where a branch changes its physical address but remains in approximately the same location. Accordingly, the final rule accelerates expedited processing for institutions that satisfy certain criteria, removes select informational requirements, eliminates the public comment process, extends the expiration date for an approved filing, and excludes from the scope of filing requirements <E T="03">de minimis</E> changes in address. The revisions in the final rule are expected to reduce the regulatory burden imposed on FDIC-supervised banks and the FDIC to complete the filing process. <HD SOURCE="HD1">II. Background</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>1</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>1</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 financial history and condition of the depository institution; (2) the adequacy of the depository institution's capital structure; (3) the future earnings prospects of the depository institution; (4) the general character and fitness of the management of the depository institution; (5) the risk presented by the depository institution to the Deposit Insurance Fund; (6) the convenience and needs of the community to be served by the depository institution; and (7) whether the depository institution'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 bank'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 the bank. <SU>2</SU> <FTREF/> With respect to a bank establishing a <E T="03">de novo</E> interstate branch that is not in the State nonmember bank's home State and in which the bank does not already have a branch, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA), <SU>3</SU> <FTREF/> as amended, imposes certain additional restrictions and requirements codified in sections 18(d) and 44 of the FDI Act. Section 38 of the FDI Act imposes additional requirements and restrictions on undercapitalized institutions seeking to establish a branch. <FTNT> <SU>2</SU>  12 U.S.C. 2903(a). </FTNT> <FTNT> <SU>3</SU>  Public Law 103-328, 108 Stat. 2338 (1994). IBBEA also imposes restrictions on out-of-State banks opening a new interstate branch in a host State in which the appropriate Federal banking agency has determined that the bank is not reasonably helping to meet the credit needs of the communities served by the bank in the host State. <E T="03">See also</E> 12 CFR part 369. </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 an existing branch 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. <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 must submit relatively more information. Further, the FDIC retains the right to request additional information to complete application 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. <SU>7</SU> <FTREF/> The FDIC Rules and Regulations at 12 CFR part 303 (part 303) define 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; (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 appropriate capital regulation and guidance of the institution's primary Federal regulator; and (5) is not subject to a cease and desist order, consent order, prompt corrective action directive, written agreement, memorandum of understanding, or other administrative agreement with its primary Federal regulator or chartering authority. <SU>8</SU> <FTREF/> <FTNT> <SU>6</SU>   <E T="03">See</E> 12 CFR 303.43. </FTNT> <FTNT> <SU>7</SU>  12 CFR 303.2(r). </FTNT> <FTNT> <SU>8</SU>  12 CFR 303.2(r). </FTNT> Under the current rule, the FDIC retains the right to move an application from expedited processing to standard processing when appropriate. <SU>9</SU> <FTREF/> Absent such removal, an application processed under expedited processing is deemed approved the latest of (1) 21 days after the FDIC receives a substantially complete application, (2) 5 days after the public comment period expires, or (3) in the case of an interstate branch application that represents new entry into a State where the applicant does not maintain a branch, 5 days after the FDIC receives the requisite confirmation from the host State that its filing requirements have been satisfied. The FDIC must provide the applicant with written notification ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 99k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━