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APPLYING FOR DEPOSIT INSURANCE
A Handbook for Organizers of De Novo Institutions
Division of Risk Management Supervision | October 2025
APPLYING FOR
DEPOSIT INSURANCE
A Handbook for Organizers
of De Novo Institutions
Division of Risk Management Supervision
October 2025
The information contained in this Handbook is intended to assist organizers in forming a new insured
depository institution. Users of the Handbook should review all applicable statutes, rules, regulations,
and policies for formal application requirements.
TABLE OF CONTENTS
TOPIC
PAGE
Introduction
1
•
Overview of the Application Process
2
•
Preparing the Application
2
•
Evaluating the Application
3
Section I: Pre-Filing Activities
4
•
Organizers
4
•
Assembling the Board of Directors and Management Team
5
•
Evaluating Management, including the Board of Directors
7
•
Setting Business Goals and Objectives
9
•
Charter, Ownership Structure, and Tax Election
10
•
Defining the Institution’s Market and Identifying Office Locations
13
•
Developing the Business Plan
14
•
Business Plan Content
14
•
Additional Considerations Regarding Business Plans
17
•
Planning for Organizational Expenses
18
•
Determining the Initial Amount of Capital
18
•
Pre-Filing Meetings
19
•
Draft Proposals
20
Section II: The Application Process
20
•
Overview of the Review and Evaluation Process
20
•
Application Requirements
22
•
Application Content
22
•
Public vs
ness Plan
14
•
Business Plan Content
14
•
Additional Considerations Regarding Business Plans
17
•
Planning for Organizational Expenses
18
•
Determining the Initial Amount of Capital
18
•
Pre-Filing Meetings
19
•
Draft Proposals
20
Section II: The Application Process
20
•
Overview of the Review and Evaluation Process
20
•
Application Requirements
22
•
Application Content
22
•
Public vs. Confidential Information
23
•
Evaluating the Statutory Factors
24
•
FDIC Staff Involvement and Field Investigations
26
•
Approval Conditions
27
Section III: Pre-Opening Activities
28
•
Satisfying Pre-Opening Conditions
28
•
Completing the Capital Raise
28
•
Other Pre-Opening Considerations
28
Conclusion
29
Resources
30
Appendix 1: Regional Office Contact Information
33
Appendix 2: Frequently Imposed Conditions
34
Appendix 3: Examples of Prudential Conditions
36
Appendix 4: Important Considerations Regarding Compensation and Related Plans
38
Stock Benefits Framework
39
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Applying for Deposit Insurance – A Handbook for Organizers
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INTRODUCTION
This Handbook is designed to help potential organizers of new or “de novo” institutions become
familiar with the deposit insurance application process and the path to obtaining deposit
insurance.1 It provides an overview of the various requirements and considerations involved in
the application process. The Handbook additionally incorporates answers to the questions raised
during de novo outreach meetings conducted by the FDIC as well as advice and commentary
shared by chief executive officers of successful de novo institutions who participated in those
events. The Handbook is divided into three sections:
•
Section I: Pre-Filing Activities highlights important considerations for the early stages of
institution formation such as identifying organizers, directors, and key officers; developing
the institution’s business plan; determining the appropriate amount of capital to be raised;
and engaging in pre-filing meetings
who participated in those
events. The Handbook is divided into three sections:
•
Section I: Pre-Filing Activities highlights important considerations for the early stages of
institution formation such as identifying organizers, directors, and key officers; developing
the institution’s business plan; determining the appropriate amount of capital to be raised;
and engaging in pre-filing meetings.
•
Section II: The Application Process discusses the statutory framework for applications for
deposit insurance; provides tips for a successful filing; and describes the FDIC’s application
evaluation process, including field investigations.
•
Section III: Pre-Opening Activities discusses other key aspects related to the successful
opening and operation of an institution.
The FDIC is committed to working with, and providing support to, any group with an interest in
starting a de novo financial institution. History shows that de novo institutions with well-
conceived business plans, qualified management, and appropriate financial support can be
successful in addressing financial service needs of the communities to be served.
We encourage organizers or their representatives to contact the FDIC with questions at any stage
of the application process. Based on the state in which the proposed institution will be
headquartered, you can use the map below to identify the appropriate FDIC regional office.
Refer to Appendix 1 for contact information for each FDIC regional office. When calling an
FDIC regional office main number, request to speak with the Assistant Regional Director
assigned to the proposed institution’s geographic location.
1 For purposes of this Handbook, the term de novo refers to newly established institutions with no existing
operations and new institutions that result from the conversion of an operating, non-insured entity.
regional office. When calling an
FDIC regional office main number, request to speak with the Assistant Regional Director
assigned to the proposed institution’s geographic location.
1 For purposes of this Handbook, the term de novo refers to newly established institutions with no existing
operations and new institutions that result from the conversion of an operating, non-insured entity.
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Overview of the Application Process
Section 5 of the Federal Deposit Insurance Act (FDI Act) requires any proposed depository
institution2 seeking federal deposit insurance to file an application with the FDIC. The FDIC
Rules and Regulations describe the application requirements in detail.3 Proposed new depository
institutions apply for federal deposit insurance by filing an Interagency Charter and Federal
Deposit Insurance Application (Application Form) with the appropriate FDIC regional office.
Most commonly, the FDIC receives applications to insure traditional community banks. In
general, traditional community banks focus on providing banking services, including loans and
core deposits, typically relied on by individuals and businesses in their local communities. The
FDIC also receives applications to insure proposed institutions that present added complexity
with regard to their business models or organizational structures.4 In all cases, the FDIC must
consider the statutory factors enumerated in Section 6 of the Federal Deposit Insurance Act (FDI
Act).5, 6
Preparing the Application
The Application Form collects information that the chartering authority and the FDIC will need
to evaluate the charter and insurance applications, respectively
exity
with regard to their business models or organizational structures.4 In all cases, the FDIC must
consider the statutory factors enumerated in Section 6 of the Federal Deposit Insurance Act (FDI
Act).5, 6
Preparing the Application
The Application Form collects information that the chartering authority and the FDIC will need
to evaluate the charter and insurance applications, respectively. The Application Form requests
information on seven main topics: an overview of the proposed institution’s operations; its
business plan and proposed policies; details on its management team, including its board of
directors; a description of the type and amount of capital to be raised, including any plans for
employee stock ownership plans or stock incentives; how the institution will meet the
convenience and needs of the community to be served; a description of the premises and fixed
assets at inception; and a description of the information systems to be used by the institution.
The Application Form also collects any other relevant information.
Applicants must answer all questions in the Application Form and provide appropriate
supporting information. If information is not available at the time of filing, the FDIC will
determine whether the information is necessary to begin the evaluation of the application. If
additional information is needed, the FDIC will provide the applicant a written request
2 For purposes of this Handbook, “institution” generally refers to the following charter types: state nonmember bank,
mutual savings bank, industrial bank, national bank, state member bank, district bank, trust company, federal or state
savings association, or any other depository institution engaged in the business of receiving deposits other than trust
funds
e the applicant a written request
2 For purposes of this Handbook, “institution” generally refers to the following charter types: state nonmember bank,
mutual savings bank, industrial bank, national bank, state member bank, district bank, trust company, federal or state
savings association, or any other depository institution engaged in the business of receiving deposits other than trust
funds.
3 Institutions that apply for federal deposit insurance must meet the FDIC’s statutory, regulatory, and other
application requirements as well as satisfy separately all of the requirements of the chartering agency, as contained
in applicable state or federal chartering law.
4 These include applications to insure a “non-bank,” which refers to an insured depository institution that is a “bank”
for purposes of the FDI Act, but is not a “bank” for purposes of the Bank Holding Company Act (BHCA), or a
“non-community bank,” which refers to an insured depository institution that may involve more complexity than a
traditional community bank in terms of its business model, products, services, activities, market segments, funding,
delivery channels, geographic footprint, operations, or intercompany or other third-party relationships.
5 12 U.S.C. § 1816.
6 Organizers may reference the FDIC’s Deposit Insurance Applications Procedures Manual and the Supplement
entitled, Applications from Non-Bank and Non-Community Bank Applicants, for further details regarding how the
FDIC processes deposit insurance applications.
nding,
delivery channels, geographic footprint, operations, or intercompany or other third-party relationships.
5 12 U.S.C. § 1816.
6 Organizers may reference the FDIC’s Deposit Insurance Applications Procedures Manual and the Supplement
entitled, Applications from Non-Bank and Non-Community Bank Applicants, for further details regarding how the
FDIC processes deposit insurance applications.
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Applying for Deposit Insurance – A Handbook for Organizers
Page 3
identifying the items needed. If no additional information is needed, the FDIC will notify the
applicant that the application is substantially complete and begin its evaluation.
Evaluating the Application
Since 1935, governing statutes have required that the FDIC consider specific factors when
evaluating applications for deposit insurance. The statutory factors, set forth in Section 6 of the
FDI Act, include: the institution’s financial history and condition; the adequacy of its capital
structure; its future earnings prospects; the general character and fitness of its management; the
risk presented by the institution to the Deposit Insurance Fund (DIF); the convenience and needs
of the community to be served by the institution; and whether the institution’s corporate powers
are consistent with the purposes of the FDI Act. The FDIC Statement of Policy on Applications
for Deposit Insurance (SOP) provides additional information to FDIC staff and the industry
about the statutory factors.7
The application is evaluated at both the field office and regional office levels, and is coordinated
by a regional office case manager, who is assigned responsibility for the ongoing supervision and
monitoring of the institution when it opens for business. The case manager will serve as the
applicant’s point of contact throughout the process.
The FDIC encourages organizing groups to communicate with the local regional office early in
the pre-filing process
ffice levels, and is coordinated
by a regional office case manager, who is assigned responsibility for the ongoing supervision and
monitoring of the institution when it opens for business. The case manager will serve as the
applicant’s point of contact throughout the process.
The FDIC encourages organizing groups to communicate with the local regional office early in
the pre-filing process. Early communication allows the FDIC to explain the application
requirements and identify any issues that may need to be addressed, reducing the chances of
issues potentially slowing the application process at later stages.
The soundness of the business plan; the qualifications of the proposed board of directors and
senior management; and the adequacy of the proposed capital are the FDIC’s key considerations
in evaluating the overall proposal and the statutory factors.
Generally, if the statutory factors are favorably resolved, the application will be approved. If the
statutory factors cannot be favorably resolved, the FDIC may, at its discretion, give the applicant
an opportunity to withdraw the application, or the application will be recommended for denial.
Each approval will be conditioned on the applicant’s satisfaction of certain conditions, including
requirements for minimum initial capital, minimum ongoing capital maintenance for the three-
year de novo period, fidelity bond insurance coverage, and financial statement audits during the
de novo period. The FDIC may also impose non-standard or prudential conditions on a case-by-
case basis. Refer to Appendix 2 for a list of conditions that are frequently imposed in an Order
granting deposit insurance
ts for minimum initial capital, minimum ongoing capital maintenance for the three-
year de novo period, fidelity bond insurance coverage, and financial statement audits during the
de novo period. The FDIC may also impose non-standard or prudential conditions on a case-by-
case basis. Refer to Appendix 2 for a list of conditions that are frequently imposed in an Order
granting deposit insurance.
Applications involving an institution that would be significantly involved in transactions or
relationships with the parent company or any affiliates, including a proposed institution that is
not a “bank” for purposes of the BHCA, present unique characteristics that may warrant the
imposition of prudential conditions beyond those routinely imposed in approving community
bank proposals. Appendix 3 presents examples of those conditions.
