This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

55431 

Vol. 73, No. 187 

Thursday, September 25, 2008 

1See 73 FR 35337. 

2Note that this paragraph is not intended to 

provide an exclusive list of permissible activities 

for banks involved in financial education programs. 

3See 12 U.S.C. 1828(d)(1). 

4See 12 U.S.C. 1813(o). 

5See 12 CFR 303.41. If, however, the messenger 

service is established or operated by a non-affiliated 

third party, it generally does not constitute a branch 

for purposes of Section 18(d) and FDIC regulations. 

This interpretation is consistent with a plain 

reading of Section 18(d)(1), and with the decision 

in Cades v. H & R Block, where Justice Butzner, 

writing for the Fourth Circuit, explained that 

‘‘courts apply a two-part test to decide whether a 

bank is operating a branch office. First, the court 

determines whether [the] branch is established and 

operated by the bank. * * *’’ See 43 F.3d 869, 814 

(4th Cir. 1994), citing Independent Bankers Ass’n of 

New York v. Marine Midland Bank, 757 F.2d 453, 

456–63 (2d Cir 1985); Independent Bankers Ass’n 

of America v. Smith, 534 F.2d, 921, 951–52 (D.C. 

Cir. 1976). See also First National Bank in Plant 

City v. Dickinson, 396 U.S. 122, 137 n. 10 (1970). 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 303 

RIN 3064–AD28 

Financial Education Programs That 

Include the Provision of Bank Products 

and Services 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Final rule. 

SUMMARY: The Federal Deposit 

Insurance Corporation (FDIC) is 

amending its regulations to permit state 

nonmember banks to participate or 

assist in certain financial education 

programs conducted on school premises 

where, in connection with the program, 

deposits are received, checks are paid, 

or money is lent, without the need to 

submit a branch application to, and 

receive prior approval from, the FDIC. 

However, any state nonmember bank 

that desires to engage in such financial 

education programs must satisfy certain 

conditions in order for the exemption to 

apply. 

DATES: The final rule is effective on 

September 25, 2008. 

FOR FURTHER INFORMATION CONTACT: 

Donald R. Hamm, Section Chief, Risk 

Management and Applications Section, 

(202) 898–3528, Division of Supervision 

and Consumer Protection; or Mark L. 

Handzlik, Senior Attorney, (202) 898– 

3990, or Robert C. Fick, Counsel, (202) 

898–8962, Supervision Branch, Legal 

Division, Federal Deposit Insurance 

Corporation, 550 17th Street, NW., 

Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

1. Background 

The FDIC recognizes the importance 

of financial education programs, 

particularly for those individuals who 

have little or no experience using bankprovided services. Such programs 

generally contribute to the financial 

stability of individuals, families, and 

communities. Accordingly, the FDIC 

supports the ongoing efforts of state 

nonmember banks to enhance financial 

literacy, and continues to encourage 

institutions to collaborate with other 

members of the community to deliver 

financial education. 

On June 23, 2008, the FDIC published 

in the Federal Register an interim final 

rule and request for comment titled, 

Financial Education Programs that 

Include the Provision of Bank Products 

and Services (the ‘‘Interim Rule’’).1 The 

FDIC issued the Interim Rule in 

response to a number of inquiries as to 

whether the definition of branch 

includes a school or school facility 

where a state nonmember bank 

participates or assists in a financial 

education program for the benefit of 

students. Generally, through such 

programs, students are trained in 

various banking functions and personal 

financial management. A bank 

employee may serve as an advisor to the 

students and assist faculty in 

developing a financial education 

curriculum. 

