Last week, the Federal Deposit Insurance Corporation (FDIC) announced a new two-phase process for reviewing deposit insurance applications, intended to encourage new bank formation and speed up the review.
Under the changes, an applicant that satisfies the relevant requirements will receive a contingent authorization within 120 days of the FDIC receiving the application, followed by approval within the subsequent 12 months once additional information is submitted and key organizational steps are complete.
The FDIC said the new procedures are generally consistent with the 21st Century ROAD to Housing Act, which directs the federal banking agencies to review and streamline the de novo application process.
“A healthy pipeline of new entrants is critical to the long-term vitality of the banking sector, particularly for community banks,” said FDIC Chairman Travis Hill.
“IBAT is encouraged by the uptick in de novo activity,” said IBAT President and CEO Christopher Williston. “There are far too many markets that have been hit by rapid consolidation and a loss of local lending decisioning.”
The Office of the Comptroller of the Currency (OCC) commended the action and said reinvigorating de novo chartering remains an agency priority, reporting 40 charter applications over the past 18 months against an average of fewer than four per year from 2011 to 2014.