7 63 Fed. Reg. 44756, August 20, 1998, effective October 1, 1998; amended at 67 Fed. Reg. 79246, December, 27,
2002.
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SECTION I: PRE-FILING ACTIVITIES
Like any new business, a de novo bank starts as a concept. An individual or group identifies a
need for certain products and services in a market that may not be met by existing market
participants. This section highlights the steps and important considerations for the early stages
of institution formation.
These considerations include, among other items, identifying organizers, directors, and key
officers; developing the institution’s business plan; and determining the appropriate amount of
capital to be raised. Organizers are encouraged to communicate with the FDIC early during the
pre-filing process. The organizing group should schedule a formal pre-filing meeting with the
FDIC and other relevant agencies as soon as these preliminary considerations have been
addressed.
Organizers
Organizers play a central role in all aspects of establishing a new insured depository institution
pital to be raised. Organizers are encouraged to communicate with the FDIC early during the
pre-filing process. The organizing group should schedule a formal pre-filing meeting with the
FDIC and other relevant agencies as soon as these preliminary considerations have been
addressed.
Organizers
Organizers play a central role in all aspects of establishing a new insured depository institution.
Establishing a new institution requires careful and in-depth planning by the institution’s
organizers. Organizers are typically individuals with business interests and community
involvement in the proposed institution’s identified geographic market(s). The term “organizer”8
generally refers to any person or entity that is significantly involved in the organization of a
proposed depository institution. An organizer could be:
•
A proposed director or officer involved in establishing the institution;
•
An incorporator (a person or entity that signs the institution’s articles of incorporation); or
•
An investor (a person or entity that contributes or commits funds toward an institution’s
organizational expenses or capitalization).
These descriptions of an organizer are not mutually exclusive. For example, an individual
organizer may be a proposed director or officer, as well as a proposed investor.
Well before a deposit insurance application is filed, organizers collectively make important
decisions regarding the proposed institution’s business focus, target geographic markets,
potential board members and officers, and options for raising capital. The organizers also
communicate with the regulatory agencies during the pre-filing period. While organizers are
initially focused on various pre-filing activities, they ultimately play a central role in all aspects
of establishing the proposed institution.
8 In some cases, the chartering authority may specifically define the terms organizer, incorporator, founder, or other
similar terms
l. The organizers also
communicate with the regulatory agencies during the pre-filing period. While organizers are
initially focused on various pre-filing activities, they ultimately play a central role in all aspects
of establishing the proposed institution.
8 In some cases, the chartering authority may specifically define the terms organizer, incorporator, founder, or other
similar terms. As used in this Handbook, the term organizer should be interpreted broadly.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Assembling the Board of Directors and Management Team
Selecting a qualified board of directors and management team is one of the organizers’ most
significant responsibilities. The quality of management (including directors and officers) is the
single most important contributor to the success of any institution. For this reason, it is
important that candidates for director and officer positions have experience that corresponds to
the proposed institution’s specific products and services, markets, and activities.
Given the importance of director and officer selections, organizers should establish a process to
identify, evaluate, and select candidates. The selection process should be based on well-defined
position descriptions consistent with the proposed business plan and organizational structure.
While one designated organizer may guide the recruitment process, all organizers’ views should
be considered when making final selections.
Assembling the Board of Directors
The FDIC expects institutions to have a minimum of five directors. When selecting board
members, organizers should consider the board’s composition to ensure it encompasses varied
business and financial backgrounds, including appropriate banking experience and community
involvement in the identified geographic market area. The FDIC’s expectations for bank
directors embody basic, common sense principles
pects institutions to have a minimum of five directors. When selecting board
members, organizers should consider the board’s composition to ensure it encompasses varied
business and financial backgrounds, including appropriate banking experience and community
involvement in the identified geographic market area. The FDIC’s expectations for bank
directors embody basic, common sense principles. See additional discussion in the Pocket Guide
for Directors (Pocket Guide); the Statement Concerning the Responsibilities of Bank Directors
and Officers (D&O Statement); the special edition of the FDIC’s Supervisory Insights, A
Community Bank Director’s Guide to Corporate Governance: 21st Century Reflections on the
FDIC Pocket Guide for Directors; and the SOP.
As noted in the Pocket Guide, a financial institution's board of directors oversees the conduct of
the institution's business. The board of directors should:
• Select and retain competent management;
• Establish, with management, the institution’s long- and short-term business objectives, and
adopt operating policies to achieve these objectives in a legal and sound manner;
• Monitor operations to ensure that they are controlled adequately and are in compliance with
laws and policies;
• Oversee the institution’s business performance; and
• Ensure that the institution helps to meet the credit needs of the community to be served.
In addition, directors should ensure that management is appropriately supervised. Directors
should be active and involved in carrying out these responsibilities, remain fully informed, and
exercise independent judgment.
Other Considerations Regarding Director Selection
The FDIC does not require directors to be U.S. citizens. However, prior to considering a foreign
citizen to serve as a director, organizers should determine if the individual can fulfill the
obligations of a director due to possible travel restrictions and other challenges. Foreign
in fully informed, and
exercise independent judgment.
Other Considerations Regarding Director Selection
The FDIC does not require directors to be U.S. citizens. However, prior to considering a foreign
citizen to serve as a director, organizers should determine if the individual can fulfill the
obligations of a director due to possible travel restrictions and other challenges. Foreign
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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directors will be treated similarly to domestic directors with respect to the FDIC’s information
needs. In addition, foreign directors will be expected to execute agreements consenting to
jurisdiction and service of process to facilitate any necessary legal proceedings with respect to
the institution within the United States. The chartering authority may also have specific
citizenship requirements for directors and should be consulted if a foreign director is proposed.
The FDIC issued its D&O Statement in response to concerns regarding the personal liability of
directors and officers of FDIC-insured institutions. The D&O Statement emphasizes how
important it is for institutions to attract and retain experienced and conscientious directors and
officers, and addresses their obligations to discharge their duties owed to the institution. These
obligations are similar to those owed by directors and officers of other business corporations, and
include the duties of loyalty and care.
In addition to describing the responsibilities of the directors and officers, the D&O Statement
notes that the FDIC will not bring civil suits against directors and officers who fulfill their
responsibilities, including the duties of loyalty and care, and who make reasonable business
judgments on a fully informed basis and after proper deliberation. In other words, the FDIC only
brings suits when such action is believed sound on the merits
f the directors and officers, the D&O Statement
notes that the FDIC will not bring civil suits against directors and officers who fulfill their
responsibilities, including the duties of loyalty and care, and who make reasonable business
judgments on a fully informed basis and after proper deliberation. In other words, the FDIC only
brings suits when such action is believed sound on the merits. Thus, bank directors can exercise
reasonable business judgment without incurring legal liability.
MORE TO KNOW: Director Litigation Involving Failed Banks
In addition to supervisory and other authorities, the FDIC may bring actions against directors of failed
financial institutions. However, the FDIC does not bring actions against directors lightly or in
haste. Potential claims are evaluated based on the legal standards established by applicable law, including
the business judgment rule where applicable, and are pursued only if the claims are deemed
meritorious. Before any lawsuit against a director or officer can be filed, the FDIC completes a multi-
layer review and approval process that includes approval, with limited exceptions, by the FDIC Board of
Directors. During the last two crises, the FDIC pursued claims against directors and officers (on average)
in approximately one-third of the failure cases. Current information regarding professional liability
lawsuits may be found at www.fdic.gov/bank/individual/failed/pls/.
Assembling the Management Team
Organizers must identify the proposed full-time chief executive officer (CEO) and may identify
other key executive officers in the deposit insurance application. Key executive officers
typically include the chief financial officer, chief lending officer, and chief operating officer, but
may include others as well, depending on the proposed business plan and the institution’s size,
complexity, and risk profile
dentify the proposed full-time chief executive officer (CEO) and may identify
other key executive officers in the deposit insurance application. Key executive officers
typically include the chief financial officer, chief lending officer, and chief operating officer, but
may include others as well, depending on the proposed business plan and the institution’s size,
complexity, and risk profile. While these individuals do not need to be formally employed by
the proposed institution when they are submitted for consideration, the application should
describe the nature of the individuals’ commitment to joining the new organization.
In some instances, identifying satisfactory candidates for certain positions can take additional
time. In such cases, organizers should identify acceptable candidates as soon as practicable to
enable review of the executive management team during the field investigation. The FDIC
recognizes that certain management candidates may be employed by other companies or
institutions prior to formally joining the proposed institution. The FDIC will, to the extent
October 2025
Applying for Deposit Insurance – A Handbook for Organizers
Page 7
required or permitted by law, maintain the confidentiality of the affected candidates until
employment arrangements are finalized.
Evaluating Management, including the Board of Directors
When evaluating applications for deposit insurance, the FDIC considers the experience and
backgrounds of all proposed organizers, directors, officers, and principal shareholders. The
proposed CEO should have strong leadership skills, along with strong skills in strategy and
execution, customer relations, operations, and risk management. In addition, the FDIC expects
the CEO to have a demonstrated record of performance at the executive level with an institution
of comparable size, complexity, risk profile, and business model. While prior successful CEO
experience is strongly encouraged, it is not required
adership skills, along with strong skills in strategy and
execution, customer relations, operations, and risk management. In addition, the FDIC expects
the CEO to have a demonstrated record of performance at the executive level with an institution
of comparable size, complexity, risk profile, and business model. While prior successful CEO
experience is strongly encouraged, it is not required. If the candidate has not previously served
as a CEO, the candidate’s background and experience should demonstrate the breadth of
knowledge, skills, and abilities necessary to successfully fulfill the requirements of the position,
including with respect to the products and services to be offered, financial and operational
management, and other significant responsibilities.
As part of the application filing, each organizer,9 proposed director, senior executive officer,10
and 10-percent-or-more shareholder submits an Interagency Biographical and Financial Report
(IBFR) and fingerprints.11 The FDIC and the chartering authority, which will be either the state
banking authority in the case of proposed state-chartered institutions or the Office of the
Comptroller of the Currency (OCC) in the case of proposed national banks or federal savings
associations, will use this information to conduct a background check.
The background and experience of the proposed directors and officers will be evaluated largely
on the basis of the following:
•
Financial institution and other business experience;
•
Duties and responsibilities in the proposed depository institution;
•
Personal and professional financial responsibility;
•
Track record for honesty and integrity; and
•
Familiarity with the economy, financial needs, and general character of the community in
which the depository institution will operate.
In assessing the management factor, the FDIC will also review compensation arrangements and
any related plans for the institution’s proposed directors, officers, and employees
professional financial responsibility;
•
Track record for honesty and integrity; and
•
Familiarity with the economy, financial needs, and general character of the community in
which the depository institution will operate.
In assessing the management factor, the FDIC will also review compensation arrangements and
any related plans for the institution’s proposed directors, officers, and employees. Refer to
Appendix 4 for a list of important considerations regarding compensation and related plans,
including stock benefit plans, severance packages, and employment agreements.
9 Generally, each organizer will be required to submit an IBFR unless the organizer has no involvement in policy or
decision making, or strategic development, and will not be a 10-percent-or-more shareholder.
10 Section 303.101 of the FDIC Rules and Regulations defines “senior executive officer” as a person who holds the
title of president, chief executive officer, chief operating officer, chief managing official (in an insured state branch
of a foreign bank), chief financial officer, chief lending officer, or chief investment officer, or, without regard to
title, salary, or compensation, performs the function of one or more of these positions. Other individuals may also
be deemed a senior executive officer depending on their influence over the institution, participation in developing
policies or strategies, or other facts and circumstances.
