served.” Considering this, it seems evaluating the proximity of any intended moves may prove valuable in understanding the application of the branch closing rules in varying situations. Additionally, in general, there’s not a specific notice requirement for customers or regulators for just a temporary or emergency closing under the federal regulations. Nonetheless, it’s typically considered an industry best practice to post information pertaining to the temporary closure on the front door or in another location where the public can view it, even if only for informational purposes and general customer service considerations. The Joint Policy Statement outlines an exception from the branch closing requirement for temporary closures so long as the bank “plans to restore branching services at the site in a timely manner.” Moreover, if a bank is simply reducing the hours of operation for a branch, but not closing the branch entirely, while notice is still generally recommended and may be required under other federal regulations or specific Federal regulator guidelines, this also tends to not be considered the “closing” of a branch which triggers the branch closing notification requirements of Section 42. It is important to clarify that, while the reduction of a branch’s hours will not generally be considered the “closing” of a branch, in certain situations, the reduction of the services offered by a branch may constitute a branch closure. Namely, as the Joint Policy Statement states, “[w]here, after a reduction in services, the resulting facility no longer qualifies as a branch, section 42 would apply.” The Joint Policy Statement also offers an example of when a reduction in services may trigger the notice requirements, suggesting that they would generally apply if a bank were to “replace a traditional brick-and-mortar branch with an ATM.” As following this type of service change, an ATM would no longer qualify as a “branch bank, branch office, additional office, or any branch place of business ... at which deposits are received or checks paid or money lent” and would effectively have the same consequence for consumers as a branch closure would. Understanding the nuances of branch closing regulations is essential for banks to remain compliant and maintain customer trust. While the guidelines may seem straightforward, there are complexities that require careful consideration, and branch closings can implicate rules beyond just those contained in Section 42, such as the Community Reinvestment Act as one example. Therefore, it’s crucial for banks to proactively review the federal and state-specific branch closing rules with legal and compliance experts when planning any changes to branch operations. This ensures that all necessary notifications are provided, customer disruptions are minimized and the bank remains in compliance with all applicable regulations. Remember, transparency and clear communication are key to maintaining positive relationships with both customers and regulators. Erin serves as associate general counsel for Compliance Alliance. Erin graduated magna cum laude from Loyola University New Orleans with a bachelor’s degree in psychology and a bachelor’s degree in English. She earned her Juris Doctor from Saint Louis University School of Law. While obtaining her law degree, Erin geared her studies towards business and financial subjects within the law, such as transactional drafting, bankruptcy and securities trading. Diversify with loan yields up to 9% Expand your loan portfolio profitability BHG Financial loans provide banks with rates up to 9%, premier credit quality, diversification benefits, lower expenses, and more. With average borrower incomes of $275K and 748 FICOs, these loans will look great on your books. Plus, no origination cost to your bank! Talk to us today about adding strong-performing assets to your portfolio. Keith Gruebele 954.263.6399 kgruebele@bhg-inc.com Contact your representative: OR BHG is an endorsed vendor Scan to learn more at BHGLoanHub.com Earn up to 9% Utah Banker 21
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