FDIC Announces Effort to Encourage De Novo Applications

FDIC Chairman Martin Gruenberg announced today that the FDIC will reduce the period of heightened supervisory monitoring for newly chartered community banks to help address the drought in de novo charters that has occurred since 2011.

The seven-year supervisory period was established during the financial crisis in response to the large number of failing de novos, Gruenberg said. However, he pointed out that “in the current environment, and in light of strengthened, forward-looking supervision, it is appropriate to go back to the 3-year period.”

Along with the announcement, the agency issued supplemental guidance for proposed depository institutions applying for FDIC insurance. The frequently asked questions expand on guidance originally issued in 2014, highlighting the FDIC’s expectations for organizations when submitting business plans.

Gruenberg also announced that the FDIC plans to hold future outreach meetings to provide more information on the de novo application and approval process, and that the agency is also in the process of developing  a handbook that will guide prospective bank start-ups through the review process.  “There is ample room for new community banks with sound funding and well-conceived business plans to serve their local markets,” Gruenberg said. “It is essential that they have a clear path to approval.”

ABA has long raised concerns about the lack of new bank approvals in recent years, and strongly supports FDIC’s recognition of improved industry conditions and commitment to fostering de novo formation. The new guidance is expected to increase the transparency of the deposit insurance application process.


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