Our bank has branches in more than one state, but those branches were all serviced by the same Federal Reserve Bank and we considered their routing prefixes as local. Now, routing prefixes of our branches in the other state are being moved to another Federal Reserve Bank. Do we still consider our other state branches as local even though their items will be process through another Federal Reserve Bank? Any help will be appreciated.

What is "local" vs. "nonlocal" is determined at the level of the check processing region, not the Federal Reserve Bank (district).

Many prefixes have been reassigned to new check processing regions. Some check processing regions now list as "local" prefixes for banks that are clearly located in different federal reserve districts, but they are still local banks; e.g. Cincinnati. If checks drawn on your branches were nonlocal before, but their prefix is now assigned to a still different check processing region than the one where your main office is located, they are still nonlocal checks.

It sounds as if your bank voluntarily treated them as local checks. Obviously, you could continue that practice. If you choose to discontinue it: First, be certain that your prior policy was not incorporated into your disclosures. Second, prepare your CSRs to explain the inexpclicable to your customers.

P.S. I'm not positive that I understood your question. If I blew it, please supplement your example with the names of the before and after check processing regions.

Same Anon here. Thanks for your response, Ken. I believe you answered my confusing question. Here's some additional information. I don't know if it will change your answer or not. The Oklahoma City Branch of the Tenth Federal Reserve Bank in Kansas City has been reassigned to the Eleventh Federal Reserve Bank in Dallas. As a Kansas bank, we treated checks out of our Oklahoma City branches as local because the OKC Branch was part of the same Federal Reserve district, the Tenth. The new Eleventh Federal Reserve District as of December 10 covers parts of New Mexico, Lousiana, all of Texas and Oklahoma.

Would this additional information change your response? Thanks.

Your Kansas branches appear to be within the Kansas City check processing region. Deposits of any checks drawn on your Kansas branches or on any of your branches that are also assigned to the KC RCPC are "on-us" items for the purposes of Regulation CC. That would inclue any branch with a routing number starting with 1010, 1011, 1012, or 1019.

Your branches in Oklahoma (unless they had routing numbers as above) were never considered local to your Kansas branches under Regulation CC. That you treated them as local was your option. Now that those branches' checks are processed in Denver instead of OKC (even though the banks are still in the Tenth district), you still have the option to consider them local, but you are under no more and no less regulatory pressure (read: none) to do so than you were before the OKC center closed.

Put another way, Ken's response was on target, and your facts don't affect it.

I'm new to compliance, so please bear with me. We are in Oklahoma also. Our bank policy has always been to make funds available on the 1st business day after the day we receive a deposit, unless we utilized a case by case or exception hold. Hence, we will now have many more routing numbers that will be considered local than before. Is the inclusion of additional routing #’s the type of change that invokes 229.18(e)? Our auditor says it does, not because we are changing the availability, but because now more checks will be considered local than nonlocal. My interpretation of the reg is that if we changed from making deposits available on the 2nd business day after deposit to the 1st business day after the deposit, we would have to notify the customer.

(e) Changes in policy. A bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank's availability policy regarding such accounts, except that a change that expedites the availability of funds may be disclosed not later than 30 days after implementation.

If your financial institution includes in its Regulation CC disclosures language from model forms C-4 or C-5 (both of which provide a list of four-digit numbers to be compared against the R/T number on a check's MICR line to determine whether the check is local), you will need to provide your customers updated disclosures within 30 days after you expand your list.

These two forms are typically used by banks that routinely place holds on local and non-local checks. They are typically not used by banks that generally provide next-day availability and reserve the right to place case-by-case holds.

Quote:

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A bank shall send a notice to holders of consumer accounts at least 30 days before implementing a change to the bank's availability policy...

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That's the right language, but the missing trigger is any change in your bank's availability policy. The consolidation of the check processing regions did not move so much as a comma in your disclosure.

Since you were next day availability to begin with, you were never required to disclose to your customers how to tell the difference between a local and a nonlocal check and you don't need to tell them now.

The real change, isn't in your policy or even their funds availability (it was next day before and it's next day now). It's in the fact that you will be able to put 5 or 11 day holds on a much smaller percentage of the items they deposit.

No amendment of your disclosure, in advance or arrears, is required.

I'm more confused than ever! We use ARTA Deposits (Bankers Systems) and the Reg CC disclosure it generates actually lists the routing numbers for local checks thus we are required to notify customers 30 days after the change. In a Bankers Systems update they list the routing symbols local to the new consolidated region (Birmingham and Nashville no longer process checks). Am I correct in thinking that that we must notify our customers of all the new routing numbers under this consolidated region list?