11 As announced in Financial Institution Letter (FIL)-21-2018, the FDIC implemented electronic fingerprinting to
facilitate background checks performed in connection with applications.
sitions. Other individuals may also
be deemed a senior executive officer depending on their influence over the institution, participation in developing
policies or strategies, or other facts and circumstances.
11 As announced in Financial Institution Letter (FIL)-21-2018, the FDIC implemented electronic fingerprinting to
facilitate background checks performed in connection with applications.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
Page 8
Prior to submitting candidates for consideration, the organizing group should perform its own
due diligence on each proposed individual to ensure that they are suitable for their respective
roles. Background and experience issues that have made approval of applications for deposit
insurance problematic include the following:
Financial Institution and Other Business Experience – Proposals that consider individuals for
CEO or other key decision making positions who have limited executive level experience or who
have been associated with failed financial institutions or financial institutions that are or were in
troubled condition as a result of their actions or decisions.
Personal and Professional Financial Responsibility – Proposals that include principals,
particularly directors and senior executive officers, either individually or through related
business interests, who have a history of bankruptcy filings or defaults on obligations that have
resulted in losses to insured financial institutions or the DIF, or exhibit other behaviors that
indicate a lack of financial responsibility; or that include individuals unable or unwilling to
demonstrate the financial capacity to meet their personal obligations.
MORE TO KNOW: Additional Considerations in Board/Management Selections
Board Member Independence
•
Typically, the FDIC expects the majority of the board of directors to be independent directors
hibit other behaviors that
indicate a lack of financial responsibility; or that include individuals unable or unwilling to
demonstrate the financial capacity to meet their personal obligations.
MORE TO KNOW: Additional Considerations in Board/Management Selections
Board Member Independence
•
Typically, the FDIC expects the majority of the board of directors to be independent directors. An
independent director is generally a director that is (a) not a principal, member, officer, or employee of
the institution, and (b) not a principal, member, director, officer, or employee of any affiliate or
principal shareholder.
•
The proposed institution’s audit committee should meet applicable independent director requirements
as set forth in Part 363 of the FDIC Rules and Regulations. See also the Interagency Policy Statement
on External Auditing Programs of Banks and Savings Associations. Institutions with less than $500
million in assets are strongly encouraged to establish an audit committee consisting entirely of outside
directors.
Individuals with Substantial Influence
•
The FDIC closely evaluates any circumstance in which a proposed individual will substantially
influence the institution beyond that expected given their official role. In such situations, organizers
should ensure that appropriate mitigating factors are implemented, such as well-developed business
plans, sufficient board independence and oversight, a comprehensive audit program, appropriate
segregation of duties, and effective internal controls.
Management Succession Planning and Talent Development
•
Management succession planning and talent development are important for a new institution to ensure
continuity in key senior management positions.
uch as well-developed business
plans, sufficient board independence and oversight, a comprehensive audit program, appropriate
segregation of duties, and effective internal controls.
Management Succession Planning and Talent Development
•
Management succession planning and talent development are important for a new institution to ensure
continuity in key senior management positions.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
Page 9
Setting Business Goals and Objectives
Achievable business goals and objectives form the starting point for organizers and investors as
they begin to establish a new institution. Broadly speaking, institutions are generally organized
to:
• Provide depository and credit services in local or other defined markets;
• Attain profitable banking operations that augment shareholder equity; and
• Foster community development through banking products, services, or programs.
Institutions can achieve these goals by developing and implementing realistic, sound business
plans. While specific products, services, and activities differ between institutions, the typical
focus of an institution is to provide lending, deposit, and other banking services to customers in
its identified markets. As opposed to many other types of financial services companies,
FDIC-insured depository institutions have access to certain cost-effective funding sources
(including insured deposits, as well as other types of funding) and the payment system.
The organizers should have a clear and consistent view of the institution’s objectives, which will
help shape the business plan and ultimately give the institution its own identity within the highly
competitive financial services industry.
access to certain cost-effective funding sources
(including insured deposits, as well as other types of funding) and the payment system.
The organizers should have a clear and consistent view of the institution’s objectives, which will
help shape the business plan and ultimately give the institution its own identity within the highly
competitive financial services industry.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
Page 10
Charter, Ownership Structure, and Tax Election
In order for an institution to obtain deposit insurance from the FDIC, it must have a charter to
conduct its proposed business activities. Institutions may obtain either a bank or savings
association12 charter from the appropriate state banking authority or the OCC.
In addition to traditional bank and savings association charters, the OCC and some states offer
limited or special purpose charters. These charter types may include, for example, insured and
uninsured limited purpose trust company charters, and charters for institutions whose operations
are limited to credit card operations. The OCC and some states also offer charters that envision
business models that are narrower in scope than traditional institutions. For example, charters
may be granted to institutions that are primarily focused on community development or cash
management activities, or that may operate as bankers’ banks. Chartering agencies have also
granted “shelf” charters,13 whose operations commence with the acquisition of one or more
failed banks, and certain states also offer insured industrial loan company charters.
Organizers should carefully review the federal and state laws applicable to each charter type, as
charter selection will generally relate to the proposed business model
as bankers’ banks. Chartering agencies have also
granted “shelf” charters,13 whose operations commence with the acquisition of one or more
failed banks, and certain states also offer insured industrial loan company charters.
Organizers should carefully review the federal and state laws applicable to each charter type, as
charter selection will generally relate to the proposed business model. Such reviews should also
consider any implications under the BHCA or, as applicable, the Home Owners’ Loan
Act.14 Organizers should engage in early discussions with the FDIC and the chartering agency
regarding charter selection, particularly if the organizers contemplate a distinctive charter
type. Importantly, regardless of charter type, each applicant must meet the same statutory
requirements to be granted deposit insurance.
All institutions have a primary federal regulator (PFR), which serves as the federal agency
responsible for supervising the institution. The FDIC is the PFR if the institution is a state-
chartered institution that is not a member of the Federal Reserve System (FRS); the Federal
Reserve Board (FRB) is the PFR if the institution is a state-chartered, FRS-member institution;
and the OCC is the PFR for all institutions with a national bank or federal savings association
charter.15
If an institution will be owned by a regulated bank or savings and loan holding company, the
FRB will supervise the institution’s parent company (or companies). The FDIC does not have a
preference with regard to the organizers’ charter and ownership decisions. The FDIC expects
organizers to determine the charter and ownership structure most appropriate to the proposed
business to be conducted, markets to be served, and individual circumstances.
Exhibit 1 summarizes the primary supervisory roles of each federal banking agency and
describes the state banking authorities’ role.
12 The term “savings association” is defined in Section 3(b)(1) of the FDI Act
ects
organizers to determine the charter and ownership structure most appropriate to the proposed
business to be conducted, markets to be served, and individual circumstances.
Exhibit 1 summarizes the primary supervisory roles of each federal banking agency and
describes the state banking authorities’ role.
12 The term “savings association” is defined in Section 3(b)(1) of the FDI Act. Savings associations, which may
include federal or state savings associations, are also commonly referred to as thrift institutions.
13 Shelf charters enable potential bank owners who are not currently affiliated with an insured depository institution
to qualify to bid on failed financial institutions for which the FDIC is acting as receiver.
14 Certain limited or special purpose banks and industrial loan companies may not be considered “banks” for
purposes of the BHCA.
15 In addition, the Consumer Financial Protection Bureau supervises and examines consumer financial service
providers under its jurisdiction for compliance with federal consumer financial laws.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Exhibit 1: Federal Banking Agency and State Banking Authority Roles
Agency
Primary Roles
FDIC
•
Insures the deposits of all depository institutions approved for federal deposit
insurance.
•
Together with the respective chartering state authority, supervises state-
chartered institutions (state-chartered banks and savings associations) that are
not members of the FRS.
•
Maintains backup supervisory responsibility for institutions for which the FRB
and the OCC are the PFRs.
•
Acts as receiver for all failed insured banks and savings associations, and may
be appointed to resolve non-bank financial companies if their failure would
have serious adverse effects on U.S. financial stability and other statutory
requirements are met
are
not members of the FRS.
•
Maintains backup supervisory responsibility for institutions for which the FRB
and the OCC are the PFRs.
•
Acts as receiver for all failed insured banks and savings associations, and may
be appointed to resolve non-bank financial companies if their failure would
have serious adverse effects on U.S. financial stability and other statutory
requirements are met.
•
Reviews resolution plans filed by certain large banking organizations and non-
bank financial companies designated by the Financial Stability Oversight
Council (FSOC) for FRB supervision that describe the company’s strategy for
its rapid and orderly resolution under the bankruptcy code in the event of the
company’s material financial distress or failure.
FRB
•
Serves as PFR for state-chartered banks that are members of the FRS, as well as
bank and financial holding companies (and certain subsidiaries), and savings
and loan holding companies.
•
Supervises other firms designated as systemically significant by the FSOC and
other entities pursuant to the Dodd-Frank Act.
•
Reviews resolution plans filed by certain large banking organizations and non-
bank financial companies designated by the FSOC for FRB supervision.
OCC
•
Charters and serves as PFR for national banks and federal savings associations.
State Banking
Authorities16
•
Charters state banks and savings associations, regardless of whether the
institution is a member of the FRS.
•
Together with the respective PFR, supervises state-chartered institutions and
certain holding companies.
Depending on the institution’s planned charter type and organizational structure, organizers
likely will interact with multiple government agencies (federal as well as state, if a state charter
is pursued) in pre-filing matters and the application process
ution is a member of the FRS.
•
Together with the respective PFR, supervises state-chartered institutions and
certain holding companies.
Depending on the institution’s planned charter type and organizational structure, organizers
likely will interact with multiple government agencies (federal as well as state, if a state charter
is pursued) in pre-filing matters and the application process. If the relevant filings are approved
and the institution commences operations, interactions between the institution and applicable
regulatory agencies will continue after opening through established supervisory processes (e.g.,
visitations, examinations, and other on-site or off-site reviews).
16 Refer to the Conference of State Bank Supervisors website for a directory of banking authorities for each of the 50
states, the District of Columbia, and the U.S. territories. Also, refer to the National Credit Union Administration
(NCUA) website for information regarding the supervision, chartering, and insurance of credit unions. The NCUA
is an independent federal agency responsible for regulating and supervising federal credit unions. The NCUA
insures deposits in federal and most state-chartered credit unions across the U.S.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Although each federal agency and state authority makes independent decisions regarding
applications, they also collaborate on pre-filing activities, application reviews, examinations, and
supervisory activities for institutions, as appropriate.17
Organizers should provide information on the institution’s anticipated ownership structure and
the status of capital raising efforts at the time of filing
h each federal agency and state authority makes independent decisions regarding
applications, they also collaborate on pre-filing activities, application reviews, examinations, and
supervisory activities for institutions, as appropriate.17
Organizers should provide information on the institution’s anticipated ownership structure and
the status of capital raising efforts at the time of filing. Such information should include an
organizational chart detailing, for example, parent companies, affiliates, and subsidiaries, if any;
as well as draft or final offering statements and subscription agreements; the status of
subscriptions; and planned investments by organizers, proposed directors and officers, and
investors proposing to subscribe to 10 percent or more of equity.
Investors acting as a group may be aggregated and considered a control group. Any individual
investors proposing to acquire 10 percent or more of any class of voting securities in either the
institution or a parent company will be required to submit an IBFR, along with details regarding
how the securities will be acquired and held (such as personally, jointly, through a trust or family
office, or other investment vehicle).
