Branch Closing Flashcards
Which of the following correctly reflects the federal regulator notification requirements for closing a branch?
A. No later than 30 days before closing a full-service branch
B. No later than 60 days before closing an insured branch of a foreign bank
C. No later than 90 days before closing a full-service branch
D. No later than 90 days before closing a loan production office
C. No later than 90 days before closing a full-service branch
Notice to customers:
- At least 90 days before the intended closing date, must mail a notice of proposed closing to all the customers of the branch in question. Include date of closing and location of nearest other branch
- At least 30 days before close, post a notice in the closing branch in a conspicuous manner
Notice to regulator
- Must be delivered at least 90 days before intended closing date
- Detailed statement of reasons for the closing and statistical or other information in support of those reasons
Must have a policy on branch closings
On February 1, the bank board of directors approved the closing of one of its branches effective April 1 due to its continued unprofitability. Customers of the bank will be notified of the planned closing. The bank is at risk of violating which of the following regulatory requirements?
A. Adverse action notification
B. Analysis of community impact
C. Timely notice to the appropriate federal regulatory agency
D. Posted notification of closing on the premises of the branch to be closed
C. Timely notice to the appropriate federal regulatory agency
Under the Branch Closing requirements, banks must notify their primary federal regulator of the closing at least 90 days before the scheduled date of closing. In this instance, the bank would only provide 60 days (if that) of the closing. Thus, they would be in violation of the timely notice requirement. The Branch Closing requirements have no adverse action notification requirement. An analysis of the community impact is necessary, but the bank would not be in violation of the rules in this scenario. The bank is also required to notify impacted customers of the impending closing, but this requires only 30 days advance notice, and at this point the bank is not inside that timing requirement.
Your bank is considering closing a branch office. You should review which of the following FIRST?
A. Percentage of out-of-area deposits
B. Ratio of loans in the assessment area to total loans
C. Bank’s branch closing policy and procedures
D. How much time remains on the building lease
C. Bank’s branch closing policy and procedures
Whenever a bank decides to close a branch, it must comply with the Branch Closing Policy Statement rules. Thus, the first thing to do in this situation is to refer to the policy and procedures to inform of the process. Examining out-of-area deposits and the ratio of loans in the bank’s assessment area, while important to determine whether the bank may have an issue with the closing, are not the first things to review. And how much time remaining on the building lease is irrelevant in this situation.
Are banks required to have a policy on branch closures?
Yes, each FDIC-insured bank with 1 or more branches must adopt a policy on branch closings.
Big Nationwide Bank has decided to close one of its smaller branches in Texas. A community association from the small town where the branch is located is not pleased with the decision because Big Nationwide’s branch is the only financial institution in the small town. The community group complains to the federal agency that regulates Big Nationwide. What must Big Nationwide do in light of this protest against its decision to close the branch?
A. Re-post the notice and wait an additional 90 days
B. Send the federal agency a detailed statistical analysis that is consistent with its branch closing policy and that proves why closing the branch is economically necessary
C. Meet with the community group, explain their reasoning, and help the group find some alternative financial services
D. Nothing is required
D. Nothing is required
As long as the bank complies with the notice requirements, nothing else is required of it to close the branch. However, the regulatory agency may convene a public meeting to hear from interested parties about alternatives to closing the branch.
A bank is planning to sell eight branches. The compliance officer participates on a bank committee to oversee the process. What should be the compliance officer’s PRIMARY concern?
A. That the bank’s revenues will not be affected severely
B. That the branches are closed in accordance with bank policy
C. That customers of the branches will continue to have access to banking services
D. That the bank’s confidential information is returned to the main office
B. That the branches are closed in accordance with bank policy
Although all of the reasons given are important considerations at some time when deciding to close branches, the primary compliance concern is whether the branches are closed in accordance with the branch closing policy. The other considerations such as whether the customers will have access to banking services and how the bank’s revenues will be affected should be considerations before deciding to close the branches. Once the decision is made, the most important concern is compliance with the branch closing policy.
In which of the following cases is a branch closing notice required?
A. Bank A decides to stop cashing checks for noncustomers at its neighborhood branch.
B. Bank B and Bank C merge. Each has a branch in the near-town neighborhood. The merged organization is closing the branch that was formerly Bank B and merging it into the branch that was formerly Bank C.
C. Bank D is closing its drive-through facilities in its near-town neighborhood branch, although its regular facility is remaining.
D. Bank E is closing its near-town facility because of its outmoded building and equipment. Bank E has commissioned a study from a local development center to determine if it is feasible to re-open its branch in the future.
D. Bank E is closing its near-town facility because of its outmoded building and equipment. Bank E has commissioned a study from a local development center to determine if it is feasible to re-open its branch in the future.
In this case the only instance where the branch will be closed without leaving a fully functioning branch in its place is (D).
Which of the following must be included in a branch closing notice to a bank’s regulatory agency?
A. Comments from customers who oppose the closing
B. Detailed statement of the reasons for the closing
C. Copy of the notice to be sent to affected customers
D. Copy of board minutes reflecting the decision to close
B. Detailed statement of the reasons for the closing
In which of the following situations does a bank need to post a branch closing notice?
A. A bank closes a branch temporarily because of heavy hurricane damage.
B. A bank closes a branch in a suburban neighborhood because business has not adequately developed there.
C. A bank decides not to exercise its option to purchase a branch it has been temporarily running for the FDIC as a part of a purchase of a failed institution.
D. A bank closes a branch and moves it 850 feet down the street
B. A bank closes a branch in a suburban neighborhood because business has not adequately developed there.
In which of the following cases would First National Bank be required to give a branch closing notice?
A. Removing its ATM from the local grocery store
B. Opening a deposit-taking facility in a kiosk during a college fair for one weekend
C. Moving its central branch across the street
D. Closing its near-town neighborhood branch
D. Closing its near-town neighborhood branch
ATMs are not considered branches under the law. Temporary branch facilities are also not covered. The relocation of a branch is not considered to be a branch closing.
Second National has decided to close one of its less profitable neighborhood branches. Which of the following actions is NOT required of the bank under federal law?
A. Publish a notice of the closing in the local newspaper
B. Send a notice to its regulatory agency
C. Send notices to the branch customers
D. Post a notice at the branch
A. Publish a notice of the closing in the local newspaper
A bank has a stand-alone ATM in a high crime area. Due to concerns for the safety of individuals using the ATM, management decides to close it. According to branch closing policy statements issued by federal regulators, which of the following actions should the bank take?
A. No action is required because an ATM is not, by definition, a branch.
B. Post a notice at the ATM at least 30 days before the intended closing date.
C. Notify the bank’s federal regulatory agency at least 90 days before the intended closing date.
D. Mail a notice to all customers at least 90 days before the intended closing date.
A. No action is required because an ATM is not, by definition, a branch.
All institutions with at least __ branch must adopt written policies for branch closing. Policies must include factors for determining which branch to close, which customers to notify in such event and procedures for providing required notices.
One
