How is the best way to explain to the FDIC the reasonings behind relocating a branch from a low census tract location to a middle census tract location a few miles away in the same community. Will this be subject to ridicule or denial just because of the census tract location issue.?

IMO even if you have a legitimate reason, if you are limiting service to a classified group, (like you are the only bank in that area, and your leaving opens up the high priced check cashing services and predatory lenders)it may be a hard thing to sell. Not impossible, but gather the facts and figures that support closing.

Consider how the community will react. If you think there will be opposition to the closing be prepared to handle that.

If you have sound financial data that shows the branch is not profitable, and can document marketing activities to the area , and some products and services that LMI individuals did not support, use that data to support the closing.

Look at the reasons you decided to open the branch there and see if they are no longer viable.

Yes, IMO it will be looked at as not a good thing to do until you can show some good reasoning why it should happen. Using the branch numbers is a good place to start in developing a good rational to close.

Couple issues rise in my mind. First, what is your current rating? You'll see a great deal less whining by the FDIC if you're sitting on an Outstanding or a Satisfactory than if you're on a Needs to Improve or lower.

Secondly, why are you moving? If you document this (neighborhood change reduced traffic in the branch etc.,) and show that you are serving LMI residents elsewhere in your system of branches, again, no biggie. If this was your only LMI branch, well it's not the smartest move, but then again, CRA is not a give a way program, so if it's not profitable, it's not profitable.

What is your overall make up of branch location? And what size are you? If you are intermediate the service test isn't such a worry now as it was, so again, this won't matter much, but if you're large, you really want to look to the entire branch system make up and compare that to your population make up.

How will the LMI population access you now? Is the new location close to their work locations, veres their homes so this really isn't a hardship? It is on a bus line? One block away, just a different tract, etc? All of that can be covered to justify the change with no adverse CRA issues. It's just all about the documentation!

As an FDIC bank, you should have a branch closing policy as expected under section 42 of FDICIA. Here's a link to the FDIC rules & regs on the topic. Documentation of your justification for closing should relate directly to your policy.

I would like to answer your question, but a crucial piece of information is missing - why are you relocating the branch? If your reasons are sound and based on substantiated facts, then you should have no problem. However, all too often I've seen community bankers make decisions like this with only very superficial documentation. Even if your branch is not profitable, you may not have good enough reason to discontinue branch operation in the location. Why? Maybe the reason you are loosing money is not extrinsic (i.e., the market conditions), but due to poor marketing strategy in which case your reasons for relocation are not acceptable. Why should a poor area be penalized because you did a poor job of understanding and analyzing the market? Understand, I am not suggesting this in your case because I don't know all the facts. But I am saying you must have a sound reason substantiated by facts that are not self-induced problems related to a poor understanding of the market.