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WASHINGTON—The Federal Deposit Insurance Corporation (FDIC) today announced a new two-phase process the agency will use to review new deposit insurance applications. The new procedures are intended to encourage new bank formation, accelerate the speed of the review process, and improve the efficiency of the application process.
“Improving the de novo process and encouraging more new bank formation has been a key priority for the FDIC,” said Chairman Travis Hill. “Today’s action is one of several steps the FDIC has been working on in furtherance of this goal. A healthy pipeline of new entrants is critical to the long-term vitality of the banking sector, particularly for community banks.”
Under the new two-phase approach, the FDIC will provide de novo applicants who satisfy relevant requirements: (1) a contingent authorization within 120 days of receiving the application; and (2) approval within the subsequent 12 months following the receipt of additional information and completion of key organizational steps. When deposit insurance applicants notify the FDIC that the institution is ready to open, the FDIC will affirm that all pre-opening conditions have been met.
The two-phase process will provide organizing groups clarity within a few months, before they expend significant time and financial resources on capital raising, staffing, infrastructure development, and other start-up activities. The FDIC expects that, with some exceptions, applicants will generally be able to file applications concurrently with both the FDIC and the chartering authority. In addition, the FDIC will coordinate with the chartering authority throughout the application process to promote efficiency, avoid duplication, and ensure timely action.
The FDIC’s new streamlined procedures are generally consistent with the 21st Century ROAD to Housing Act, which, among other provisions, directs the federal banking agencies to review and streamline the de novo application process. The FDIC will continue to review its framework for processing de novo applications and coordinate with state and federal agency counterparts to ensure a transparent and consistent FDI application process. The FDIC is committed to ensuring a timely and effective application process, and FDIC staff will be available to meet with organizers and answer questions at any stage of the process.
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