Banks may extend their geographic reach by merging with another bank, by acquiring branches from another bank or by opening a de novo branch.  Individual banks can only open a de novo branch in another state if the laws of that state permit it  12 USC 36(g)

In general, mergers are the principle method by which banks branch into another state

The route chosen by a particular bank will depend not only upon regulatory law, but also upon competitive and financial considerations

The regulatory process entailed depends upon a number of factors

There are additional considerations when the proposed target is a so-called failing bank.  This topic is covered within the general topic of Liquidations.  See 12 USC 1828(c)(3)

A branch (of a national bank) was defined in the McFadden Act as an "office of the bank at which deposits are received, or checks paid or money lent."  With Riegle-Neal I, circularity was introduced, but the basic wording remained unchanged. 12 USC 36(j)

A major commonality of bank acquisitions is that all mergers or branch acquisitions of insured depository institutions are subject to prior approval by the primary federal regulatory of the resulting institution.  Bank Merger Act , 12 USC 1828(c)

Criteria considered by the primary federal regulator include

For national banks and federal savings associations, analysis of an interstate merger or acquisition application involves analysis only of federal law

Similarly, for state banks and savings associations seeking intrastate merger or acquisition approval, analysis is primarily based upon state law

• Note, however, that even in this case approval of the primary federal regulator is required.  12 USC 1828(c)

If a bank holding company is the party making the acquisition, approval is required from the FRB

If a savings and loan holding company is the acquirer, OTS approval is required

The same basic issues are examined in individual bank vs bank holding company cases

Adding FRB approval to the requirements simply adds an additional level of complexity to the approval process

Laws recently enacted in some states that prohibit or restrict branching by out-of-state industrial loan companies into the enacting state have the effect of defeating those states laws permitting interstate de novo branching into those states by banks generally. The result is that under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, federal regulators cannot approve the establishment of de novo branches in such states by any out-of-state bank. OCC Interpretive Letter No. 1068  7.28.06

Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994  Riegle-Neal I

All four federal regulators have adopted a "Joint Policy Statement on Branch Closing Notices and Policies" to implement section 106

See the "Branch Closings" booklet of the Comptroller's Licensing Manual for details and procedures regarding branch closings

Section 106 of Riegle-Neal (12 USC §1831r-1) requires insured depository institutions to submit 90 days advanced notice of any proposed branch closing to its federal regulators and to customers

• The statute does not, however, authorize the OCC to actually prohibit a national bank from closing a branch
• See also "Branch Closings"

See the "Branches and Relocations" booklet of the Comptroller's Licensing Manual for details and procedures for a national bank to establish or relocate a branch or to relocate its main office

See the "Branching Activities" section of the OTS Applications Processing Handbook

12 CFR Part 5  Rules, policies, and procedures for 
                          corporate activities

12 CFR Part 25  Community Reinvestment Act and
                             Interstate Deposit Production Regs

SEC_CODE_REF_0090001192884

OCC Interpretations - Specific activities

Membership of state banking inst in the FRS   Reg H

• 208.6 -  Establishment and maintenance of branches
• 208.7 -  Prohibition against use of interstate branches
              primarily for deposit production

12 CFR Part 303  Filing procedures

12 CFR Part 369  Prohibition against use of interstate
                               branches primarily for deposit
                               production

12 CFR Part 347  International banking

12 CFR 545  Federal Savings Associations - Operations

• 545.92  Branch offices
• 545.93  Application and notice requirements for branch and
             home offices
• 545.95  What processing procedures apply to my home or
             branch office application and notices?
• 545.96  Agency office

12 CFR Part 741  Requirements for Insurance

• Subpart A - Regulations that apply to both Federal Credit
                   Unions and Federally Insured State-Chartered
                   Credit Unions and that are not codified
                   elsewhere in NCUA's regulations

• 741.11  Foreign branching