Adoption of Branch Closure Policy

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Federal Register / Vol. 64, No. 124 / Tuesday, June 29, 1999 / Notices

national bank’s honorary or advisory
directors (who act in advisory capacities
without voting power or the power of
final decision in matters concerning
bank business) must distinguish
between them and the bank’s board of
directors, or indicate their advisory
status.
12 CFR 7.2014(b) (Indemnification of
institution-affiliated parties in
administrative proceedings or civil
actions not initiated by a federal
banking agency): A national bank shall
designate in its bylaws the body of law
selected for making indemnification
payments in administrative proceedings
or civil actions not initiated by a federal
banking agency.
National banks use the information to
ensure their compliance with applicable
federal banking law and regulations.
Further, the collections of information
evidence bank compliance with various
regulatory requirements. This
information assists bank management in
the safe and sound operation of the
bank. The OCC uses the information in
the conduct of bank examinations and
as an audit tool to verify bank
compliance with law and regulations.
Type of Review. Extension, without
change, of a currently approved
collection.
Affected Public: Businesses or other
for-profit.
Estimated Number of Respondents:
2,430.
Estimated Total Annual Responses:
2,430.
Frequency of Response:
Recordkeeping.
Estimated Total Annual Burden:
4,156 burden hours.
Comments
Comments submitted in response to
this notice will be summarized and
included in the request for OMB
approval. All comments will become a
matter of public record. Comments are
invited on:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information has practical utility;
(b) The accuracy of the agency’s
estimate of the burden of the collection
of information;
(c) Ways to enhance the quality,
utility, and clarity of the information to
be collected;
(d) Ways to minimize the burden of
the collection on respondents, including
through the use of automated collection
techniques or other forms of information
technology; and
(e) Estimates of capital or startup costs
and costs of operation, maintenance,

and purchase of services to provide
information.
Dated: June 22, 1999.
Mark Tenhundfeld,
Assistant Director, Legislative & Regulatory
Activities Division.
[FR Doc. 99–16472 Filed 6–28–99; 8:45 am]
BILLING CODE 4810–33–M

DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
[Docket No. 99–06]

FEDERAL RESERVE SYSTEM
[Docket No. R–1036]

FEDERAL DEPOSIT INSURANCE
CORPORATION
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
[Docket No. 99–33]

Branch Closings
Office of the Comptroller of
the Currency (OCC), Treasury; Board of
Governors of the Federal Reserve
System (Board); Federal Deposit
Insurance Corporation (FDIC); and
Office of Thrift Supervision (OTS),
Treasury.
ACTION: Joint policy statement.
AGENCIES:

The OCC, the Board, the
FDIC, and the OTS (the agencies) are
revising their joint policy statement
regarding branch closings by insured
depository institutions. This action is
needed to incorporate changes in the
underlying statute made by section 106
of the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994
and section 2213 of the Economic
Growth and Regulatory Paperwork
Reduction Act of 1996. The action is
intended to clarify the additional steps
regarding notice and consultation for
proposed branch closings by interstate
banks in low- or moderate-income areas,
and to clarify the status of automated
teller machines, relocations and
consolidations, and branch closings in
connection with emergency acquisitions
or assistance by the FDIC.
EFFECTIVE DATE: June 29, 1999.
FOR FURTHER INFORMATION CONTACT:
OCC: Crystal Maddox, National Bank
Examiner, Licensing Policy and Systems
Analyst, Bank Organization and
Structure Division (202/874–5060); Sue
Auerbach, Senior Attorney, Bank
Activities and Structure Division (202/
874–5300); Beth Knickerbocker, Senior
SUMMARY:

