The Federal Deposit Insurance Corporation (FDIC) is launching a new process to review deposit insurance applications.
Under the new two-phase approach, the FDIC will provide applicants who satisfy relevant requirements a contingent authorization within 120 days of receiving the application and 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 conditions have been met.
“Improving the de novo process and encouraging more new bank formation has been a key priority for the FDIC,” Chairman Travis Hill said. “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.”
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.
The process will provide 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 most applicants will 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 new streamlined procedures are consistent with the 21st Century ROAD to Housing Act, which directs the federal banking agencies to review and streamline the application process.