FR4001_20160126_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. 7100-0097). 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 131 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 C.F.R. 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
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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 C.F.R. § 211).

to serve as the qualifying standard for when expedited treatment is appropriate. Eligible bank is
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 the Federal Reserve.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.
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 the Federal Reserve 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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Unless notification is waived, the bank shall notify the appropriate Federal Reserve Bank no later
than 30 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 section 9(3) of the Federal Reserve Act
requires that state member banks obtain prior Federal Reserve approval before establishing a
domestic branch (12 U.S.C. § 321). This requirement is implemented by the provisions of
section 208.6 of the Board’s Regulation H (12 C.F.R. § 208.6). The individual respondent
information in the notification is not considered confidential.
Consultation Outside the Agency
On October 22, 2015, the Federal Reserve published a notice in the Federal Register (80
FR 64000) requesting public comment for 60 days on the extension, without revision, of
FR 4001. The comment period for this notice expired on December 21, 2015. The Federal
Reserve did not receive any comments. On December 29, 2015, the Federal Reserve published a
final notice in the Federal Register (80 FR 81324) 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 2014. 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 131 hours, which is less than 1 percent of the total Federal Reserve
System paperwork 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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FR 4001
Expedited
Nonexpedited

Number of
respondents6

Annual
frequency

60
101

1
1

Total

Estimated
average hours
per response
0.5
1.0

Estimated
annual burden
hours
30
101
131

The total cost to the public is estimated to be $6,779.7
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

Of the respondents, 14 expedited and 28 nonexpedited are small entities as defined by the Small Business
Administration (i.e., entities with less than $550 million in total assets) www.sba.gov/content/table-small-businesssize-standards.
7
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2014, published March 25, 2015, 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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