Attorney, Community and Consumer
Law Division (202/874–5750); Office of
the Comptroller of the Currency, 250 E
Street, SW., Washington DC 20219.
Board: Rick Heyke, Senior Attorney,
Legal Division (202/452–3688), Board of
Governors of the Federal Reserve
System, 20th and C Streets, NW.,
Washington, DC 20551. For the hearing
impaired only, Telecommunications
Device for the Deaf (TDD), Diane Jenkins
(202/452–3544).
FDIC: Curtis Vaughn, Examination
Specialist, Division of Supervision (202/
898–6759); Gladys C. Gallagher,
Counsel, Legal Division (202/898–3833);
Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, DC
20429.
OTS: Larry Clark, Director of Trust
Programs, Compliance Policy and
Specialty Examinations (202/906–5628);
Lucrecia R. Moore, Attorney (202/906–
6161); Office of Thrift Supervision, 1700
G Street, NW., Washington DC 20552.
SUPPLEMENTARY INFORMATION:
Background Information
Section 42 of the Federal Deposit
Insurance Act (12 U.S.C. 1831r–1) (FDI
Act) requires an 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. The notice to the
regulator must include a detailed
statement of the reasons for the decision
to close the branch and information in
support of those reasons.
On September 21, 1993 (58 FR 49083),
the agencies issued a joint policy
statement to provide guidance to
institutions in complying with section
42 of the FDI Act. The 1993 joint 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.
On September 29, 1994, section 42 of
the FDI Act was amended by section
106 of the Riegle-Neal Interstate
Banking and Branching Efficiency Act
of 1994 (Pub. L. 103–328, 108 Stat.
2338) (Interstate Act). The Interstate Act
changed section 42 of the FDI Act in
two ways, both relating to proposed
closings by interstate banks (banks
which maintain branches in more than
one state) of branches in low- or
moderate-income areas: First, by
providing a new notice procedure; and
second, by requiring the appropriate
Federal banking agency to convene a
meeting of community leaders and other

Federal Register / Vol. 64, No. 124 / Tuesday, June 29, 1999 / Notices
persons to discuss the feasibility of
obtaining adequate alternative facilities
and services if a person from the
affected area requests such a meeting
and other prescribed requirements are
satisfied.
On September 30, 1996, section 42 of
the FDI Act was amended by section
2213 of the Economic Growth and
Regulatory Paperwork Reduction Act of
1996 (Pub. L. 104–208, 110 Stat. 3009)
(Regulatory Relief Act). The Regulatory
Relief Act amended section 42 of the
FDI Act to clarify that section 42 does
not apply to: (1) An automated teller
machine; (2) the relocation of a branch
or consolidation of one or more
branches into another branch, if the
relocation or consolidation occurs
within the immediate neighborhood and
does not substantially affect the nature
of the business or customers served; and
(3) a branch that is closed in connection
with an emergency acquisition under
sections 11(n), 13(f), or 13(k) of the FDI
Act, or any assistance provided by the
FDIC under section 13(c) of the FDI Act.
(12 U.S.C. 1821(n), 1823(f) and (k), and
1823(c)).
The agencies are revising the 1993
joint policy statement to reflect the
changes to section 42 of the FDI Act
made by the Interstate Act and the
Regulatory Relief Act. The revised
policy statement incorporates the new
procedure and provides for banks to
inform customers in affected areas of
their ability to comment on a particular
branch closing. The agencies are also
clarifying that main offices, remote
service facilities, loan production
offices, and insured branches of foreign
banks are not branches for purposes of
section 42. A reference to the Resolution
Trust Corporation (RTC) is being
eliminated since the agency ceased to
exist on December 31, 1995. The
agencies are also clarifying the section
on allocation of customers to branches.
The text of the revised joint policy
statement follows:
Policy Statement of Office of the
Comptroller of the Currency, Board of
Governors of the Federal Reserve
System, Federal Deposit Insurance
Corporation, and Office of Thrift
Supervision Concerning Branch Closing
Notices and Policies
Purpose
This policy statement provides
guidance to each insured depository
institution concerning requirements that
an institution provide prior notice of
any branch closing and establish
internal policies for branch closings.1
1 An ‘‘insured depository institution’’ means any
bank or savings association, as defined in Section