Foreign investors will be treated similarly to domestic investors with respect to the FDIC’s
information needs and any possible aggregation among a group of investors. In addition, foreign
investors may be required to execute agreements consenting to jurisdiction and service of
process.
A de novo institution may elect to be incorporated as a C Corporation (C Corp), an S Corporation
(S Corp), or a limited liability company (LLC). There are notable differences between
organizational forms with respect to the number of allowable shareholders, the terms of
prospective capital distributions, and the tax treatment of income and losses
ing to jurisdiction and service of
process.
A de novo institution may elect to be incorporated as a C Corporation (C Corp), an S Corporation
(S Corp), or a limited liability company (LLC). There are notable differences between
organizational forms with respect to the number of allowable shareholders, the terms of
prospective capital distributions, and the tax treatment of income and losses.
For example, a C Corp allows for an unlimited number of shareholders, while S Corps are
restricted by Internal Revenue Service regulations as to the number of shareholders. A C Corp
pays taxes on its income directly, while its shareholders are taxed on cash dividends.
Alternatively, an S Corp passes through taxable income or losses directly to shareholders, who
report those earnings on individual tax returns. Shareholders of both the C Corp and S Corp are
generally subject to limited shareholder liability. Rules for LLCs are provided in state law and
Section 303.15 of the FDIC Rules and Regulations.
De novo organizers should thoroughly consider the legal, tax, and capital implications associated
with a particular organizational form and choose the corporate structure that best suits their
business strategy.
17 In addition to the other federal agencies and state authorities, the FDIC will also consult with the appropriate
functional regulators regarding the affiliation of an institution with a company subject to functional regulation (e.g.,
insurance companies, securities companies, broker-dealers, etc.) pursuant to the Gramm-Leach-Bliley Act.
ture that best suits their
business strategy.
17 In addition to the other federal agencies and state authorities, the FDIC will also consult with the appropriate
functional regulators regarding the affiliation of an institution with a company subject to functional regulation (e.g.,
insurance companies, securities companies, broker-dealers, etc.) pursuant to the Gramm-Leach-Bliley Act.
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Defining the Institution’s Market and Identifying Office Locations
A de novo institution’s target market can be defined both in terms of the geographic market
area(s) and the communities or clients the institution intends to serve. Organizers can determine
the target market by taking into account the institution’s planned products and services,
economic and market conditions, the competitive landscape, and population, income, industry,
and housing trends.
Small banks often serve local geographic areas and easily identifiable customer bases, and larger
institutions often serve wider geographic areas and may define market segments on broader
terms. Regardless of the size of the institution’s target market area, organizers should develop a
map that identifies anticipated office locations, be able to describe the market characteristics, and
discuss the overall marketing/advertising strategy. Careful thought should also be given to how
the institution will serve its customers in terms of operational and technological infrastructure,
staffing, and deployment of resources. Organizers must also consider the proposed institution’s
obligations under the Community Reinvestment Act (CRA), including the needs of low- and
moderate-income geographies and individuals
g/advertising strategy. Careful thought should also be given to how
the institution will serve its customers in terms of operational and technological infrastructure,
staffing, and deployment of resources. Organizers must also consider the proposed institution’s
obligations under the Community Reinvestment Act (CRA), including the needs of low- and
moderate-income geographies and individuals.
The specific address of the proposed institution’s main office location does not need to be
determined at the time an application is filed.18 In such circumstances, the application (including
the public and confidential portions) and the published notice should include a reasonable
description of the anticipated location of the main office. A reasonable description may be based
on street boundaries within a neighborhood or city block. Alternatively, a broader area may be
presented if supported by additional information, such as a quadrant within a census tract, zip
code, or municipal boundaries.
The description should be sufficient to provide an understanding of the general location and
geographic market of the proposed institution, such that the FDIC may evaluate the application
pursuant to the statutory factors and regulations for which the institution’s location is relevant,
including consumer protection and community reinvestment laws and rules. The information
provided should also be sufficient to enable the general public to reasonably comment on the
application
n and
geographic market of the proposed institution, such that the FDIC may evaluate the application
pursuant to the statutory factors and regulations for which the institution’s location is relevant,
including consumer protection and community reinvestment laws and rules. The information
provided should also be sufficient to enable the general public to reasonably comment on the
application. In reviewing the reasonableness of the described location, the FDIC may consider
issues such as the nature of the area (e.g., urban, suburban, or rural), population, physical
boundaries, historic preservation or environmental issues, and political subdivisions,
metropolitan statistical areas, or census tracts.19
The FDIC may act on an application for which a specific location of the main office has not yet
been identified, provided that the applicant agrees in writing to appropriate non-standard
conditions involving the specific location of the institution prior to the effective date of deposit
insurance. Such conditions may require FDIC non-objection to the proposed location, chartering
authority approval, satisfactory resolution of outstanding historical preservation and
environmental matters, and appropriate plans to reasonably inform the public.
The institution’s proposed main office and branch locations should make prudent business sense
and enable the institution to reach its target customer base. In selecting office locations,
18 The FDIC will continue to require an address for purposes of corresponding with the organizing group.
19 The FDIC will advise an applicant if additional information is necessary regarding the physical location of the
main office and whether re-publication is required.
ke prudent business sense
and enable the institution to reach its target customer base. In selecting office locations,
18 The FDIC will continue to require an address for purposes of corresponding with the organizing group.
19 The FDIC will advise an applicant if additional information is necessary regarding the physical location of the
main office and whether re-publication is required.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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organizers should consider applicable laws, tax consequences, future growth plans, real estate
lease and purchase options, and budget implications. The basis for the selected target market and
planned office locations should be explained in detail in the institution’s business plan.
In addition, applicants are cautioned against purchasing any fixed assets or entering into any
non-cancelable construction contracts, leases, or other binding arrangements related to the
proposal unless and until the FDIC approves the application. If the main office location will
involve an insider transaction, the organizing group should refer to the SOP discussion of the
financial history and condition factor for specific considerations.
Developing the Business Plan
All de novo institutions must prepare a business plan to guide the first three years of the
institution’s operations. The business plan should be the result of thorough planning and
research by the institution’s organizers and management team, including its board members. It
should be forward-looking and dynamic to enable the institution to evolve over time to meet the
challenges of a changing operating environment.
A comprehensive, well-constructed, and well-supported business plan is used to demonstrate that
the institution has a reasonable probability of success, will operate in a safe and sound manner,
and will have adequate capital to support the institution’s risk profile
looking and dynamic to enable the institution to evolve over time to meet the
challenges of a changing operating environment.
A comprehensive, well-constructed, and well-supported business plan is used to demonstrate that
the institution has a reasonable probability of success, will operate in a safe and sound manner,
and will have adequate capital to support the institution’s risk profile. The business plan also
serves as the “business case” for the de novo institution and outlines specifically how the
institution will compete in its chosen market and derive a reasonable return.
A business plan is a necessary element of the application process, but it should not be created for
the benefit of the regulators. Organizers should view the business plan as an essential tool for
the organization that will help guide decisions in the early stages of operations. While the
institution is raising capital, key elements of the business plan will be evaluated by potential
investors as they consider becoming a shareholder. Once the institution is open and operating,
the business plan will guide daily operations and strategic decisions. As a result, it is important
for the organizers and board of directors to fully understand and have confidence in the plan that
is submitted with the application.
Guidance for developing a business plan is included within the Application Form. As described
in the Application Form, the business plan content should cover the following areas: executive
summary; description of business; marketing plan; management plan (including directors and
officers); records, systems, and controls; financial management plan; monitoring and revising the
plan; and financial projections. The business plan should be tailored to the institution’s size,
complexity, and risk profile. For example, smaller, non-complex community institutions may
require a less extensive plan.
Business Plan Content
The FDIC does not require a specific format for a business plan
rds, systems, and controls; financial management plan; monitoring and revising the
plan; and financial projections. The business plan should be tailored to the institution’s size,
complexity, and risk profile. For example, smaller, non-complex community institutions may
require a less extensive plan.
Business Plan Content
The FDIC does not require a specific format for a business plan. While each of the following
areas should be addressed, as described in the Application Form, certain areas may require more
depth or explanation depending on the proposed institution’s strategies.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Description of the Business
This section discusses the proposed location of the institution and any future branching or
expansion plans, the organizational structure of the institution, any insider transactions, and the
legal form of stock ownership.
Marketing Plan
In addition to describing target markets and the products and services to be offered, this section
discusses the analyses and assumptions with respect to products and services, the selected
markets, relevant economic considerations, and the competitive environment.
Management Plan
This section discusses the number of organizers and directors, board committees and their
responsibilities, the duties and responsibilities of the senior executive officers and employees,
and the institution’s plans to address management succession.
If the proposed institution will be significantly involved in transactions or relationships with the
parent company or any affiliates, the majority of the institution’s board of directors should be
independent from the parent and any affiliates. Further, such proposals must demonstrate that
the institution has a sustainable financial structure
ution’s plans to address management succession.
If the proposed institution will be significantly involved in transactions or relationships with the
parent company or any affiliates, the majority of the institution’s board of directors should be
independent from the parent and any affiliates. Further, such proposals must demonstrate that
the institution has a sustainable financial structure.
Records, Systems, and Controls
This section discusses the institution’s plans for accounting and internal control systems, the
proposed internal audit function, compliance management programs (including the Bank Secrecy
Act (BSA)/Anti-Money Laundering (AML) program), and annual audits by independent public
accountants. Proposals involving transactions or relationships with affiliates should describe all
planned arrangements and include service level agreements that comply with Section 23A and
Section 23B of the Federal Reserve Act.
This section also addresses information technology (IT), which involves the institution’s core
banking systems, internal networks, internet and mobile applications, and payment and
settlement systems that may be hosted internally or externally. Effective IT and cybersecurity
strategies that are aligned with the institution’s overall strategies are critical due to the role of
technology in supporting and delivering most business activities. As such, appropriate strategies
should be adopted for the institution’s business activities (such as commercial lending and asset
management) and enterprise-wide activities (such as security and business continuity planning),
and should address system development, acquisition, and outsourcing requirements.
For outsourced solutions, the strategies should identify functions or services the institution will
outsource, and include the name of each third party under consideration, due diligence
performed, costs, and an assessment of external dependency risks
ities (such as security and business continuity planning),
and should address system development, acquisition, and outsourcing requirements.
For outsourced solutions, the strategies should identify functions or services the institution will
outsource, and include the name of each third party under consideration, due diligence
performed, costs, and an assessment of external dependency risks. Contracts should be made
contingent on obtaining the necessary regulatory approvals for both the bank charter and deposit
insurance, and should limit personal liability should approval not be obtained. For internal
solutions, the strategies should address facilities, capacity, and skill requirements, and should be
supported by projected technology-related budgets.
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Cyber threats and other operational issues can disrupt, degrade, or compromise an institution’s
operations thereby affecting capital and liquidity, or harm the institution’s customers.
