The Federal Deposit Insurance Corporation (FDIC) has proposed significant revisions to its application procedures for banks seeking to establish a branch or relocate a main office or branch, marking a major shift in regulatory expectations for routine transactions.
In its recent proposed rule, the FDIC aims to simplify requirements under 12 CFR Part 303, particularly Subpart C, by eliminating certain public notice and comment requirements, streamlining application content, and revising processing timeframes.
The proposed rule would apply to state-chartered non-member banks, including industrial loan companies, state savings associations, and insured branches of foreign banks. Comments are due September 16, 2025.
Key Takeaways
- The proposal’s streamlined procedures would generally support more branches and deals. The proposal would remove newspaper publication and various public comment requirements, and introduce short, predictable timelines, including applications being deemed approved for eligible institutions after a certain amount of time without any further action by the FDIC. The proposal would lower the risk of approvals stalling for branch openings, relocations, and consolidations, and should make transaction timelines more reliable.
- The proposal would likely reduce compliance burdens and better reflect modern banking and customer preferences. Clarifying that remote service units (RSUs) (e.g., ATMs that include other functions) are not “branches” would avoid unnecessary filings, and the removal of non-statutory newspaper publication requirements would streamline routine applications.
- The changes would harmonize certain aspects of the FDIC’s branch regulations with OCC regulations, especially concerning RSUs, reflecting modern banking practices as well as continued coordination among the federal banking agencies. If states and the FDIC take the same approach that the OCC has taken with regard to RSUs, the proposal could open the door to more creative solutions for fintech-bank partnerships.
Read more by Max Bonici, Stephen T. Gannon, and Paige Knight at Davis Wright Tremaine, LLP