Background
The Federal Deposit Insurance
Corporation Improvement Act of 1991
(Pub. L. 102–242, 105 Stat. 2236)
(FDICIA) was enacted on December 19,
1991. Section 228 of the FDICIA added
a new section 42 to the Federal Deposit
Insurance Act (12 U.S.C. 1831r–1) (FDI
Act) that imposes notice requirements
on insured depository institutions that
intend to close branches. The provision
became effective on December 19, 1991.
Section 42 was amended on September
29, 1994, by section 106 of the RiegleNeal Interstate Banking and Branching
Efficiency Act of 1994 (Pub. L. 103–328,
108 Stat. 2338), and on September 30,
1996, by the Economic Growth and
Regulatory Paperwork Reduction Act of
1996 (Pub. L. 104–208, 110 Stat. 3009).
The law requires an insured
depository institution to submit a notice
of any proposed branch closing to the
appropriate Federal banking agency no
later than 90 days prior to the date of
the proposed branch closing. The
required notice must include a detailed
statement of the reasons for the decision
to close the branch and statistical or
other information in support of such
reasons.
The law also requires an insured
depository institution to notify its
customers of the proposed closing. The
institution must mail the notice to the
customers of the branch proposed to be
closed at least 90 days prior to the
proposed closing. The institution also
must post a notice to customers in a
conspicuous manner on the premises of
the branch proposed to be closed at least
30 days prior to the proposed closing.
An interstate bank (defined in section
42 as a bank that maintains branches in
more than one state) proposing to close
a branch located in a low- or moderateincome area is required to include in its
notice to customers the mailing address
of the appropriate Federal banking
agency and a statement that comments
on the closing may be mailed to the
agency.2 In those cases, a person from
the affected area may submit a written
request relating to the proposed closing
to the agency, stating specific reasons
for the request and including a
discussion of the adverse effect the
closing may have on the availability of
banking services in the affected area. If
the agency determines that the request
is nonfrivolous, then the agency shall
convene a meeting of appropriate
individuals, organizations, depository
institutions, and agency representatives,
3 of the FDI Act (12 U.S.C. 1813), the deposits of
which are insured by the FDIC.
2 Under section 42, this requirement does not
apply when a savings association closes a branch.

34845

as determined by the agency in its
discretion, to explore the feasibility of
obtaining adequate alternative facilities
and services for the affected area
following the closing of the branch.
Finally, the law requires each
institution to adopt policies regarding
closings of branches of the institution.
Applicability
Section 42 of the FDI Act applies to
the closing of a ‘‘branch’’ by an insured
depository institution.3 The agencies
consider a ‘‘branch’’ for purposes of
section 42 to be a traditional brick-andmortar branch, or any similar banking
facility other than a main office, at
which deposits are received or checks
paid or money lent. Notice pursuant to
section 42 would not be required for the
closing of non-branch facilities, such as
an ATM, remote service facility, or loan
production office, or of a temporary
branch.4 The law also does not apply to
mergers, consolidations, or other
acquisitions, including branch sales,
that do not result in any branch
closings. Institutions that are in doubt
about the coverage of a particular
closing should consult the appropriate
Federal banking agency.
Mergers
An institution must file a branch
closing notice whenever it closes a
branch, including when the closing
occurs in the context of a merger,
consolidation or other form of
acquisition.5 Branch closings that occur
in the context of transactions subject to
the Bank Merger Act (12 U.S.C. 1828)
require a branch closing notice, even if
the transaction received expedited
treatment under that Act. The
responsibility for filing the notice lies
with the acquiring or resulting
institution, but either party to such a
transaction may give the notice. Thus,
for example, the purchaser may give the
notice prior to consummation of the
transaction where the purchaser intends
to close a branch following
consummation, or the seller may give
the notice because it intends to close a
branch at or prior to consummation. In
the latter example, if the transaction
3 Insured branches of foreign banks are not
considered ‘‘branches’’ for purposes of section 42
because they are subject to separate liquidation
procedures as specified in 12 CFR 28.22 (Federal
branches of foreign banks) and 12 CFR 211.25(f)
(state branches of foreign banks).
4 Consistent with the agencies’ original
interpretation, the 1996 amendment expressly
stated that section 42 of the FDI Act ‘‘shall not
apply with respect to automated teller machines.’’
(Pub. L. 104–208, 110 Stat. 3009.)
5 See ‘‘Other’’ below for certain branches closed
in connection with emergency acquisitions or FDIC
assistance or subsequently transferred back to the
FDIC.

