We believe that before closing a branch, you must notify your customers and primary federal regulator (the FDIC). Additionally, we recommend reviewing your policies for branch closings and checking your account agreements for additional notification requirements.

Under the Federal Deposit Insurance Act, an insured depository institution proposing to close a branch must submit notice to their primary federal regulator at least ninety days prior to the proposed closing. This notice must include a detailed statement of the reasons for the decision to close and statistical or other information to support that reasoning.

Insured depository institutions must also notify their customers of the closing in at least one regular account statement or in a separate mailing at least ninety days before closing the branch, as well as by posting a notice in the branch that will be closing for at least thirty days before closing. Note that these notices must include additional information in the case of interstate banks closing branches in a low- or moderate-income area. We also recommend reviewing your policies and any relevant account agreements for any additional customer notice requirements.

If your bank is subject to the Community Reinvestment Act’s (CRA) service performance test, a branch closing can raise issues in some instances. One factor in a bank’s CRA service performance rating is whether “its record of opening and closing branches” has adversely affected its delivery systems, “particularly in low- and moderate-income geographies and to low- and moderate-income individuals.” Consequently, if the CRA service test applies to your bank, you may wish to document your reasons for closing the branch and your customer outreach efforts, although you are not required to do so.

The IBA recently held a Compliance Connection Call with the Federal Reserve Bank of St. Louis on the topic of “Redlining, Branch Closings and Other Fair Lending and CRA Concerns.” The presentation slides and notes on the Q&A session are linked to in the resources below.

For resources related to our guidance, please see:

• Federal Deposit Insurance Act, 12 USC 1831r-1(a)(1) (“An insured depository institution which proposes to close any branch shall submit a notice of the proposed closing to the appropriate Federal banking agency not later than the first day of the 90-day period ending on the date proposed for the closing.”)

• Federal Deposit Insurance Act, 12 USC 1831r-1(a)(2) (“A notice under paragraph (1) shall include (A) a detailed statement of the reasons for the decision to close the branch; and (B) statistical or other information in support of such reasons.”)

• Federal Deposit Insurance Act, 12 USC 1831r-1(b)(1) (“An insured depository institution which proposes to close a branch shall provide notice of the proposed closing to its customers.”)

• Federal Deposit Insurance Act, 12 USC 1831r-1(b)(2) (“Notice under paragraph (1) shall consist of
   
  • (A) posting of a notice in a conspicuous manner on the premises of the branch proposed to be closed during not less than the 30-day period ending on the date proposed for that closing; and
     
  • (B) inclusion of a notice in

    • (i) at least one of any regular account statements mailed to customers of the branch proposed to be closed, or
       
    • (ii) in a separate mailing,
       
  • by not later than the beginning of the 90-day period ending on the date proposed for that closing.”)
     
• Federal Deposit Insurance Act, 12 USC 1831r-1(d) (“In the case of an interstate bank which proposes to close any branch in a low- or moderate-income area, the notice required under subsection (b)(2) shall contain the mailing address of the appropriate Federal banking agency and a statement that comments on the proposed closing of such branch may be mailed to such agency.”)

• Federal Deposit Insurance Act, 12 USC 1831r-1(c) (“Each insured depository institution shall adopt policies for closings of branches of the institution.”)

• FDIC, Consumer Compliance Examination Handbook, Section 42 of the Federal Deposit Insurance (FDI) Act—Branch Closings (June 2013)

• FDIC Community Reinvestment Act Regulations, Appendix A to Part 345 – Ratings, Part (b)(3) (“The FDIC rates a bank’s service performance ‘outstanding’ if, in general, the bank demonstrates: . . . To the extent changes have been made, its record of opening and closing branches has improved the accessibility of its delivery systems, particularly in low- or moderate-income geographies or to low- or moderate-income individuals; . . .”)

• Redlining, Branch Closings and Other Fair Lending and CRA Concerns, Presentation Slides (October 5, 2021)

• Redlining, Branch Closings and Other Fair Lending and CRA Concerns, Q&A Session (October 5, 2021)