FR4001_20091208_omb

Supporting Statement for
the Domestic Branch Notification
(FR 4001; OMB No. 7100-0097)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from the
Office of Management and Budget (OMB), proposes to extend for three years, without revision, the
filing requirements associated with the Domestic Branch Notification (FR 4001; OMB No. 71000097). The Federal Reserve Act and Regulation H require a state member bank to seek prior
approval of the Federal Reserve System before establishing or acquiring a domestic branch. Such
requests for approval must be filed as notifications at the appropriate Reserve Bank for the state
member bank. Due to the limited information that a state member bank generally has to provide for
branch proposals, there is no formal reporting form for a domestic branch notification. A state
member bank is required to notify the Federal Reserve by letter of its intent to establish one or more
new branches and provide with the letter evidence that public notice of the proposed branch(es) has
been published by the state member bank in the appropriate newspaper(s). The Federal Reserve uses
the information provided to fulfill its statutory obligation to review any public comment on proposed
branches before acting on the proposals and otherwise to supervise state member banks. The current
annual burden for the FR 4001 is estimated to be 810 hours.
Background and Justification
Under Section 9 of the Federal Reserve Act and section 208.6 of Regulation H, a state
member bank is required to obtain Federal Reserve approval before establishing or acquiring a
domestic branch. The regulation defines “branch” to include “any branch bank, branch office,
branch agency, additional office, or any branch place of business located in the United States or its
territories (including the District of Columbia) at which deposits are received, or checks paid, or
money lent.”1 A state member bank is required under 12 CFR Section 208.6(a) to submit a written
request to establish a branch. The Federal Reserve uses this information, along with available
supervisory and financial information, to determine if the proposal is consistent with the public
interest.
Branch applications are reviewed by the Federal Reserve on either an expedited or
nonexpedited processing track. The Board has defined the term “eligible bank” in Regulation H to
serve as the qualifying standard for when expedited treatment is appropriate. Eligible bank is
1

Regulation H states that branches do not include: (i) a loan-origination facility where the proceeds of loans are not
disbursed; (ii) an office of an affiliated or unaffiliated institution that provides services to customers of the member bank
on behalf of the member bank so long as the institution is not established or operated by the bank; (iii) an automated
teller machine; (iv) a remote service unit; (v) a facility to which the bank does not permit members of the public to have
physical access for purposes of making deposits, paying checks, or borrowing money (such as an office established by
the bank that receives deposits only through the mail); or (vi) a facility that is located at the site of, or is an extension of,
an approved main office or branch. The Board determines whether a facility is an extension of an existing main or
branch office on a case-by-case basis. In addition, the branches of state member banks located in foreign nations, in the
overseas territories, dependencies, and insular possessions of those nations and of the United States, and in the
Commonwealth of Puerto Rico, are subject to the Board’s Regulation K (12 CFR 211).

defined in Section 208.2(e) of Regulation H as a bank that (1) is well capitalized as defined in
Subpart D of the regulation, (2) has a composite Uniform Financial Institutions Rating System
(CAMELS) rating of 1 or 2, (3) has a Community Reinvestment Act rating of outstanding or
satisfactory, (4) has a compliance rating of 1 or 2, and (5) has no major unresolved supervisory
issues outstanding (as determined by the Board or appropriate Federal Reserve Bank in its
discretion).
Description of Information Collection
The notification for a state member bank to establish or acquire a domestic branch has no
required format. The state member bank is required, however, to file a letter that includes a very
limited amount of information with the appropriate Reserve Bank.2 The information includes a
description of the proposed branch and its proposed location, as well as evidence (such as a copy of
the actual notice) that public notice of the proposed transaction has been published by the state
member bank in the appropriate newspaper(s). A bank that meets the criteria for expedited
treatment files only this information (and the certification described below). A bank that does not
meet the criteria for expedited treatment typically is required to provide more detailed information
addressing the matters that prevent the notification from qualifying for expedited treatment as well
as any other outstanding issues identified by Federal Reserve staff.3
As soon as practicable after the initial filing of a domestic branch notification and prior to
final action on the notification by the Federal Reserve, the notificant must provide a certified copy of
the requisite newspaper notice publication(s). The original newspaper notice must contain the name
and location of the proposed branch, and the original comment period must be for at least 15
calendar days.4 Sections 208.6(a)(3) and (4) of Regulation H describe the procedural rules for
public notice and comment for branch applications. A bank is not required to prepare a separate
notice for submission to the Federal Reserve, but may incorporate any related filings to other
regulators as a means to expedite preparation of the required letter to the Federal Reserve.
No objection is made to the notification if the bank is in satisfactory financial condition and
the establishment of the proposed branch is deemed consistent with the public interest. The Federal
Reserve approves the domestic branch notification in writing.
Regulation H also has a provision for the filing of consolidated branch applications. Under
this provision, a state member bank may seek approval in a single application or notice for any
branches that it proposes to establish within one year after the contemplated approval date. Unless
notification is waived, the bank shall notify the appropriate Federal Reserve Bank no later than 30
2