34846

Federal Register / Vol. 64, No. 124 / Tuesday, June 29, 1999 / Notices

were to close ahead of schedule, the
purchaser, if authorized by the
appropriate Federal banking agency,
could operate the branch to complete
compliance with the 90-day
requirement without the need for an
additional notice.
Relocations and Consolidations
The law does not apply when a
branch is relocated or consolidated with
one or more other branches if the
relocation or consolidation occurs
within the immediate neighborhood and
does not substantially affect the nature
of the business or customers served. For
purposes of this policy statement, a
branch relocation is a movement within
the same immediate neighborhood that
does not substantially affect the nature
of the business or customers served.
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 will generally be
considered to be relocations. In less
densely populated areas or where
neighborhoods extend farther, and a
long move would not significantly affect
the nature of the business or the
customers served by the branch, a
relocation may occur over substantially
longer distances.6 Institutions that are in
doubt about whether a relocation or a
closing has occurred should consult the
appropriate Federal banking agency.
Consolidations of branches are
considered relocations for purposes of
this policy statement if the branches are
located within the same neighborhood
and the nature of the business or
customers served is not affected. Thus,
for example, a consolidation of two
branches on the same block following a
merger would not constitute a branch
closing. The same guidelines apply to
consolidations as to relocations.
Other
Changes of services at a branch are
not considered a branch closing,
provided that the remaining facility
constitutes a branch (as defined
herein).7
Section 42 also does not apply when
a branch ceases operation but is not
closed by an institution. Thus, the law
does not apply to:
6 OCC and OTS regulations specify distances
considered short-distance relocations. See 12 CFR
5.3(l) (national banks) and 12 CFR 545.95(c)
(thrifts).
7 The agencies note that where, after a reduction
in services, the resulting facility no longer qualifies
as a branch, section 42 would apply. Thus, notices
of branch closing would be required if an
institution were to replace a traditional brick-andmortar branch with an ATM.

• A temporary interruption of service
caused by an event beyond the
institution’s control (e.g., a natural
catastrophe), if the insured depository
institution plans to restore branching
services at the site in a timely manner; 8
• Transferring back to the FDIC,
pursuant to the terms of an acquisition
agreement, a branch of a failed bank or
savings association operated on an
interim basis in connection with the
acquisition of all or part of a failed bank
or savings association, so long as the
transfer occurs within the option period
or within an occupancy period, not to
exceed 180 days, provided in the
agreement.
• A branch that is closed in
connection with an emergency
acquisition under sections 11(n), 13(f),
or 13(k) of the FDI Act, or any assistance
provided by the FDIC under section
13(c) of the FDI Act. (12 U.S.C. 1821(n),
1823(f) and (k), and 1823(c)).
Notice of Branch Closing to the Agency
The law requires an insured
depository institution to give notice of
any proposed branch closing to the
appropriate Federal banking agency no
later than 90 days prior to the date of
the proposed branch closing. The
required notice must include the
following:
• Identification of the branch to be
closed;
• The proposed date of closing;
• A detailed statement of the reasons
for the decision to close the branch; and
• Statistical or other information in
support of such reasons consistent with
the institution’s written policy for
branch closings.
If an institution believes certain
information included in the notice is
confidential in nature, the institution
should prepare such information
separately and request confidential
treatment. The agency will decide
whether to treat such information
confidentially under the Freedom of
Information Act (5 U.S.C. 552).
If a notice provided to a state
supervisory agency pursuant to state
law contains the information outlined
above, then the institution may provide
a copy of that notice to the appropriate
Federal banking agency in satisfaction
of section 42, provided that the notice
is filed at least 90 days prior to the date
of the branch closing.
8 Section 42 would apply, however, if the
institution did not reopen the branch following the
incident. Although prior notice would not be
possible in such a case, the institution should notify
the customers of the branch and the appropriate
Federal banking agency in the manner specified by
section 42 to the extent possible and as soon as
possible after the decision to close the branch has
been made.