Organizers should develop strategies to protect the institution from ongoing and emerging
threats. These strategies should address operational resilience, including back-up and disaster
recovery, incident response, cyber threat intelligence, governance, skills, testing of plans, and
independent review of controls. Non-standard conditions regarding technology strategies may be
imposed on a case-by-case basis. The regulatory agencies have provided guidance on third-party
relationships and outsourcing, information security and business continuity planning, and
cybersecurity.20
Financial Management Plan
This section discusses the institution’s capital goals; earnings goals; plans for raising capital;
dividend policy; funding plans, including how the institution will identify and measure liquidity
risk; and types of investment securities to be held
d-party
relationships and outsourcing, information security and business continuity planning, and
cybersecurity.20
Financial Management Plan
This section discusses the institution’s capital goals; earnings goals; plans for raising capital;
dividend policy; funding plans, including how the institution will identify and measure liquidity
risk; and types of investment securities to be held. This section also discusses the institution’s
objectives, strategies, and risk tolerance for interest rate risk, including how the institution will
identify and measure interest rate risk. Further, this section addresses the loan review program,
including how the institution will identify and measure credit risk, and its methodology for
determining the allowance for loan and lease losses (ALLL).21
Narrow focus proposals, including monoline operations or other proposals considering a limited
set of banking activities, should address in this section how the institution will mitigate
concentration risk, how the institution intends to maintain adequate liquidity, and how credit-
sensitive funding risks will be managed. This section should also demonstrate that sufficient
capital is available to address uncertainties, as well as a clear ability to raise capital if needed.
Monitoring and Revising the Plan
This section discusses how the board of directors will monitor adherence to the business plan,
and how it will adjust and amend the plan to accommodate significant or material changes; for
example, the board’s proposed responses to greater or lesser than expected growth, greater or
lesser than expected market penetration, etc.
Narrow focus proposals should clearly define strategic alternatives for redirecting efforts, which
may include self-liquidation, if the business plan proves unsuccessful
will adjust and amend the plan to accommodate significant or material changes; for
example, the board’s proposed responses to greater or lesser than expected growth, greater or
lesser than expected market penetration, etc.
Narrow focus proposals should clearly define strategic alternatives for redirecting efforts, which
may include self-liquidation, if the business plan proves unsuccessful.
20 See, for example, FIL-44-2008, Guidance for Managing Third-Party Risk, the Federal Financial Institutions
Examination Council (FFIEC) Information Technology Handbook, booklets on Outsourcing Technology Services,
Information Security, and Business Continuity Management; and FFIEC Cybersecurity Awareness.
21 In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-13,
Topic 326, Financial Instruments—Credit Losses (ASU No. 2016-13), which revises the accounting for credit losses
under U.S. generally accepted accounting principles (U.S. GAAP). ASU No. 2016-13 introduces the current
expected credit losses (CECL) methodology to replace the incurred loss methodology. Under the CECL
methodology, allowances for credit losses (ACL) cover a broader range of financial assets than the ALLL under the
incurred loss methodology. The effective date of ASU No. 2016-13 is either fiscal years beginning after December
15, 2019, or fiscal years beginning after December 31, 2022. While the term ALLL is used in this Handbook,
proposed institutions may prepare their financial projections using either ACL or an ALLL depending on their
anticipated CECL adoption date. All institutions must adopt CECL beginning in 2023.
dology. The effective date of ASU No. 2016-13 is either fiscal years beginning after December
15, 2019, or fiscal years beginning after December 31, 2022. While the term ALLL is used in this Handbook,
proposed institutions may prepare their financial projections using either ACL or an ALLL depending on their
anticipated CECL adoption date. All institutions must adopt CECL beginning in 2023.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Financial Projections
This section provides financial information for opening day pro forma and quarterly projections
for three years of operations, and includes projected balance sheet, income statement, and
regulatory capital schedules; details of all assumptions used, including the assumed interest rate
scenario; discussion of market studies or surveys used to support projected growth; discussion of
the level of marketing expenses necessary to achieve the projected market share for both loan
and deposit products, consistent with those experienced by other institutions in the market; and a
sensitivity analysis of the financial projections to reflect the effects of adverse changes in interest
rates, changes in the asset/liability mix, higher than expected operating expenses, marketing
costs, and/or growth rates. All financial projections should be well-supported and sufficiently
detailed.
Additional Considerations Regarding Business Plans
Bank CEOs who have successfully opened a de novo institution have, in a variety of settings,
provided advice regarding several important aspects of the organization of an institution. The
CEOs discussed best practices and shared advice from their experiences with other meeting
participants during de novo outreach events and through participation in the FDIC’s Advisory
Committee on Community Banking
EOs who have successfully opened a de novo institution have, in a variety of settings,
provided advice regarding several important aspects of the organization of an institution. The
CEOs discussed best practices and shared advice from their experiences with other meeting
participants during de novo outreach events and through participation in the FDIC’s Advisory
Committee on Community Banking.
The CEOs have noted that institutions should develop a business plan that is sustainable through
each stage of the business cycle, and then operate under the established plan. The CEOs further
indicated that organizers should regularly discuss the business plan to ensure everyone has
confidence in the plan and should ensure that potential investors understand the plan and are
investing for long-term growth.
With respect to IT and the proposed institution’s core processing environment, the CEOs also
advised that management take the time to fully consider vendor and product options, as this is
one of the most important decisions to be made. The CEOs suggested thinking about the
services customers will want and the institution’s proposed growth plans. The CEOs
characterized this initial contract negotiation as critical in terms of its importance. The CEOs
suggested that if management is not familiar with the primary IT vendors, management should
talk to other bankers or, as appropriate, engage a qualified consultant before making any vendor
selection and negotiating a contract. They believed these additional steps in the due diligence
process would enable management to carefully consider the selection of a core processor and
best negotiate the related contracts.
During the first three years of operation, a newly insured institution will be required to operate
within the parameters of its business plan and provide prior notice22 to the FDIC or its PFR, if
not the FDIC, for any material change to, or major deviation from, the business plan
ble management to carefully consider the selection of a core processor and
best negotiate the related contracts.
During the first three years of operation, a newly insured institution will be required to operate
within the parameters of its business plan and provide prior notice22 to the FDIC or its PFR, if
not the FDIC, for any material change to, or major deviation from, the business plan. The board
should regularly monitor actual performance in relation to the business plan projections, budgets,
and other benchmarks. Any significant deviations in balance sheet composition, financial
performance, or other key metrics should be promptly identified, and remedial strategies should
be developed to bring the institution into conformance with the approved business plan.
22 The FDIC may require the applicant to seek prior approval of a business plan change in cases involving higher
complexity or elevated risk.
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In limited instances, a de novo institution’s circumstances may necessitate a change to its
business plan. Major deviations or material changes from the plan could involve adjustments to
the target geographic market, additional branching or expansion plans, new products or services,
new activities or third-party relationships, growth that significantly exceeds or falls short of
projections, and other unexpected outcomes that could influence the institution’s risk profile. De
novo institutions contemplating business plan changes should contact the appropriate FDIC
regional office and other relevant agencies, including the institution’s chartering authority, to
discuss potential changes.23
Planning for Organizational Expenses
De novo institutions incur certain organizational expenses before they open for business
nfluence the institution’s risk profile. De
novo institutions contemplating business plan changes should contact the appropriate FDIC
regional office and other relevant agencies, including the institution’s chartering authority, to
discuss potential changes.23
Planning for Organizational Expenses
De novo institutions incur certain organizational expenses before they open for business. For
example, all organizing groups expend time and resources to prepare an application and
supporting documentation including a business plan, feasibility studies, and pro forma financial
projections. There also are costs associated with facilitating a capital raise, retaining members of
the management team, and completing other organizational activities. Planning for such
organizational expenses at the outset of the pre-filing process can help minimize unforeseen
expenditures and funding needs.
Many organizers rely on third parties (e.g., attorneys, consultants, or other professionals) to assist
in the organizational process. Although these parties may be experienced and helpful in
navigating regulatory requirements, the FDIC does not require organizers to engage third-party
firms to facilitate the application process. The use of third parties should be carefully considered
based on the nature of the proposal and the level of expert guidance needed by the organizers. In
many cases, sufficient expertise may exist within the organizing group to handle key aspects of
the institution’s organization.
Organizers can play an important role in containing organizational costs by performing due
diligence on third parties, ensuring that the use of such parties is in fact necessary given existing
internal resources, submitting all required information for the deposit insurance application, and
responding in a timely manner to requests from the regulatory authorities
institution’s organization.
Organizers can play an important role in containing organizational costs by performing due
diligence on third parties, ensuring that the use of such parties is in fact necessary given existing
internal resources, submitting all required information for the deposit insurance application, and
responding in a timely manner to requests from the regulatory authorities. Further, organizers
should not prematurely enter into definitive, final, or long-term contracts or agreements related
to institution offices, service relationships, employment, or other relationships due to the
potential costs associated with terminating such agreements or arrangements.
Determining the Initial Amount of Capital
Adequate capital is essential for all banking institutions. In determining the proposed initial
capital, organizers should consider the risks inherent in the institution’s business model, the
potential variability in earnings projections, and the skill and ability of the management team to
carry out the business plan.
23 Refer to the FDIC’s Applications Procedures Manual and the Deposit Insurance Applications Procedures Manual
for further details regarding how the FDIC processes business plan changes.
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Because each proposed de novo institution is unique in terms of its business plan, management
team, market competition, and local economy, the FDIC does not prescribe a minimum dollar
level of capital for any given proposal. Instead, the FDIC considers the unique factors of each
application and sets a minimum capital requirement based on an evaluation of the proposed
institution’s market dynamics, anticipated size, complexity, activities, concentrations, and
business model. The FDIC will require higher capital if the proposal presents more than routine
risk or novel characteristics
apital for any given proposal. Instead, the FDIC considers the unique factors of each
application and sets a minimum capital requirement based on an evaluation of the proposed
institution’s market dynamics, anticipated size, complexity, activities, concentrations, and
business model. The FDIC will require higher capital if the proposal presents more than routine
risk or novel characteristics. For example, proposals involving limited or specialty business
models may need higher capital to mitigate the inherent risks.
The FDIC expects the initial capital of each de novo institution to be sufficient to provide a tier 1
capital to assets leverage ratio24 of not less than 8 percent throughout the first three years of
operation.25 In addition, the institution must maintain an adequate ALLL. The business plan
should not assume, for the first three years of operation, any new or additional capital raises
beyond the initial capital contributions made during the institution’s organization phase. During
the first three years of operation, any cash dividends should be paid only from net operating
income, and should not be paid until an appropriate ALLL has been established and overall
capital is adequate. Organizers should not assume that the institution will make any dividend
payments during this time frame.
See the SOP for additional details regarding capital.
Pre-Filing Meetings
The FDIC strongly encourages organizers to meet with FDIC staff and other applicable
regulatory agencies before submitting a deposit insurance application, which will aid organizers
in developing a complete application and facilitate the review process.
Pre-filing meetings are beneficial for both prospective applicants and the supervisory agencies.
The meetings promote open communication regarding the specifics of the application, regulatory
expectations, and the application review process
ies before submitting a deposit insurance application, which will aid organizers
in developing a complete application and facilitate the review process.
Pre-filing meetings are beneficial for both prospective applicants and the supervisory agencies.
The meetings promote open communication regarding the specifics of the application, regulatory
expectations, and the application review process. Additionally, pre-filing communication with
the FDIC can minimize the amount of time required for the application review process by
providing potential applicants with a clear understanding of the requirements and providing the
FDIC with the opportunity to identify early in the process any issues that need to be addressed by
the applicant.
