From time to time, banks choose to close branch offices for a variety of reasons, such as merger, consolidation, economics, or new offices being built nearby. When a bank branch is closed, there are strict guidelines that must be followed, as outlined in the Federal Deposit Insurance Act.
Federal Reserve Notification
At least 90 days prior to the proposed closure of a bank branch, notification must be given to the Federal Reserve. That notification shall include the name of the branch office being closed; the date when closing is planned; why the branch office is being closed; and any other information the bank thinks is pertinent as to why the branch should be closed.
Customers with accounts at branch offices that are to be closed are to be notified as well. Such notification, as with the Federal Reserve, must be done a minimum of 90 days before the proposed closure. The notification is to be sent out in at least one of a customer’s monthly statements and provide the date of closure, other locations where service is available, or a telephone number given where customers can get information on alternative banking locations. Notices also should be placed in a conspicuous manner in the branch office closing no less than 30 days before closure.
If a bank proposes to close a branch in a low to moderate income area, the customer notification shall include the Federal Reserve’s address. Anybody living in such an area may then write to the Federal Reserve with questions or comments on the proposed closure. If a letter is determined to have substance, bank and federal officials will convene and work to ensure that adequate faculties and services still will be available in such areas following the closing.
All banks are required to have policies for closing branches before any closure takes place. The policy must outline how the bank determines it will close branch offices, and the procedures followed to issue the notifications.
Any bank that fails to follow the FDIC procedures for closing branch offices could find itself facing an adverse finding in a compliance evaluation, with the option of enforcement steps being taken.