FDIC seal

Almost three years ago, AABD (together with the Independent Community Bankers Association) filed a letter with FDIC Chairman Gruenberg  expressing  concern with the lack of new bank charters and proposing policy reforms to encourage more de novo bank charter applications [FDIC response]. AABD then met with the FDIC staff, and filed a follow-up letter dated April 21, 2014 to urge the FDIC to address the dearth of de novo bank charter insurance applications by revisiting its policies and practices to assure that it is not unnecessarily inhibiting the formation of de novo banks.  See AABD alert @ http://aabd.wpengine.com/aabd-issues-joint-letter-icba-fdic-take-action-light-dearth-de-novo-bank-applications-charters/.  That submission started the ball rolling.

Since then, the FDIC has taken several steps to be responsive. In November 2014, the FDIC issued Deposit Insurance Q &As to help applicants develop proposals to obtain Federal deposit insurance for newly chartered banks.  In March 2015, it sponsored a national conference highlighting the de novo bank chartering process.  Then on April 6, 2016 the FDIC announced that it had reduced from seven to three years the period of enhanced supervisory monitoring of newly insured depository institutions – a major “ask” in AABD and ICBA’s original submission.  Also, in April 2016, the FDIC supplemented its previously issued Q&As to give further clarity to multiple issues related to business plans required for a new charter insurance application.

On July 13, 2016, FDIC Chairman Gruenberg testified before the House Committee on Oversight and Government Reform regarding de novo banks and industrial loan companies.  In his testimony, Chairman Gruenberg emphasized FDIC’s continued support of the formation of new financial institutions and applications for deposit insurance.  He stated that de novo formation has always been cyclical and that de novo activity since the crisis of 2008 is best explained by economic factors, rather than increased statutory burden.  Since January 2011, the FDIC has received only 10 applications, of which three have been approved, five have been withdrawn and two remain in process.

In its summer edition of Supervisory Insights the FDIC provides an overview of trends and supervisory process for the formation of de novo institutions.  See: https://www.fdic.gov/news/news/press/2016/pr16070.pdf.  In anticipation of the economy improving and increased demand for de novo charters, the FDIC is preparing a publication designed to serve as a practical guide for organizing groups on the initiating and completing the de novo chartering process, including post-approval consideration.  The publication, to be released later this year, will focus on “those issues that frequently have been identified as obstacles to the FDIC’s ability to favorably resolve the statutory factors” applicable to de novo chartering.  Finally, the FDIC has scheduled three Community De Novo Outreach Meetings for later this year.  See https://www.fdic.gov/news/conferences/communitybanking/2016/DeNovo/