FR4031_20130410_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 SMBs. The current annual burden for the FR 4031 is estimated to be 224
hours for 73 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 moderateincome 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
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
1

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

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 Reserve Bank and a statement that comments on the proposed branch closing
may be mailed to that Reserve Bank.
Time Schedule for Information Collection
At least 90 days prior to the proposed date of the branch closure, an SMB must advise its local
Reserve Bank of the closing and send a notice to the branch's customers. At least 30 days before
the closing date, the SMB 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.

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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 2010
through 2012, the Federal Reserve estimates that each year, on average 72 SMBs are affected by
the reporting and third-party-disclosure requirements and one additional SMB is affected by the
recordkeeping requirements. The following table shows the total annual burden for this
information collection is estimated to be 224 hours, which represents less than 1 percent of the total
paperwork burden for the Federal Reserve System.

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

Estimated
Number
of
respondents2

Estimated
annual
frequency

Estimated
average
hours per
response

72

1

2.00

144

72
72

1
1

0.75
0.25

54
18

1

1

8.00

8

73

Estimated
annual
burden hours

224

The total cost to the public is estimated to be $10,046.3

2.

Of these respondents, 24 are small entities as defined by the Small Business Administration (i.e., entities with
less than $175 million in total assets) www.sba.gov/content/table-small-business-size-standards.
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% Office & Administrative Support @ $17, 45% Financial Managers @ $52, 15%
Legal Counsel @ $55, and 10% Chief Executives @ $81). Hourly rate for each occupational group are the median
hourly wages (rounded up) from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
2011, 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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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 22, 2013, the Federal Reserve published a notice in the Federal Register (78 FR
4410) 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 25, 2013. The Federal
Reserve did not receive any comments. On April 10, 2013, the Federal Reserve published a final
notice in the Federal Register (78 FR 21366).

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