4000 - Advisory Opinions
Unaffiliated Entity Which Provides "Back Office" Processing Services On Behalf of an Insured State Nonmember Bank is Not Considered a Branch
November 18, 1992
Jeffrey M. Kopchik, Counsel
This is in response to your letter of November 3, 1992 which was received by the FDIC on November 9th and our November 13th telephone conversation. You have inquired as to whether *** ("[Company]") may perform "back office" processing operations on behalf of a state nonmember bank without being considered a "branch" of the bank as that term is defined in section 3(o) of the Federal Deposit Insurance Act ("FDI Act"). 12 U.S.C. 1813(o).
According to your letter, [Company] provides general purpose financial institution software to nearly 1,000 financial institutions across the United States and 27 countries. The company also provides certain back office processing services to financial institutions either on-site or from a remote processing center. These back office processing services include statement rendering for bank customers, signature verification on exception items, bulk filing and sorting, account reconciliation, MICR encoding, providing proof tapes and other documentation for audit purposes, transportation of checks and the creation of a disaster recovery plan. During our telephone conversation, you assured me that [Company] is not owned, directly or indirectly, by or affiliated with an insured depository institution.
Section 3(o) of the FDI Act provides that:
"The term "domestic branch' includes any branch bank, branch
office, branch agency, additional office, or any branch place of
business located in any State of the United States . . . at which
deposits are received or checks paid or money lent. . . ."
If I may be of any further assistance, please do not hesitate to contact me.