WASHINGTON – The Federal Deposit Insurance Corp. released a guide Thursday on the process for seeking new bank charters amid signs that a virtual freeze in new-bank activity is thawing.
The handbook for de novo bank organizers provides guidance to those applying for deposit insurance on three stages for establishing a new institution: pre-filing, the application process and pre-opening. The agency said that the handbook does not amount to new policy, nor does it modify existing policy.
Instead, "the handbook … provides organizers and the public with transparency and clarity about the FDIC's process for reviewing and approving applications for deposit insurance," the agency said in a press release.
De novo activity has largely sputtered since the crisis, but recent signs have pointed to a possible rebound. After having approved just one new deposit insurance application from 2012 through 2014, the FDIC issued two approval orders last year and approved two applications this year. Earlier this month, it approved an application by International Bank of Commerce in Oklahoma City, and in October it approved an application by Blue Gate Bank in Costa Mesa, Calif. The FDIC has received a total of six applications this year, according to an FDIC spokeswoman.
In April, the FDIC announced it was easing its post-crisis policy requiring higher capital and more frequent examinations of new banks; the agency reduced the period of heightened supervision from seven to three years.
In releasing the new handbook, the FDIC also announced a 60-day comment period for interested parties to provide feedback about the guide. Questions include whether the handbook is sufficiently clear about the FDIC procedures, whether it adequately addresses requirements for establishing an insured depository and whether it addresses "the information needs of organizers who are experienced bankers, as well as the information needs of other organizers, such as certain proposed investors or directors."
"Our goal is to increase transparency about the application approval process and resources available to assist potential organizers," FDIC Chairman Martin Gruenberg said in the press release. "The FDIC has developed this handbook as a practical and plain language guide to help organizers navigate the application review process."
The dearth of de novo activity has vexed industry advocates since the crisis; they have directed much of the blame on the federal regulators for a supervisory environment that they say is not attractive to potential organizers.
Yet the FDIC has appeared to want to encourage more activity. The August report, which was included as part of the agency's Supervisory Insights publication, said de novo activity historically declines with an economic downturn but then usually rebounds as conditions improve.
The new handbook includes an overview of the application process. On the application form, the guide says, potential organizers provide information on seven main topics: an overview of the institution's operations; business plan; management team; the bank's capital base, including employee stock ownership plans or incentives; how the institution will meet needs of the community; the institution's premises and fixed assets at inception; and information systems.
The guide also discusses the factors the agency will use in evaluating an application.
"Approvals will be conditioned on the applicant's satisfaction of certain standard conditions, including requirements for minimum initial capital, minimum ongoing capital maintenance for the three-year de novo period, fidelity bond insurance coverage, and financial statement audits during the de novo period," the handbook says.