Those requests that involve the acquisition of an existing branch from another banking organization also require the
filing of a related application under the Bank Merger Act. The information required by the FR 4001 may be incorporated
in the Bank Merger Act application, with the related filings reviewed together as a single proposal.
3

A state member bank may be advised by Federal Reserve staff that it is not eligible for expedited procedures either
before or after the filing of a domestic branch notification. A bank may not qualify for the expedited procedures due to
unresolved supervisory issues or because certain financial or managerial aspects of the proposed expansion require
additional scrutiny.
4

The Board may, in its discretion and based on the facts and circumstances, extend the comment period for up to an
additional 15 calendar days.

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days after opening any branch approved under the consolidated application. A bank is not required
to open a branch approved under either a consolidated or single branch application. Branch
approvals granted under this provision remain valid for one year unless the Board or the appropriate
Federal Reserve Bank notifies the bank that there has been a change in the bank’s condition
(financial or otherwise) that warrants reconsideration of the approval.
Time Schedule for Information Collection
This information collection is event generated. The domestic branch notification must be
filed prior to a state member bank establishing or acquiring a branch. Under the expedited branch
notification procedure, authorization is granted by either a Reserve Bank or the Secretary of the
Board between three and five business days after the end of the newspaper comment period, unless
an issue is identified prior to that time. In no case would an expedited branch application be
approved prior to the third business day after the end of the public comment period. A branch
notification that is processed for action by either a Reserve Bank or the Secretary of the Board under
nonexpedited procedures usually is approved within 30 days of its receipt. If a branch notification
needs to be presented to the Board, it is usually acted on within 60 days of its receipt.
Legal Status
The Board’s Legal Division has determined that 12 U.S.C. § 321 authorizes the Board to
require this notification. The individual respondent information in the notification is not considered
confidential.
Consultation Outside the Agency and Discussion of Public Comments
On September 25, 2009, the Federal Reserve published a notice in the Federal Register
(74 FR 48960) requesting public comment for 60 days on the extension of the FR 4001. The
comment period for this notice expired on November 24, 2009. The Federal Reserve did not receive
any comments on the extension. On December 8, 2009, the Federal Reserve published a final notice
in the Federal Register (74 FR 64692) for the FR 4001.
Estimate of Respondent Burden
The FR 4001 annual reporting burden estimate is based on the average number and type of
notifications processed in 2008. The respondent burden is estimated to average one-half hour for
expedited notifications and one hour for nonexpedited notifications. The current annual burden is
estimated to be 810 hours, which is less than 1 percent of the total Federal Reserve System burden.5

5

The respondent numbers reflected in the following chart include notifications to acquire established branches that are
filed with Bank Merger Act applications.

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Expedited
Nonexpedited
Total

Number of
respondents

Estimated
annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

159
730
889

1
1

0.50
1.00

80
730
810

The total cost to the public is estimated to be $54,797.6
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
Annual costs associated with providing the instructions for this notice are negligible. There
are no mailing or printing costs incurred by the Federal Reserve System in administering this notice.

6

Total cost to the public was estimated using the following formula. Percent of staff time, multiplied by annual burden
hours, multiplied by hourly rate: 25% Administrative or Junior Analyst @ $25, 40% Managerial or Technical @ $55,
25% Senior Management @ $100, and 10% Legal Counsel @ $144. Hourly rate estimates for each occupational group
are averages using data from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages 2007,
www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the BLS Occupational Classification System,
www.bls.gov/soc/.

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