On November 20, 2014, the Federal Deposit Insurance Corporation (FDIC) issued Guidance Related to the FDIC Statement of Policy on Applications for Deposit Insurance – Q&As (Guidance) to aid "applicants in developing proposals for deposit insurance, and to provide transparency to the application process." More important than the Guidance itself, however, is the implication that the sun may once again be rising on the FDIC and its willingness to seriously entertain de novo applications for deposit insurance for the first time since before the financial crisis.
According to the Independent Community Bankers of America, between 1984 and 2008, an average of 170 new banks were approved each year for deposit insurance. In the last three years, the FDIC has only approved one de novo application for deposit insurance. In the wake of the financial crisis, the FDIC issued Enhanced Supervisory Procedures for Newly Insured FDIC-Supervised Depository Institutions (Enhanced Procedures), which placed stringent requirements on banks seeking to apply for deposit insurance. Because of the Enhanced Procedures and the agency's internal application review procedures, some commentators have suggested that the FDIC has actively discouraged the formation of new banks. At the same time, criticisms from consumers and Congress have been mounting against the financial industry for a perceived lack of innovation in the provision of financial services and products. Although senior officials at the FDIC have repeatedly insisted that the FDIC is "absolutely open for business" regarding de novo applications for deposit insurance, the lack of recent de novo bank approvals suggests otherwise.
Of particular note is that the Guidance does not formally amend or alter the FDIC's underlying Policy on Applications for Deposit Insurance. It does, however, clarify that the FDIC only requires the application to contain a business plan and initial capital to provide a Tier 1 capital-to-assets leverage ratio of at least 8% for the first three years of operation – not the first seven years, which the Enhanced Procedures could have been interpreted to require.
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