Notice of Branch Closing to Customers
Customer Allocation
The law requires an insured
depository institution that proposes to
close a branch to provide notice of the
proposed closing to the customers of the
branch. A customer of a branch is a
patron of an institution who has been
identified with a particular branch by
such institution through use, in good
faith, of a reasonable method for
allocating customers to specific
branches. An institution that allocates
customers based on where a customer
opened his or her deposit or loan
account will be presumed to have
reasonably identified each customer of a
branch. The agencies recognize that use
of this means of allocation, and perhaps
others, may result in certain facilities
which technically constitute branches
not being assigned any customers, but
believe that this result is permissible so
long as the means of allocation is
reasonable; if such a branch is closed,
then notification to the appropriate
agency and posting of a notice on the
branch premises will suffice. Finally, an
institution need not change its
recordkeeping system in order to make
a reasonable determination of who is a
customer of a branch.
Timing
Under section 42, an institution must
include a customer notice at least 90
days in advance of the proposed closing
in at least one of the regular account
statements mailed to customers, or in a
separate mailing. If the branch closing
occurs after the proposed date of
closing, no additional notice is required
to be mailed to customers (or provided
to the appropriate Federal banking
agency) if the institution acted in good
faith in projecting the date for closing
and in subsequently delaying the
closing.
Content
The mailed customer notice should
state the location of the branch to be
closed and the proposed date of closing,
and either identify where customers
may obtain service following the closing
date or provide a telephone number for
customers to call to determine such
alternative sites. If a notice of branch
closing provided to customers pursuant
to state law contains this information,
then a separate notice need not be sent,
provided that the notice is sent at least
90 days prior to the closing.
Low- or Moderate-Income Areas Served
by Interstate Banks
If the institution is a bank that
maintains branches in more than one

Federal Register / Vol. 64, No. 124 / Tuesday, June 29, 1999 / Notices
state and the branch to be closed is
located in a low-or moderate-income
area,9 the notice shall contain the
mailing address of the appropriate
Federal banking agency and a statement
that comments on the proposed branch
closing may be mailed to that agency.
The notice should also state that the
agency does not have the authority to
approve or prevent the branch closing.
If the agency receives a written request
by a person from the area in which the
branch is located, relating to the
proposed closing and stating specific
reasons for the request, including a
discussion of the adverse effect of such
closing on the availability of banking
services in the affected area, and if the
agency concludes that the request is
nonfrivolous, then the agency shall
convene a meeting of agency
representatives, other interested
depository institution regulatory
agencies, community leaders, and other
appropriate individuals, organizations,
and depository institutions, as
determined by the agency in its
discretion. The purpose of the meeting
shall be to explore the feasibility of
obtaining adequate alternative facilities
and services for the affected area,
including the establishment of a new
branch by another depository
institution, the chartering of a new
depository institution, or the
establishment of a community
development credit union, following the
closing of the branch. In the case of an
institution which will become an
interstate bank prior to the closure of a
branch in a low-or moderate-income
area, such information must be included
in the notice unless the closure will
occur immediately upon consummation
of the transaction that causes the
institution to become interstate. No
action by the appropriate Federal
banking agency under this provision
shall affect the authority of an interstate
bank to close a branch (including the
timing of such closing) if the
requirements of sections 42(a) and 42(b)
of the FDI Act (regarding notice to the
appropriate Federal banking agency and
notice to the institution’s customers)
9 The term ‘‘low-or moderate-income area’’ means
a census tract for which the median family income
is: (1) Less than 80 percent of the median family
income for the metropolitan statistical area (as
designated by the Director of the Office of
Management and Budget) in which the census tract
is located; or (2) in the case of a census tract that
is not located in a metropolitan statistical area, less
than 80 percent of the median family income for the
State in which the census tract is located, as
determined without taking into account family
income in metropolitan statistical areas in such
State. (12 U.S.C. 1831r-l(d)(4)).