In some instances, students provide 

limited banking services to other 

students, faculty, and parents directly at 

the school, on either a part-time basis or 

designated school days. A bank engaged 

in such a program could train students 

in bank operations and provide general 

supervision over the program and the 

provision of banking services. These 

services could include opening deposit 

accounts at the bank for students, 

faculty and parents, and receiving 

deposits for credit to such accounts. The 

participating bank may also pick up and 

deliver to its main office or a branch any 

funds received by the students in 

connection with the program.2

Section 18(d)(1) of the Federal 

Deposit Insurance Act (FDI Act) 

generally provides that no state 

nonmember bank shall establish or 

operate a new domestic branch without 

the prior written consent of the FDIC.3

Under the FDI Act, the term domestic 

branch generally is defined to include 

any branch bank, branch office, branch 

agency, additional office or any branch 

place of business located in any State or 

U.S. territory at which deposits are 

received or checks paid or money lent 

(each a core-banking function).4 The 

FDIC has determined by regulation that 

a messenger service that is established 

and operated by a state nonmember 

bank, which performs one of the corebanking functions, is a branch and 

requires a prior approval pursuant to 

these statutory provisions.5 However, 

under certain circumstances, a bank’s 

participation in a financial education 

program conducted on school premises 

differs from a bank messenger service in 

that any core-banking function provided 

in connection with such program is (i) 

provided at the discretion of the school; 

(ii) not provided to the general public; 

and (iii) conducted and designed 

primarily for financial education 

purposes. Moreover, participating in a 

financial education program differs from 

establishing a branch because, generally, 

with respect to such a program, the 

facility where banking services are 

provided is established by the school. 

The Interim Rule generally exempts 

from the definition of branch any 

participation by a state nonmember 

bank in a financial education program 

that is operated on school premises or 

a facility used by a school, where, in 

connection with the program, deposits 

are received, checks are paid, or money 

is lent, subject to certain conditions. 

The principal purpose of the financial 

education program must be educational, 

and not designed for the purpose of 

profit-making. Further, any banking 

services provided in connection with 

the program must be provided at the 

discretion of the school. Finally, the 

program must be conducted in a safe 


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55432 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Rules and Regulations 

6This exemption is consistent with a regulation 

promulgated by the Office of the Comptroller of the 

Currency in 2001 which exempts from the 

definition of branch a national bank’s participation 

in a financial literacy program conducted on school 

premises. 12 CFR 7.1021. 7See 5 U.S.C. 553(d). 

8See 5 U.S.C. 603(a). 

9See 5 U.S.C. 604. 

10 44 U.S.C. 3501 et seq. 

and sound manner and comply with 

applicable law. 

The FDIC received three comments on 

the Interim Rule from trade- and 

research-based organizations. Generally, 

the commenters supported the Interim 

Rule, and lauded the FDIC for 

recognizing the importance of financial 

education programs, particularly for 

those individuals with little or no 

experience using bank-provided 

services. The commenters expressed no 

concerns regarding the Interim Rule, 

and they proposed no substantive or 

technical revisions. However, the FDIC 

has made a technical, nonsubstantive 

change to paragraph (a) of 12 CFR 

303.41, which involved moving the 

reference to the financial education 

program exception provided in 12 CFR 

303.46 to the sentence that lists the 

other exceptions to the definition of 

branch. Except for this change, the final 

rule is identical to the Interim Rule. 

2. Final Rule 

The final rule excludes from the 

definition of branch any financial 

education program operated on school 

premises or a facility used by a school, 

where, in connection with the program, 

deposits are received, checks are paid, 

or money is lent, subject to certain 

conditions.6 As provided in this rule, 

the principal purpose of the program 

must be financial education, and not for 

the purpose of profit-making. Further, 

any banking services provided in 

connection with the program must be 

provided at the discretion of the school. 

The FDIC expects that such services 

would be limited in nature; available 

only to students, parents, and faculty; 

and accessible on a part-time basis or 

designated school days. The program 

must be conducted in a safe and sound 

manner and comply with applicable 

law. 

Regulatory Analysis and Procedure 

A. Administrative Procedure Act 

Section 553(d) of the Administrative 

Procedure Act (APA) requires the FDIC 

to publish a substantive rule at least 30 

days before its effective date unless, 

under subsection (d)(1), the rule 

establishes or recognizes an exemption 

or relieves a restriction.7 This final rule 

establishes an exemption from the 

definition of branch provided in 12 CFR 

part 303, subpart C, which has the effect 

of permitting state nonmember banks to 

participate in certain financial 

education programs conducted on 

school premises without having to 

submit a branch application to, and 

receive prior approval from, the FDIC. 