BankerMama, it appears from your post that your bank routinely places holds on deposited checks under the 1/2/5 day rules. That would explain why your disclosure includes a list of partial routing numbers for customers to be able to determine whether their checks are local or not.

Consolidation means that your list of local banks got larger. You are providing faster availability than previously. And you need to inform your consumer depositors (for some reason Reg. CC requires initial disclosures for business accounts but no change in terms notices), within 30 days after making the change. See section 229.18(e).

The definitions to Reg. CC are the most beneficial in determining how you treat items as local or non-local when you have physical branches in other states that were in the same Fed Reserve District but have been reassigned to another Fed Reserve.

The definition of "local paying bank" 229.2(s) is a "paying bank located in the same check processing region as the branch or proprietary ATM of the depositary bank." It appears that if you have a branch physically located in that district, a deposit made to that branch is considered local. So checks deposited to the Oklahoma branches are considered local to the 11th Fed Reserve District and non-local for checks deposited to Kansas branches since Kansas is located in the 10th Fed Reserve District.

Anyone have any thoughts on this?

Help, I have several branches in one state and 1 branch in another state that happens to be a different district --- however, all work is sent to the main office and processed. We have next day availability. My question is in regard to hold notices. Does my 1 branch in another state have to follow a different schedule of local vs non-local or do they follow the same schedule as the home office (remember, all processing at home office)? Thanks,

I am also confused on this issue. Is the underlying issue not what State you are located in but where your branches' checks are processed, right? If that is the case, as the Fed continues to consolidate, banks will have to update their routing numbers for holds. For example, we have some branches which processed through the New Orleans Fed under the Sixth district, since Katrina and as the Fed announced at this first of this month, those will be processed through Atlanta. So, am I correct in saying that not only will checks in these branches with the New Orleans routing numbers be local but now we will have to include the Atlanta routing numbers? Thanks!

Still not sure that this question has been answered--- "I am also confused on this issue. Is the underlying issue not what State you are located in but where your branches' checks are processed, right?"

Even if the bank is located in a different processing region, a bank uses the availability and hold schedules according to the region that the checks are processed through? i.e. checks sent to home office for processing? Thanks,

At my last job, we had a branch in another processing region. We considered only those check that cleared thru there processing region as local checks for that bank.

Regulation CC requires that your definition of local be based on the location of the branch where a deposit is made, not upon the place where the deposit is processed. To use a ridiculous example, if B of A were to consolidate all its check processing in South Carolina, it couldn't tell its California customers that California checks are non-local.

If you have branches in the geographic area that is served by the Denver check processing center, checks deposited at that branch that are drawn on banks in the Denver list in Appendix A to Regulation CC are local checks, even if you transport them to San Francisco for processing and actually use the San Francisco check processing hub.

You can always include MORE geography in your definition of local. You can include more than one check region's routing numbers, or part of another region's list. But you must include as local all routing numbers that are in the check processing region in which the branch is physically located.

John's sending you in the right direction. Forget about states. Forget about Federal Reserve Districts. Focus on where the drawee bank's bricks and mortar are located relative to the facility where the check is deposited. Are those physical locations in the same check processing region?

(s) Local paying bank means a paying bank that is located in the same check-processing region as the physical location of the branch, contractual branch, or proprietary ATM of the depositary bank in which that check was deposited.

Thanks guys. A nearby bank processes in a different region, this had me doubting myself. After a little more research, I find that they are down the road just far enough to be a different processing center. No wonder some of the customers get confused.

Would like to clarify some information in the 12/15 Fed release of changes to the Atlanta check processing region. It states that changes to the Nashville office are being postponed until 2007 but they include the Nashville routing numbers in the amendment so would we be alright to continue to consider Nashville non-local until that time? Also, a question about notice to the customers. I believe this got missed when some of the earlier changes were made but just to confirm would the bank need to send a new notice to the customers every time a change is made in the check processing region? Section 229.18(e) refers that the notice may be given in any form, so could this be done as a statement notice? Thank you.

The Nashville numbers were included just to show the full Sixth District list. I surmise that you are in the Atlanta check processing region. You are fine leaving the Nashville numbers in your non-local list until the Fed actually moves the Nashville processing to Atlanta sometime in 2007. You do, however, have to plan to add the New Orleans numbers to your local list, if you haven't already done so.

If your bank routinely places holds based on whether deposited checks are local or non-local, you should be listing in your disclosure documents how the customer can tell the difference, and that means listing the routing number groups that are considered local by your institution (depending on the branch used for a deposit). When that list of local routing numbers is changed by one of the Fed's restructuring moves, you need to provide your customer with a notice. If the change (as most of them do) adds to the list of routing numbers, you can give the notice as much as 30 days AFTER you implement it. (see 229.18(e)).