Topic: Branching Rules
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We are an Illinois-chartered bank, and our primary federal regulator is the FDIC. We recently opened a new branch in Illinois with all the necessary approvals. Do we need to send a notice of opening to the FDIC and Illinois Department of Financial and Professional Regulation (IDFPR)’s Division of Banking?
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No, we do not believe you need to send any additional notices to the FDIC or IDFPR’s Division of Banking if you have already received all necessary approvals to establish the branch, unless your bank is required to file a notice with the IDFPR’s Division of Banking before beginning operations at a new branch due…
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We are planning on establishing a “virtual” branch where we will take online loan applications and allow individuals to submit applications to open deposit accounts. Accounts opened at the virtual branch will be transactional accounts capable of accepting deposits and making loan payments. All accounts opened online will be associated with the virtual branch, whereas all other accounts opened at our physical branches are associated with the branch at which they were opened. Does this “virtual” branch fit the definition of a “branch” under the FDIC rules and regulations pertaining to establishing a domestic branch, and do we need to apply for approval pursuant to the Federal Deposit Insurance Act to open this branch? Also, do we need to file an FR Y-10 report for changes in organizational structure?
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Whether the “virtual branch” you described would be considered a branch by the FDIC depends on whether the virtual branch is performing an online banking function, which would not be considered a branch, or performing the functions of an interactive teller machine (ITM), which would be considered a branch. The Federal Deposit Insurance Act requires…
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We are acquiring a bank and would like to know if we are required to provide the bank with our privacy policy as part of the merger booklet?
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In our view, reviewing the other party’s privacy policies in a merger or acquisition should be an integral part of each party’s respective due diligence process. The representations made in both organizations’ privacy policies remain effective after the acquisition, and the successor entity may need to reconcile differences between the predecessor banks’ terms and promises.…
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We have a Loan Production Office in Florida, but we operate our business out of Illinois. Are there any special considerations we need to be aware of regarding the mortgage license and NMLS registrations for bank employees who are Florida-based mortgage loan originators?
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No, we are not aware of any special considerations regarding your bank’s Florida-based mortgage loan originators, provided they are registered with the Nationwide Mortgage Licensing System (NMLS). In Florida, like in Illinois and every other state, a mortgage loan originator who is a bank employee and is registered with the NMLS is not required to…
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We are an Illinois state-chartered bank and have been asked if we can provide services to customers who are residents of a nursing home. The Illinois Banking Act indicates that we can provide such services on a “limited basis.” Is this a limitation on the type of services we can provide or how often we can provide the services? Are there any other restrictions that we need to consider if we were to handle deposit accounts and check cashing at a nursing home or elder care facility?
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Section 44.1 of the Illinois Banking Act permits state-chartered banks to “conduct a banking business at the location” of a nursing home or retirement home without that location being deemed a branch. In our view, the primary significance of this decades-old language is that it clarified that banks could provide such services without running up…
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We are a state-charted bank. Do we need to notify the Illinois Department of Financial and Professional Regulation (IDFPR) if we want to establish a subsidiary? We want to form the subsidiary as part of an investment project that generates tax credits.
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Yes, as a state-chartered bank subject to the Illinois Banking Act, you must provide written notice to the Secretary of the IDFPR 60 days before your new subsidiary commences business (or prior to acquiring stock in a corporation that already has commenced business). After receiving the notice, the Secretary may waive or reduce the balance…
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We opened two loan deposit offices (LPOs) this year. Should we include them in our CRA Public File as “branches opened”? The LPOs have not been authorized as branches.
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No, we do not believe that you should include the new LPOs with your list of new branches in your CRA public file. An LPO is not considered a branch under the CRA unless it has been authorized as a branch through the regulatory approval process. In addition, Regulation BB indicates that including information about…
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Besides the Interagency Statement on Branch Names from May 1, 1998, is there any other guidance regarding how a loan production office (LPO) is identified for advertising purposes? Our marketing department would like to refer to it as a “Loan Center” rather than “Loan Production Office.”
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In addition to the Interagency Statement on Branch Names that you mention, there is a short FDIC Advisory Opinion on the use of trade names in which the FDIC warns a bank to clarify on its website that a particular bank division is part of that same bank. This opinion also refers to the Interagency…
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We have a loan production office (LPO) in Illinois. Can we receive mail at an LPO, even if customers inadvertently mail loan payments there? What activities should we avoid?
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Under the OCC’s standards, receiving misdirected loan payments in the mail will not cause the LPO to be considered a branch. Also, while the IDFPR has not issued written guidance on this issue, we confirmed with an IDFPR attorney that it would not view occasional misdirected loan payments as causing an LPO to be treated…
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At our corporate headquarters, which is not our main office, we accept loan applications (commercial and/or consumer) and loan payments, and we also perform loan modifications. What types of signage are required at the corporate headquarters?
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There are signage requirements in both Illinois and federal laws, and whether these signs or notices are required depends on the activities performed at your corporate headquarters. In addition, some of these requirements apply only if the corporate headquarters is your “main office” or a “branch.” While you have told us that the corporate headquarters…