As a general rule, pre-filing meetings are attended by the FDIC, the chartering authority, and, as
appropriate, the FRB as PFR or holding company supervisor. FDIC representatives generally
include staff from the regional office and field office for the location in which the institution
would be headquartered. Staff from the FDIC’s Washington Office may also attend. During the
meeting, the participating agencies will discuss regulatory expectations and provide an overview
24 As defined in the appropriate capital regulation of the institution’s PFR.
25 As appropriate, and depending on the institution’s risk profile, the FDIC may establish additional capital
requirements based on common equity, tier 1 risk-based, and/or total risk-based capital. Additionally, in September
2019, the FDIC approved a Final Rule that allows qualifying institutions to use an optional community bank
leverage ratio (CBLR) framework for calculating and reporting regulatory capital ratios
depending on the institution’s risk profile, the FDIC may establish additional capital
requirements based on common equity, tier 1 risk-based, and/or total risk-based capital. Additionally, in September
2019, the FDIC approved a Final Rule that allows qualifying institutions to use an optional community bank
leverage ratio (CBLR) framework for calculating and reporting regulatory capital ratios. Qualifying institutions
include those with 1) less than $10 billion in average total consolidated assets (ATCA), 2) off balance sheet
exposures of 25 percent or less of ATCA, and 3) trading assets plus trading liabilities of 5 percent or less of ATCA,
provided the institution does not apply the advanced approaches capital framework.
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of the application process, including general timelines for processing. Staff may also address
special information needs and other matters specific to the application so that the applicant can
include appropriate information in the submission.
FDIC staff is available to discuss proposals, even at the earliest stages of development, and
answer any questions that organizers may have regarding regulatory requirements or the
application process. To schedule a meeting with FDIC staff, organizers should contact the
appropriate FDIC regional office.
Draft Proposals
The FDIC has established a voluntary process for the receipt and review of draft deposit
insurance proposals. While the process may be particularly helpful for business models that present
unusual or complex aspects, or for groups seeking technical assistance, any organizing group may
choose to submit a draft proposal to obtain feedback beyond that typically available through the
existing pre-filing process. Refer to FIL-82-2018 for additional information, including an
implementing document that describes the FDIC’s review process for draft deposit insurance
proposals
present
unusual or complex aspects, or for groups seeking technical assistance, any organizing group may
choose to submit a draft proposal to obtain feedback beyond that typically available through the
existing pre-filing process. Refer to FIL-82-2018 for additional information, including an
implementing document that describes the FDIC’s review process for draft deposit insurance
proposals.
SECTION II: THE APPLICATION PROCESS
After completing the initial organizational steps and gaining insights from the pre-filing meeting,
organizers should be in a position to prepare and submit applications to the appropriate
regulatory agencies. Section 5 of the FDI Act requires any proposed depository institution
seeking federal deposit insurance to file an application with the FDIC.
The Application Form may be used to apply for deposit insurance from the FDIC, as well as a
charter from either the OCC or the applicable state authority.26
If the proposed organizational structure will include a holding company, an application (or
multiple applications) will also need to be filed with the FRB.
Overview of the Review and Evaluation Process
Although the FDIC’s processing time will vary depending on the unique characteristics of a
proposal, the FDIC strives to act on FDI applications within four months after being accepted as
substantially complete. An application is considered substantially complete when the FDIC has
the necessary information to fully consider each of the applicable statutory factors and any other
regulatory requirements. In general, an application will be deemed substantially complete if an
applicant has provided the information required in the Application Form, and the submitted
information does not raise significant follow-on questions
onsidered substantially complete when the FDIC has
the necessary information to fully consider each of the applicable statutory factors and any other
regulatory requirements. In general, an application will be deemed substantially complete if an
applicant has provided the information required in the Application Form, and the submitted
information does not raise significant follow-on questions. Significant follow-on questions may
arise when, for example, inconsistencies exist between sections of the application, the business
plan is lacking in certain respects, concerns are identified with respect to the proposed corporate
structure or relationships, potential concerns are raised in the review of required IBFR filings, or
26 Use of the Application Form is optional; however, the material submitted to the FDIC must contain all
information required in the form, unless the FDIC otherwise indicates. Organizers should sign the applicable
certification page(s) even if the form itself is not being used.
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other aspects of the proposal require further details in order for the FDIC to assess the risks
presented and any mitigating factors.
Organizers should expect regular communication with the FDIC throughout the application
process, with communication generally occurring at the intervals described below.
• Within three business days of receipt of an application for deposit insurance, the FDIC will
provide a written response to the applicant acknowledging receipt and requesting publication
of the filing in a local newspaper, if publication has not already occurred. FDIC staff will
then coordinate internally and with other relevant agencies to conduct an initial review of the
application and facilitate a common understanding of the proposal. The focus of the initial
review is on the completeness, accuracy, and consistency of the filing
ledging receipt and requesting publication
of the filing in a local newspaper, if publication has not already occurred. FDIC staff will
then coordinate internally and with other relevant agencies to conduct an initial review of the
application and facilitate a common understanding of the proposal. The focus of the initial
review is on the completeness, accuracy, and consistency of the filing.
• In most cases, within 30 days of receipt of the application, the FDIC will provide a letter to
the applicant noting either that the application is substantially complete and accepted for
processing, or that additional information is needed.27 If additional information is needed,
the letter will include specific questions and requests, and will include a date by which the
information should be submitted. Applicants are normally provided up to 30 days to respond
to such requests.
• If the application is substantially complete, a field investigation will be coordinated among
the relevant agencies, including the chartering authority and, as applicable, the local Federal
Reserve Bank. In completing the field investigation, the FDIC will communicate any
identified issues or concerns to the applicant or advise the applicant that no issues or
concerns exist. This communication may occur by letter or through a presentation to the
proponents. The field investigation process should be completed within 60 days of the date
the application was deemed substantially complete and accepted for processing.
• Following the field investigation process, the FDIC will complete the review process, notify
the applicant in writing of any proposed non-standard conditions, seek the applicant’s written
concurrence to the non-standard conditions, and finalize the recommendation for action.
This process should be completed within 30 days of the FDIC’s prior communication
te and accepted for processing.
• Following the field investigation process, the FDIC will complete the review process, notify
the applicant in writing of any proposed non-standard conditions, seek the applicant’s written
concurrence to the non-standard conditions, and finalize the recommendation for action.
This process should be completed within 30 days of the FDIC’s prior communication.
If an applicant has concerns regarding the FDIC’s review of its application, including concerns
with respect to processing timeframes or other pre-decisional matters, the applicant may request
a review by the Division Director similar to the informal review process discussed in FIL-51-
2016, Reminder on FDIC Examination Findings. The informal review process is available solely
for pre-decisional processing matters. Applicants may not use this process to request a review of
the FDIC’s analysis or preliminary findings with regard to any statutory factor or the application,
as a whole; determinations involving conditions to be imposed in connection with approving the
application; or situations where the FDIC has offered the applicant an opportunity to withdraw
the filing.
27 A letter to the applicant for a non-bank or non-community bank proposal may take up to 45 days to issue
depending on the matters presented.
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Application Requirements
Part 303 of the FDIC Rules and Regulations describes the FDIC’s application requirements in
detail.28 The Application Form, which should be filed with the appropriate FDIC regional
office,29 includes information that the chartering authority and the FDIC will need to evaluate the
proposal. It provides general instructions, specific information fields and forms (e.g., organizer
certification forms and director oath forms), and supplemental guidelines for business plans
including template financial schedules
n Form, which should be filed with the appropriate FDIC regional
office,29 includes information that the chartering authority and the FDIC will need to evaluate the
proposal. It provides general instructions, specific information fields and forms (e.g., organizer
certification forms and director oath forms), and supplemental guidelines for business plans
including template financial schedules. Pursuant to Sections 303.7 and 303.23 of the FDIC Rules
and Regulations, applicants must also publish a notice of the institution’s proposed formation in
a newspaper of general circulation in the community in which the main office of the institution
will be located.
Application Content
The core portion of the Application Form includes the following eight sections and general
information requirements:
Overview – Business description, any legal or permissibility issues, copies of related
applications,30 offering materials, and corporate documents.
Management – List of the organizers, proposed directors, senior executive officers, and 10-
percent-or-more shareholders, and an IBFR and electronic fingerprints for each of those
individuals; signed oath of director forms; and details regarding director and management
qualifications, responsibilities, compensation, conflicts of interest, and interlocks.
Capital – Details regarding each class of stock, the adequacy of the proposed capital structure,
all known stock subscribers, and any fees to be paid in connection with the sale of stock.
Convenience and Needs of the Community – Details regarding market characteristics and the
CRA plan, which should include demographic and economic information on the assessment area,
as well as the strategy for meeting the credit needs of the assessment area, including low- and
moderate-income communities
known stock subscribers, and any fees to be paid in connection with the sale of stock.
Convenience and Needs of the Community – Details regarding market characteristics and the
CRA plan, which should include demographic and economic information on the assessment area,
as well as the strategy for meeting the credit needs of the assessment area, including low- and
moderate-income communities.
Premises and Fixed Assets – A description of the physical premises, details on whether the
premises will be purchased or leased, a description of the physical security program and property
insurance, a discussion of any significant environmental or historical sites/structures impact, and
any plan to establish branches within the first three years.
28 The procedures governing the processing of a deposit insurance application are contained in Part 303, Subpart B
of the FDIC Rules and Regulations (12 CFR part 303).
29 FDIC regional office staff will advise the organizers on the number of hard copies of the application that should
be provided (in addition to the original signed copy) and will communicate procedures for secure electronic
submission.
30 Related applications may include holding company filings, as well as institution-specific filings. Institution-
specific filings may include, for example, applications to establish branches or offer fiduciary services upon
opening, each of which would be subject to separate application and publication requirements.
copy) and will communicate procedures for secure electronic
submission.
30 Related applications may include holding company filings, as well as institution-specific filings. Institution-
specific filings may include, for example, applications to establish branches or offer fiduciary services upon
opening, each of which would be subject to separate application and publication requirements.
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Information Systems – A description of any products and services that will be delivered
electronically, an outline of the proposed information systems, budgeting for IT, and a
description of the information security program.
Business Plan and Financial Projections – A comprehensive, written plan that results from in-
depth planning of the organizers and management. Appropriate supporting financial schedules,
as well as key assumptions, sensitivity analyses, and market/feasibility studies should also be
provided.
Other Information – A list of any activities and functions that will be outsourced to third parties,
a description of the vendor management program, details on all planned organizational expenses,
key operating policies, and the institution’s BSA/AML program.
The materials collected through the Application Form provide the information the regulatory
agencies need to evaluate a charter or insurance application. Therefore, it is important that the
materials be complete and responsive to all questions in the Application Form. Individuals
completing the application and any related forms should carefully follow the instructions
provided and any applicable statutes, regulations, policies, and guidance.
Each agency has specific purposes and timing requirements for information requested in the
Application Form
, it is important that the
materials be complete and responsive to all questions in the Application Form. Individuals
completing the application and any related forms should carefully follow the instructions
provided and any applicable statutes, regulations, policies, and guidance.
Each agency has specific purposes and timing requirements for information requested in the
Application Form. Depending on the institution’s anticipated risk profile, certain aspects (e.g.,
fully developed policies for all main business functions) may not be necessary at the time the
application is filed. If not provided at the time of filing, policies should be provided as soon as
possible thereafter to enable a complete review during the field investigation.