have been met by such bank with
respect to the branch being closed.
On-Site Notice
Under section 42, an institution also
must post notice to branch customers in
a conspicuous manner on the branch
premises at least 30 days prior to the
proposed closing. This notice should
state the proposed date of closing and
identify where customers may obtain
service following that date or provide a
telephone number for customers to call
to determine such alternative sites. An
institution may revise the notice to
extend the projected date of closing
without triggering a new 30-day notice
period.
Contingent Notices
In some situations, an institution, in
its discretion and to expedite
transactions, may mail and post notices
to customers of a proposed branch
closing that is contingent upon an event.
For example, in the case of a proposed
merger or acquisition, an institution
may notify customers of its intent to
close a branch upon approval by the
appropriate Federal banking agency of
the proposed merger or acquisition.
Policies for Branch Closings
The law requires all insured
depository institutions to adopt policies
for branch closings. Each institution
with one or more branches must adopt
such a policy. If an institution currently
has no branches, it must adopt a policy
for branch closing when it establishes
its first branch. The policy should be in
writing and meet the size and needs of
the institution.
Each branch closing policy adopted
pursuant to section 42 should include
factors for determining which branch to
close and which customers to notify,
and procedures for providing the
notices required by the statute.
Compliance
The Federal banking agencies will
examine for compliance with section 42
of the FDI Act in accordance with each
agency’s compliance examination
procedures, to determine whether the
institution has adopted a branch closing
policy and whether the institution
provided the required notices when it
closed a branch. If an institution fails to
comply with section 42, the appropriate
Federal banking agency may make
adverse findings in the compliance
evaluation or take appropriate
enforcement action.

34847

Dated: May 19, 1999.
John D. Hawke, Jr.,
Comptroller of the Currency.
By order of the Board of Governors of the
Federal Reserve System, June 22, 1999.
Jennifer J. Johnson,
Secretary of the Board.
Dated: June 3, 1999.
Robert E. Feldman,
Executive Secretary, Federal Deposit
Insurance Corporation.
Dated: June 18, 1999.
Ellen Seidman,
Director, Office of Thrift Supervision.
[FR Doc. 99–16471 Filed 6–28–99; 8:45 am]
BILLING CODE Board of Governors: 6210–01–P (25%)
OCC: 4810–33–P (25%) FDIC: 6714–01–P (25%) OTS:
6720–01–P (25%)

DEPARTMENT OF THE TREASURY
Customs Service
Procedures if the Generalized System
of Preferences Program Expires
Customs Service, Treasury.
General notice.

AGENCY:
ACTION:

The Generalized System of
Preferences (GSP) is a renewable
preferential trade program that allows
the eligible products of designated
developing countries to directly enter
the United States free of duty. The GSP
is currently scheduled to expire at
midnight on June 30, 1999, unless its
provisions are extended by Congress.
This document provides notice to
importers that claims for duty-free
treatment under the GSP will not be
processed by Customs for merchandise
entered or withdrawn from a warehouse
for consumption on or after July 1, 1999,
if the program is not extended before
that date. This document also sets forth
the mechanisms that will facilitate
refunds, should the GSP be renewed
with retroactive effect.
DATES: The plan set forth in this
document will become effective as of
July 1, 1999, if Congress does not extend
the GSP program before that date.
FOR FURTHER INFORMATION CONTACT: For
specific questions relating to the
Automated Commercial System:
James Halpin, Office of Information
Technology, 703–921–7128. For general
operational questions:
Formal entries—John Pierce, 202–927–
1249;
Informal entries—John Considine, 202–
927–0042;
Mail entries—Robert Woods, 202–927–
1236;
Passenger claims—Wes Windle, 202–
927–0167
SUPPLEMENTARY INFORMATION:
SUMMARY: