Our bank branches are located in the Federal Reserve's Memphis check processing region, but we are now sending all items via FedForward image exchange to St. Louis. Would this use of FedForward for St. Louis processing require any revision to our list of local routing numbers?

No. Your local bank definition is based strictly on the location of your branches (in the Memphis region), regardless of where you send items for processing.

Thanks for your response John. That is what I thought, but wanted to be sure.

Just to clarify the response above --

Think about what customers' expectations are when trying to figure out what "local bank" means under Regulation CC. Customers aren't usually aware of any special arrangements you have for clearing items. If the bank branch receiving a deposit is in Vermont, for example, your customer would have reason to believe that "local" means somewhere close to Vermont. As a matter of fact, a lot of customers (and bankers, for that matter) think of "local" as "in-state" (which is definitely incorrect). But suppose your Vermont branch is part of a bank that clears out-of-state checks with a correspondent bank in Tennessee. Should your customer expect that Tennessee banks become "local" to them? No, of course not.

So, remember four things when defining "local bank" for your availability tables or Regulation CC disclosures:

1. "Local" is based on the FRB check processing region in which the branch of deposit is located (not the bank's back office operation).
2. At a minimum, the list of paying bank routing numbers that you must treat as local has to include all of the routing numbers found in Appendix A to Regulation CC, listed under the check processing region office identified with your branch of deposit.
3. If you have branch locations in two or more FRB check processing regions, you may need multiple definitions of "local bank" (one for each check processing region), or you may combine lists and give customers "local bank" availability for checks from a larger, combined geographic area.
4. You can always expand the list of local routing numbers to include those you don't HAVE to, but you cannot omit numbers from the Appendix A list. For example, a bank in Burlington, VT, must include all New England routing numbers in its local list (because all of New England is included in the Windsor Locks RCPC). But Burlington is close to Upstate New York, and could decide to add part of that region to its list of local routing numbers, in order to compete with other banks.

Thanks, John. I had a similar question to Rob K and appreciate the time you put in to help the rest of us.

I just read the Fed's latest announcement on streamlining their check processing operations. It looks like within the next four years only five centers will be "full service" and a number will be doing various combinations of image-capture and substitute check printing. It will be very interesting to see whether the Reg. CC Appendix A list shrinks to only five regions. Can you imagine a "local" area that takes in everything west of the Mississippi?