Therefore, the FDIC is not required to 

publish this final rule in the Federal 

Register at least 30 days before its 

effective date. 

B. Regulatory Flexibility Analysis 

The Regulatory Flexibility Act (RFA) 

requires an agency that is issuing a 

proposed rule to prepare and make 

available for public comment an initial 

regulatory flexibility analysis that 

describes the impact of a proposed rule 

on small entities.8 Because this 

rulemaking does not involve the 

issuance of a notice of proposed 

rulemaking, the requirements of the 

RFA for a final regulatory flexibility 

analysis do not apply.9

C. Paperwork Reduction Act 

The FDIC has determined that this 

final rule does not involve a collection 

of information pursuant to the 

provisions of the Paperwork Reduction 

Act of 1995.10

List of Subjects in 12 CFR Part 303 

Banks, Banking, State nonmember 

banks, Filing procedures, Establishment 

and relocation of domestic branches and 

offices, Financial education programs. 

Authority and Issuance 

■ For the reasons set forth in the 

preamble, part 303 of chapter III of title 

12 of the Code of Federal Regulations is 

amended as follows: 

PART 303—FILING PROCEDURES 

■ 1. The authority citation for part 303 

continues to read as follows: 

Authority: 12 U.S.C. 378, 1813, 1815, 1817, 

1818, 1823, 1819 (Seventh and Tenth), 1820, 

1823, 1828, 1831a, 1831e, 1831o, 1831p–1, 

1831w, 1835a, 1843(1), 3104, 3105, 3108, 

3207, 15 U.S.C. 1601–1607.2. 

■ 2. In § 303.41, revise paragraph (a) to 

read as follows: 

§ 303.41 Definitions. 

* * * * * 

(a) Branch, except as provided in this 

paragraph, includes any branch bank, 

branch office, additional office, or any 

branch place of business located in any 

State of the United States or in any 

territory of the United States, Puerto 

Rico, Guam, American Samoa, the Trust 

Territory of the Pacific Islands, the 

Virgin Islands, and the Northern 

Mariana Islands at which deposits are 

received or checks paid or money lent. 

A branch does not include an automated 

teller machine, an automated loan 

machine, a remote service unit, or a 

facility described in section 303.46. The 

term branch also includes the following: 

* * * * * 

■ 3. A new § 303.46 is added to subpart 

C to read as follows: 

§ 303.46 Financial Education Programs 

that Include the Provision of Bank Products 

and Services. 

No branch application or prior 

approval is required in order for a state 

nonmember bank to participate in one 

or more financial education programs 

that involve receiving deposits, paying 

withdrawals, or lending money if: 

(a) Such service or services are 

provided on school premises, or a 

facility used by the school; 

(b) Such service or services are 

provided at the discretion of the school; 

(c) The principal purpose of each 

program is financial education. For 

example, the principal purpose of a 

program would be considered to be 

financial education if the program is 

designed to teach students the 

principles of personal financial 

management, banking operations, or the 

benefits of saving for the future, and is 

not designed for the purpose of profitmaking; and 

(d) Each program is conducted in a 

manner that is consistent with safe and 

sound banking practices and complies 

with applicable law. 

By Order of the Board of Directors. 

Dated at Washington, DC, the 18th day of 

September, 2008. 

Federal Deposit Insurance Corporation. 

Valerie J. Best, 

Assistant Executive Secretary. 

[FR Doc. E8–22326 Filed 9–24–08; 8:45 am] 

BILLING CODE 6714–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 303, 308, and 309 

RIN 3064–AD25 

Deposit Insurance Requirements After 

Certain Conversions; Definition of 

‘‘Corporate Reorganization;’’ Optional 

Conversions (‘‘Oakar Transactions’’); 

Additional Grounds for Disapproval of 

Changes in Control; and Disclosure of 

Certain Supervisory Information 

AGENCY: Federal Deposit Insurance 

Corporation. 

ACTION: Final rule. 


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