FR4031.20100420.omb

Supporting Statement for the
Notice of Branch Closure
(FR 4031; OMB No. 7100-0264)
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 Notice of Branch Closure (FR 4031; OMB No. 7100-0264). The mandatory reporting,
recordkeeping, and disclosure requirements regarding the closing of any branch of an insured
depository institution are imposed by section 228 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA). There is no reporting form associated with the reporting
portion of this information collection; state member banks (SMBs) notify the Federal Reserve by
letter prior to closing a branch. The Federal Reserve uses the information to fulfill its statutory
obligation to supervise state member banks. The current annual burden for the FR 4031 is
estimated to be 291 hours for 80 respondents.
Background and Justification
Section 228 of the FDICIA added a new section to the Federal Deposit Insurance Act (FDI
Act) that imposed reporting, recordkeeping, and disclosure requirements on insured depository
institutions that propose to close any branch (section 42; 12 U.S.C. 1831r-1). The provision
became effective on December 19, 1991.
On September 21, 1993, the federal banking agencies1 issued a joint final policy statement
to provide guidance to institutions in complying with section 42 of the FDI Act (58 FR 49083).
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.
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 in two ways, both relating to proposed closings by
interstate banks (banks that maintain branches in more than one state) of branches in low- or
moderate-income areas. First, the amendment provides a new notice procedure. Second, the
amendment requires the appropriate federal banking agency to convene a meeting of
organizations, depository institutions, agency representatives, and other interested persons to
discuss the feasibility of obtaining adequate alternative facilities and service if a person from the
affected area requests such a meeting and if 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) (EGRPRA). The EGRPRA 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
1

The term federal banking agencies means: the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board
(Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS).

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)).
Effective June 29, 1999, the federal banking agencies revised the 1993 joint policy statement
to reflect the changes to section 42 of the FDI Act made by the Interstate Act and EGRPRA. 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
Federal banking agencies also clarified that main offices, remote service facilities, loan
production offices, and insured branches of foreign banks are not branches for purposes of
section 42.
Description of Information Collection
There are several requirements associated with this information collection. Each insured
financial institution must adopt a policy regarding the closing of its branches. When a branch is
scheduled for closing, the insured financial institution must notify both its regulator and its
customers. The agencies examine institutions for compliance with these requirements and may
make adverse examination findings or take enforcement action for failure to comply.
SMBs report any proposed branch closing to their local Reserve Bank no later than 90 days
prior to the date of the proposed branch closing. The notification must include the following
information:
 the 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.
The SMB must notify branch customers of the closing by including a notice in any regular
account statement or in a separate mailing and by posting a notice in the branch to be closed.
The 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. The
information on the proposed date of the branch closing and alternative sites for service must also
be posted in the branch to be closed. If the institution is an interstate bank and the branch is
located in a low- or moderate-income area, the customer notice must also 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.
Time Schedule for Information Collection
At least ninety days prior to the proposed date of the branch closure, state member banks
must advise their local Reserve Banks of the closing and send a notice to the branch's customers.
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At least thirty days before the closing date, the bank must post a notice in the branch to be
closed. Customer notices and the institution's branch closing policy are not submitted to the
regulator.

Legal Status
The Board's Legal Division has determined that Section 42(a)(1) of the FDI Act
(12 U.S.C. 1831r-l(a)(1)) authorizes the Board to require this information collection. The
reporting requirements associated with the FR 4031 are mandatory. Individual respondent data
are not considered confidential; however, an SMB may request confidential treatment pursuant
to exemption b (4) of the Freedom of Information Act. 5 U.S.C. 552 (b)(4).
Estimate of Respondent Burden
An SMB incurs reporting and third-party-disclosure burden each time it closes a branch.
The recordkeeping burden for adopting a branch closing policy is a one-time burden incurred by
an institution when it opens its first branch. Based on the number of notifications received from
2007 through 2009, the Federal Reserve estimates that each year on average 70 SMBs are
affected by the reporting and third-party-disclosure requirements and an additional 10 SMBs are
affected by the recordkeeping requirements. The following table shows the total annual burden
for this information collection is estimated to be 291 hours, which represents less than 1 percent
of the total Federal Reserve System paperwork burden.

Reporting burden:
Regulatory notice
Third party disclosure burden2:
Customer mailing
Posted notice
Recordkeeping burden:
Adoption of policy

Number
of
respondents

Estimated
annual
frequency

Estimated
average
hours per
response

70

1

2.00

140

70
70

1
1

0.75
0.25

53
18

10

1

8.00

80

Total

Estimated
annual
burden hours

291

The total cost to the public is estimated to be $17,940.3
2.

The estimated annual burden has been rounded up to the nearest whole number in order to accommodate OMB’s online
information collection inventory application.
3.
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual burden hours,
multiplied by hourly rate (30% Administrative or Junior Analyst @ $25, 45% Managerial or Technical @ $55, 15% 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,
http://www.bls.gov/news.release/ocwage.nr0.htm Occupations are defined using the BLS Occupational Classification System,
http://www.bls.gov/soc/.

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Estimate of Cost to the Federal Reserve System
Annual costs associated with this notice are negligible. Because there is no standard
reporting form, there are no printing or distribution costs.
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Consultation Outside the Agency and Discussion of Public Comments
On January 29, 2010, the Federal Reserve published a notice in the Federal Register (75
FR 4819) requesting public comment for 60 days on the extension, without revision, on Notice
of Branch Closure. The comment period for this notice expired on March 30, 2010. The Federal
Reserve did not receive any comments. On April 9, 2010, the Federal Reserve published a final
notice in the Federal Register (75 FR 18208).

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