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Key Takeaways from FDIC’s May 31st Community Banking Initiative - “Strategies for Successful De Novo Bank Applications

On May 31, Patrick Neuman and I attended the FDIC’s Community Banking Initiative in Chicago, at which the assembled group heard presentations on and discussed “Strategies for Successful De Novo Bank Applications.”  As we all know, there have been few de novo bank applications since the Great Recession.  Recognizing the value community banks provide to the local and national economy, the FDIC, Federal Reserve and OCC brought together bankers, regulators and other interested persons to discuss the de novo application process.  The big takeaways from the meeting were:

  1. The business plan is the most important document in the de novo application. Great effort should be put into crafting the plan.  The regulators are generally going to hold new banks to the business plan on which they are approved.
  2. Choose your founding and management team carefully. The de novo must have at least five directors, and at least one should have community banking experience at the senior management level.
  3. Meet with your chosen chartering authority and the FDIC before you start putting together your business plan and application. Keep in active contact with them through the process.  Their door is always open for de novo discussions.
  4. They did not answer the big question – how much capital does a de novo need to raise post-Great Recession? This, they say, depends on your business plan, your target market and the riskiness of what you are proposing. 
  5. The FDIC has put out a new handbook that all persons interested in starting a bank should read: APPLYING FOR DEPOSIT INSURANCE, A Handbook for Organizers of De Novo Institutions, which can be found here

The program included a great panel of bankers who discussed their own de novo experience.  One of the panelists was Wisconsin’s own Joe Fazio, ‎Co-Founder, Chairman & CEO of Commerce State Bank.

The regulators provided a lot of practical guidance for any group looking to form a de novo.  We are happy to share what we learned with anyone who is thinking about starting the process.  At this link you’ll find a copy of the FDIC materials about preparing the business plan.

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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