Public vs. Confidential Information
Certain portions of the application will be available for public review and comment. The FDIC
may receive requests for copies of a deposit insurance application from individuals,
organizations, the media, or other interested parties. Pursuant to Section 303.8 of the FDIC
Rules and Regulations, any person may inspect or request a copy of the non-confidential portions
of the application until 180 days following the final disposition of the filing. Following the 180-
day period, non-confidential portions of an application file will be made available upon request
in accordance with the Freedom of Information Act (FOIA).31
In the event the FDIC receives a request for a copy of a deposit insurance application, staff will
review the full submission to determine the portions that may be made public according to
Section 303.8 of the FDIC Rules and Regulations. Because applications are generally submitted
with the public and confidential portions identified by the applicant, the FDIC will consider the
applicant’s suggested categorizations when making a disclosure determination
it insurance application, staff will
review the full submission to determine the portions that may be made public according to
Section 303.8 of the FDIC Rules and Regulations. Because applications are generally submitted
with the public and confidential portions identified by the applicant, the FDIC will consider the
applicant’s suggested categorizations when making a disclosure determination. However, if
there is a conflict between the applicant’s suggested categorization and the FDIC’s
determination, our staff will contact the applicant to discuss this issue prior to disclosure.
31 The FOIA, a federal statute, provides that any person has a right, enforceable in court, to obtain access to federal
agency records, except to the extent that any portions of such records are protected from public disclosure by one of
nine exemptions or by one of three special law enforcement record exclusions. The FOIA thus established a
statutory right of public access to Executive Branch information in the federal government. Section 309.5 of the
FDIC Rules and Regulations implements FOIA and provides procedures for requesting records. Refer to the FDIC
FOIA Service Center for additional information regarding FOIA and public information.
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MORE TO KNOW: Examples of Public vs. Confidential Information
Public Information
•
General information in the business plan;
•
Lists of organizers, directors, and senior executive officers;
•
The oath of director forms (with the signatures and any other personally identifiable information,
such as personal addresses redacted);
•
Lists of board committees and members;
•
Descriptions of each proposed senior executive officer’s duties and responsibilities;
•
The institution’s articles of association, articles of incorporation, corporate charter, and proposed
bylaws (if publicly available from the incorporating state);
•
Information about the proposal’s effect on
information,
such as personal addresses redacted);
•
Lists of board committees and members;
•
Descriptions of each proposed senior executive officer’s duties and responsibilities;
•
The institution’s articles of association, articles of incorporation, corporate charter, and proposed
bylaws (if publicly available from the incorporating state);
•
Information about the proposal’s effect on the quality of the human environment or the impact on
historic locations;
•
The CRA Plan;
•
Descriptions of general issues pertaining to applicable laws or regulations;
•
Materials related to public stock offerings and public debt issuances;
•
Non-confidential supplementary information filed during the application review process; and
•
Comments received from interested parties.
Confidential Information
•
Personal information protected by privacy statutes;
•
Commercial or financial information, the disclosure of which could result in substantial
competitive harm to the submitter; and
•
Information that could adversely affect the financial condition of any depository institution.
The FDIC may also receive public comments regarding a pending deposit insurance application.
Pursuant to Section 303.9 of the FDIC Rules and Regulations, if a comment is received, the
FDIC will provide a copy of the comment letter to the applicant who will have an opportunity to
make a formal response. Under Section 303.8 of the FDIC Rules and Regulations, the comment
letter and any response from the organizers, if provided, will become part of the public record of
the application to the extent they are not afforded confidential treatment
ons, if a comment is received, the
FDIC will provide a copy of the comment letter to the applicant who will have an opportunity to
make a formal response. Under Section 303.8 of the FDIC Rules and Regulations, the comment
letter and any response from the organizers, if provided, will become part of the public record of
the application to the extent they are not afforded confidential treatment.
Evaluating the Statutory Factors
The FDIC considers the statutory factors enumerated in Section 6 of the FDI Act when
evaluating any deposit insurance application.32 The statutory factors consist of the following:
• Financial History and Condition,
• Adequacy of the Capital Structure,
• Future Earnings Prospects,
• General Character and Fitness of Management,
• Risk to the Deposit Insurance Fund,
• Convenience and Needs of the Community to be Served, and
• Consistency of Corporate Powers with the FDI Act.
32 Per Section 5 of the FDI Act, the FDIC Board of Directors shall consider the factors described in Section 6 in
determining whether to approve the application for deposit insurance.
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Refer to the SOP for additional information regarding how the FDIC interprets the statutory
factors. The primary considerations for each statutory factor are summarized as follows:
Financial History and Condition – The proponents’ ability to provide financial support to the
new institution; the reasonableness of the aggregate direct and indirect investment in fixed assets,
including lease obligations; and whether insider transactions are made on substantially the same
terms as those prevailing at the time for comparable transactions with non-insiders and do not
involve more than normal risk
d Condition – The proponents’ ability to provide financial support to the
new institution; the reasonableness of the aggregate direct and indirect investment in fixed assets,
including lease obligations; and whether insider transactions are made on substantially the same
terms as those prevailing at the time for comparable transactions with non-insiders and do not
involve more than normal risk.
Adequacy of the Capital Structure – Generally, whether the institution has initial capital
sufficient to provide a tier 1 capital-to-assets leverage ratio of not less than 8 percent throughout
the first three years of operation; the adequacy of the proposed ALLL; and the acceptability of
the capital structure and any stock financing arrangements by proposed insiders.
Future Earnings Prospects – Whether the institution can achieve and sustain adequate
profitability within a reasonable period (normally three years) as projected in realistic and
supportable estimates.
General Character and Fitness of Management – For each proposed director and officer, the
individual’s experience, proposed duties, personal and professional financial responsibility, track
record for honesty and integrity, and familiarity with the proposed institution’s community;
whether the institution’s stock benefit plans, including stock options, stock warrants, and other
similar stock-based compensation plans are acceptable; and the sufficiency of fidelity insurance,
policies, and audit coverage.
Risk to the Deposit Insurance Fund – The FDIC will rely on any available information including,
but not limited to, the business plan and financial projections.
Convenience and Needs of the Community to be Served – The deposit and credit needs of the
community to be served, and the applicant’s willingness and ability to serve those needs; and the
proposed institution’s CRA documentation, including any applicable public file information,
prepared in accordance with the requirements of the institution’s PFR
e business plan and financial projections.
Convenience and Needs of the Community to be Served – The deposit and credit needs of the
community to be served, and the applicant’s willingness and ability to serve those needs; and the
proposed institution’s CRA documentation, including any applicable public file information,
prepared in accordance with the requirements of the institution’s PFR.
Consistency of Corporate Powers with the FDI Act – Whether the institution plans to engage as
principal in any impermissible activity.
In general, deposit insurance will be granted if each of the statutory factors plus the
considerations required by the National Historic Preservation Act (NHPA) and the National
Environmental Policy Act of 1969 (NEPA) are favorably resolved. Additional guidance
regarding these laws may be found in the respective Statements of Policy on NHPA and NEPA.
In some cases, the FDIC is unable to favorably resolve each of the statutory factors and the
request for federal deposit insurance is not granted. We notify the organizers of such a
determination as soon as possible, explain the rationale for our conclusion, and present potential
options that the organizers might consider to address the unfavorable statutory factor(s) if such
options exist. The organizers may choose to modify the application to address the underlying
concerns or, at the FDIC’s discretion, applicants may be offered the opportunity to withdraw the
filing.
determination as soon as possible, explain the rationale for our conclusion, and present potential
options that the organizers might consider to address the unfavorable statutory factor(s) if such
options exist. The organizers may choose to modify the application to address the underlying
concerns or, at the FDIC’s discretion, applicants may be offered the opportunity to withdraw the
filing.
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Note: The FDIC’s criteria for evaluating applications submitted by operating financial services
entities seeking to convert to an FDIC-insured institution (including credit unions, mortgage or
finance companies, limited purpose trust companies, and other entities) are generally the same as
those for other proposed de novo institutions. In circumstances involving an existing non-
insured entity applying for deposit insurance, the FDIC will review the institution’s financial and
operating history, current condition, the nature and extent of any proposed affiliate relationships,
and all relevant considerations with respect to the statutory factors to ensure the institution would
not pose undue risk to the DIF.
FDIC Staff Involvement and Field Investigations
Deposit insurance applications are evaluated at both the FDIC regional office and field office
levels. At the regional office, a case manager will be designated as the primary point of contact
for the organizers. The case manager, who also may have participated in the pre-filing meeting
or other preliminary discussions, will conduct the initial review of the application, refer the
application to the field office for investigation, review the investigation results, interact with
other FDIC staff, and coordinate with other regulatory agencies as appropriate
e primary point of contact
for the organizers. The case manager, who also may have participated in the pre-filing meeting
or other preliminary discussions, will conduct the initial review of the application, refer the
application to the field office for investigation, review the investigation results, interact with
other FDIC staff, and coordinate with other regulatory agencies as appropriate.
Once the application is accepted as substantially complete, the case manager will forward the
application to the field office/territory that has supervisory responsibility for the area where the
institution is to be headquartered. The field office supervisor will assign an examiner to conduct
a field investigation, which serves as the FDIC’s on-site review of the de novo proposal with the
organizers. The chartering authority may also participate in the field investigation.
During the investigation, the examiner will meet with the organizers and proposed directors to
ascertain their understanding of their responsibilities as directors; understanding of the financial
projections and capital needs; abilities to execute the business plan; and commitment to the
proposed institution. The examiner will focus particular attention on the feasibility and
reasonableness of the business plan (including the financial projections), the experience and
competency of the management team, and the adequacy of the proposed capital. These aspects
are critical because they will have a significant bearing on the institution’s prospective risk
profile and performance.
The examiner may also meet with other bankers in the community as well as local community
groups to evaluate the competitive environment of the marketplace and deposit and credit needs
of the community. Finally, the examiner will summarize her or his findings from the
investigation and will submit the findings to the case manager
he institution’s prospective risk
profile and performance.
The examiner may also meet with other bankers in the community as well as local community
groups to evaluate the competitive environment of the marketplace and deposit and credit needs
of the community. Finally, the examiner will summarize her or his findings from the
investigation and will submit the findings to the case manager.
The case manager will review the results of the field investigation, ensure that any issues or
concerns conveyed to the organizers are resolved, prepare final recommendations regarding the
disposition of the application for the designated FDIC official(s), and ultimately will be assigned
responsibility for the ongoing supervision and monitoring of the institution once it opens for
business.
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Depending on the application characteristics and the findings with regard to the statutory factors,
the application may be acted on at the regional level, at the divisional level (at the FDIC’s
Washington Office), or by the FDIC Board of Directors.33
Regardless of the nature or circumstances of the proposal, field and regional staff will
communicate with organizers throughout the application process and keep them apprised of our
status in considering the application.
Approval Conditions
The FDIC imposes certain conditions on all institutions that are granted deposit insurance.
These conditions include minimum initial and ongoing capital for the three-year de novo period,
fidelity bond insurance coverage, and financial statement audit requirements, among other
conditions.
The FDIC may also impose non-standard conditions on a case-by-case basis. Typically,
non-standard conditions are used when the FDIC determines that additional controls are
appropriate or necessary to mitigate risks unique to the proposal
ongoing capital for the three-year de novo period,
fidelity bond insurance coverage, and financial statement audit requirements, among other
conditions.
The FDIC may also impose non-standard conditions on a case-by-case basis. Typically,
non-standard conditions are used when the FDIC determines that additional controls are
appropriate or necessary to mitigate risks unique to the proposal. Non-standard conditions may
also be needed to ensure that actions or activities in process at the time of approval are
completed before deposit insurance becomes effective. It is the FDIC’s practice to seek the
applicant’s written agreement to any non-standard conditions before the FDIC grants deposit
insurance.
