Change in Branch Hours

Issue/Inquiry

The Bank, which maintains branches in more than one state, is planning to close one of its branches one hour earlier on some weekdays and to change its hours on Saturdays. Is the Bank required to notify customers of a change or reduction in branch hours? If it is, does the notification have to be in a certain form? For example, would a branch or website notice suffice, or would the Bank need to notify customers by mail or a notice with the periodic statement?

Response Summary

A change in hours for a branch would not be considered a branch closing under Federal regulations and would not require advance notice, assuming that it continued to operate as a branch. The Bank should also refer to the laws of the state in which the branch is located for any other restrictions on such changes. As a matter of best practice, however, the Bank should document the change in its Board minutes and provide prior notice to its customers.

Response Detail

Federal regulations require an FDIC-insured depository institution to notify the appropriate federal banking agency and its customers before a proposed closing of a branch office. There are particular requirements for the notice made by an interstate bank, such as the Bank, which maintains branches in more than one state. However, changes of services at a branch are not considered a branch closing, provided that the remaining facility qualifies as a branch. FDIC – 5000, Interagency Statement Concerning Branch Closing Notices and Policies.

The statutory definition of “branch” includes any bank facility at which one or more of the following activities are carried out: receiving deposits, paying checks, or lending money. These activities have been collectively referred to as the “core banking functions.” 12 U.S.C. §36(j); FDIC FIL 97-6.

In this case, since the branch office will be closing one hour earlier on some weekdays and changing banking hours on Saturdays, but maintaining all of its other services, these changes would not constitute a branch closing, and no notice would be required.

In matters concerning state law, the Bank should consult with outside legal counsel to determine whether there are any other restrictions.

As a matter of best practice, this change should be reflected in the minutes of the Board of Directors, so that it will be noted by the bank examiners. In particular, a bank subject to the community development test, such as a large or intermediate small bank, would want to document the decision to make the change in hours and demonstrate how it would affect the bank’s customers. 12 CFR §228.26(a),(c)(4).

For the convenience of its customers, the change should be posted in the main office and at the affected branch office. Placing the notice on the Bank’s website would also prove useful. An adequate notice period would be one month prior to the hour changes, as customers often visit branches, at least, once a month. This may vary, however, according to each bank and how often its customers visit its branches.

The Bank’s CRA Public File must contain a list of services offered at its branch offices, including the hours of operation. The Public File will have to be updated to reflect the change in branch hours by April 1^st of the following year. 12 CFR §228.42(a)(5),(e).

This entry was posted on Monday, August 15th, 2016 at 3:00 pm.