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Be Careful What You Ask For
The Federal Deposit Insurance Corp. announced this week that it would streamline applications for de novo banks. The move fulfills a promise from the agency’s leadership. “We have to think creatively about how we can get more individuals into the system,” said FDIC Chair Travis Hill at a Bank Director conference in 2025.
The FDIC says it will decide on conditional approval within 120 days of receiving a new deposit insurance application and final approval within the next 12 months, provided requirements are met. The Office of the Comptroller of the Currency has been using a similar two-step process, which helps founders and investors gain confidence in their applications before putting more time and money into forming a bank. The Comptroller of the Currency, Jonathan Gould, applauded the FDIC’s move this week, issuing a statement saying that the decline of chartering activity contributes to a less dynamic and competitive industry. “From 2011 through 2014, for example, the OCC received an average of less than four charter applications per year. In some years, the OCC received no charter applications,” he said. In the last 18 months, he said the OCC has received 40 applications for bank charters or national trust charters.
Bank charters diminished after the financial crisis of 2007-09. The decline is mostly due to low margins during a long period of low interest rates, as well as an increased regulatory burden and higher capital expectations. Banks typically need $25 million to $30 million in capital these days — sometimes more — to start a bank. Then it can take years before investors see any return, according to the Independent Community Bankers of America.
But some of the newer banking entrants in the past 18 months seem to have had no trouble raising capital. Columbus, Ohio-based Erebor Bank, for example, was approved in July of 2025 as a national bank to serve the Silicon Valley area in California. The Financial Times reported recently it’s nearing completion on a $1.5 billion funding round valuing it at $8 billion. The stablecoin issuer Circle last month was granted final approval for the First National Digital Currency Bank.
Banking groups have long called for processes that make it easier to start a bank. But recent history shows the FDIC is likely to see more nontraditional institutions, rather than community banks, applying for a de novo.
• Naomi Snyder, editor-in-chief of Bank Director
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