The founders of two de novo banks shared with lawmakers the challenges of launching a new financial institution in the current regulatory climate, and they pushed for legislation to ease some of those burdens in the early years of a new bank.
Keith Costello, CEO of Locality Bank in Fort Lauderdale, Florida, and Mary Usategui, CEO of BankMiami in Miami, testified today before the House Services Financial Subcommittee on Financial Institutions for a hearing titled “Enhancing Competition: Shaping the Future of Bank Mergers and De Novo Formation.” In prepared remarks, the two bankers expressed support of the Promoting New Bank Formation Act (H.R. 478), legislation that would create a three-year phase-in for federal capital requirements for de novo banks.
“If we want more de novo banks and all the community value that they bring, we must make the economics viable,” Costello said. “Let’s unleash the power of free enterprise, the same force that built this country. If that happens, we won’t need congressional hearings to discuss why new banks are not forming — they’ll already be open for business.”
Usategui said bank mergers and acquisitions are healthy for markets, but without new banks forming, communities are ultimately left underserved.
“Today, there are 4,487 banks in the United States, nearly 50% lower than that in 2005,” she said. “Of the banks acted today, only 85 were established after 2010. I’m proud to be one of those 85, but there should be more of us.”
The American Bankers Association submitted a statement in advance of the subcommittee hearing voicing support for several legislative proposals aimed at promoting transparency and timeliness in the merger application process and incentivizing de novo bank formation in the U.S.