The most common non-standard conditions address business plan changes, employment
agreements and stock options plans, bank policies, and additional directors or officers.34 Non-
standard conditions may also address corporate relationships, management authority and
independence, and other areas, as appropriate. Most non-standard conditions do not exceed the
three-year de novo period. However, certain conditions may be imposed for any length of time
deemed necessary to mitigate risk.
Depending on the nature and complexity of the proposal, the FDIC may impose non-standard
conditions that require the institution and/or other applicable parties (such as certain affiliates or
investors) to enter into a written agreement. Written agreements, which are intended to address
specific risks or supervisory matters, may include parent company agreements, capital and
liquidity maintenance agreements, operating agreements, and passivity agreements.
All approval conditions are enumerated in the FDIC’s Order for Federal Deposit Insurance,
which is issued with a formal Statement indicating the basis for approval. Each of these
documents will be made publicly available on the FDIC’s website
rvisory matters, may include parent company agreements, capital and
liquidity maintenance agreements, operating agreements, and passivity agreements.
All approval conditions are enumerated in the FDIC’s Order for Federal Deposit Insurance,
which is issued with a formal Statement indicating the basis for approval. Each of these
documents will be made publicly available on the FDIC’s website. Appendix 2 lists (in
33 Generally, applications involving proposed traditional community banks will be acted on at the regional
level. Applications presenting more complexity may require action by the FDIC’s Washington Office, with
authority to act on certain applications being reserved to the FDIC’s Board of Directors. The FDIC’s delegations of
authority for deposit insurance applications and other filings, which are summarized in a matrix and detailed in a
Board Resolution, are accessible through the FDIC’s Laws & Regulations webpage.
34 If the FDIC acts on an application where the full executive officer team has not yet been identified, non-standard
conditions may be imposed that require FDIC non-objection to any proposed executive officer candidate(s). The
conditions may also require the submission of background information, proposed employment agreements and
compensation arrangements, and any other relevant items.
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abbreviated form) the conditions that are frequently imposed in an Order granting deposit
insurance. The FDIC may impose fewer conditions, additional conditions, or variations of these
conditions, depending on the facts and circumstances of each particular proposal.
SECTION III: PRE-OPENING ACTIVITIES
Once conditional approval is received, organizers need to ensure that certain final steps,
described below, are completed prior to the opening of the institution and deposit insurance
becoming effective
pose fewer conditions, additional conditions, or variations of these
conditions, depending on the facts and circumstances of each particular proposal.
SECTION III: PRE-OPENING ACTIVITIES
Once conditional approval is received, organizers need to ensure that certain final steps,
described below, are completed prior to the opening of the institution and deposit insurance
becoming effective.
Satisfying Pre-Opening Conditions
The FDIC’s approval documents, as well as those from the chartering authority, may include
certain conditions that must be satisfied prior to the institution’s opening. These conditions may
require that the organizers submit material to the FDIC demonstrating compliance. Fulfillment
of all pre-opening conditions will be validated by FDIC staff before an insurance certificate is
issued.
Completing the Capital Raise
As a pre-opening condition, organizers need to demonstrate that sufficient funds are in escrow to
meet the initial capital requirement of the deposit insurance Order, which is expressed in U.S.
dollars. In some instances, the institution may have received commitments from investors in the
form of executed subscription agreements, but not yet obtained all of the committed capital
funds. The organizers should coordinate as necessary with counsel and financial advisors to
ensure the capital closing is completed accurately and according to the terms and conditions
stated in the application materials.
Other Pre-Opening Considerations
Various other operational matters may need to be addressed or finalized to ensure that the
institution will begin operations in a seamless manner
e organizers should coordinate as necessary with counsel and financial advisors to
ensure the capital closing is completed accurately and according to the terms and conditions
stated in the application materials.
Other Pre-Opening Considerations
Various other operational matters may need to be addressed or finalized to ensure that the
institution will begin operations in a seamless manner. The following actions, among others, are
integral to the pre-opening process:
• Finalize policies and procedures for all key business areas (e.g., loans, investments, liquidity,
interest rate risk, BSA/AML, compliance, IT, code of ethics, etc.);
• Develop documents for delivering loan, deposit, and other banking products or services;
• Hire and train staff;
• Formalize all service/vendor relationships;
• Ensure all physical office space is ready for occupancy;
• Ensure IT systems will operate as planned;
• Develop strategies to remain aware of physical and cybersecurity threats;35 and
• Institute appropriate security procedures and meet with local law enforcement.
35 The Financial Services Information Sharing and Analysis Center (FS-ISAC) is an industry forum for collaborating
on critical security threats facing the financial services sector. More information is available on the FS-ISAC
website, https://www.fsisac.com.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Once all FDIC and chartering authority approval conditions are satisfied and an opening date is
selected, the case manager will notify the FDIC’s Executive Secretary, who will prepare the
institution’s insurance certificate and forward it to the institution along with membership
materials to be displayed at teller windows.
CONCLUSION
The FDIC is committed to working with, and providing support to, any group with an interest in
starting a de novo institution
d and an opening date is
selected, the case manager will notify the FDIC’s Executive Secretary, who will prepare the
institution’s insurance certificate and forward it to the institution along with membership
materials to be displayed at teller windows.
CONCLUSION
The FDIC is committed to working with, and providing support to, any group with an interest in
starting a de novo institution. New institutions with sound business plans, experienced
leadership at the board and management levels, and appropriate capital support can play a vital
role in serving the deposit and credit needs of their communities.
It is our hope that this Handbook provides organizers a better understanding of the deposit
insurance application process and assists in meeting their objectives in successfully forming a de
novo institution. The FDIC looks forward to discussing new deposit insurance proposals with
organizers and their representatives.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
Page 30
RESOURCES
Agency Contact Information and Websites
Resource
Website
Bureau of Consumer Financial Protection
http://www.consumerfinance.gov
Conference of State Bank Supervisors (Directory of
State Banking Authorities)
https://www.csbs.org/state-bank-agency-contact-quick-
access
Federal Deposit Insurance Corporation (FDIC)
https://www.fdic.gov
FDIC Public Website Dedicated to Applications for
Deposit Insurance
https://www.fdic.gov/regulations/applications/depositinsu
rance/
FDIC Organization Directory and Office Contacts
http://www.fdic.gov/about/contact/directory/
Federal Reserve Board of Governors
http://www.federalreserve.gov
National Credit Union Administration
https://www.ncua.gov/Pages/default.aspx
Office of the Comptroller of the Currency
http://www.occ.gov
Application Form and Related Documents36
Resource
Website
Interagency Charter and Federal Deposit Insurance
Application Form and Instructions
https://www.fdic.gov/formsdocuments/interagencycha
erve Board of Governors
http://www.federalreserve.gov
National Credit Union Administration
https://www.ncua.gov/Pages/default.aspx
Office of the Comptroller of the Currency
http://www.occ.gov
Application Form and Related Documents36
Resource
Website
Interagency Charter and Federal Deposit Insurance
Application Form and Instructions
https://www.fdic.gov/formsdocuments/interagencycharter
-insuranceapplication.pdf
Interagency Biographical and Financial Report
https://www.fdic.gov/formsdocuments/6200-06.pdf
36 Application and IBFR forms are also available in Word format at FDIC: Forms
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Laws and Regulations
Resource
Website
Section 5 of the FDI Act
https://www.fdic.gov/regulations/laws/rules/1000-
600.html
Section 6 of the FDI Act
https://www.fdic.gov/regulations/laws/rules/1000-
700.html
Part 303 of the FDIC Rules and Regulations
https://www.fdic.gov/regulations/laws/rules/2000-
200.html
Part 309 of the FDIC Rules and Regulations
https://www.fdic.gov/regulations/laws/rules/2000-
3800.html
Part 345 of the FDIC Rules and Regulations
https://www.fdic.gov/regulations/laws/rules/2000-
6500.html
Part 363 of the FDIC Rules and Regulations
https://www.fdic.gov/regulations/laws/rules/2000-
8500.html
Part 364 of the FDIC Rules and Regulations
https://www.fdic.gov/regulations/laws/rules/2000-
8600.html
National Historic Preservation Act of 1996 (NHPA)
https://www.fdic.gov/regulations/laws/rules/8000-
5100.html
National Environmental Policy Act of 1969 (NEPA)
https://www.fdic.gov/regulations/laws/rules/8000-
5000.html
Supervisory Guidance
Resource
Website
FDIC Statement of Policy on Applications for Deposit
Insurance (SOP)
https://www.fdic.gov/regulations/laws/rules/5000-
3000.html
FIL 51-2016 (Reminder on FDIC Examination
Findings)
https://www.fdic.gov/news/news/financial/2016/fil16051
l
National Environmental Policy Act of 1969 (NEPA)
https://www.fdic.gov/regulations/laws/rules/8000-
5000.html
Supervisory Guidance
Resource
Website
FDIC Statement of Policy on Applications for Deposit
Insurance (SOP)
https://www.fdic.gov/regulations/laws/rules/5000-
3000.html
FIL 51-2016 (Reminder on FDIC Examination
Findings)
https://www.fdic.gov/news/news/financial/2016/fil16051.
html
FDIC Statement of Policy on NHPA
https://www.fdic.gov/regulations/laws/rules/5000-
1400.html
FDIC Statement of Policy on NEPA
https://www.fdic.gov/regulations/laws/rules/5000-
1500.html
FDIC Statement of Policy Concerning the
Responsibilities of Bank Directors and Officers
https://www.fdic.gov/regulations/laws/rules/5000-
3300.html
FDIC Statement of Policy Regarding Use of Offering
Circulars in Connection with Public Distribution of
Bank Securities
https://www.fdic.gov/regulations/laws/rules/5000-
500.html
Interagency Policy Statement on External Auditing
Programs of Banks and Savings Associations
https://www.fdic.gov/regulations/laws/rules/5000-
2400.html
Interagency Guidance on Sound Incentive
Compensation Policies
https://www.fdic.gov/regulations/laws/rules/5000-
5350.html
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
Page 32
Other Resources
Resource
Website
FDIC Applications Procedures Manual
https://www.fdic.gov/regulations/applications/resources/a
pps-proc-manual/index.html
FDIC Deposit Insurance Applications Procedures
Manual
https://www.fdic.gov/regulations/applications/depositinsu
rance/procmanual.pdf
FDIC Deposit Insurance Applications Procedures
Manual Supplement: Applications from Non-Bank and
Non-Community Bank Applicants
https://www.fdic.gov/regulations/applications/depositinsu
rance/procmanual-supplement.pdf
FDIC Delegations of Authority: Board Resolution
https://www.fdic.gov/regulations/laws/matrix/
FDIC Directors’ Resource Center
https://www.fdic.gov/regulations/resources/director/
FDIC’s Pocket Guide for Director
Procedures
Manual Supplement: Applications from Non-Bank and
Non-Community Bank Applicants
https://www.fdic.gov/regulations/applications/depositinsu
rance/procmanual-supplement.pdf
FDIC Delegations of Authority: Board Resolution
https://www.fdic.gov/regulations/laws/matrix/
FDIC Directors’ Resource Center
https://www.fdic.gov/regulations/resources/director/
FDIC’s Pocket Guide for Directors
https://www.fdic.gov/regulations/resources/director/pocke
t/index.html
FDIC FOIA Service Center
https://www.fdic.gov/about/freedom/
FDIC Risk Management Manual of Examination
Policies
https://www.fdic.gov/regulations/safety/manual/
FDIC Supervisory Insights, Special Corporate
Governance Addition
https://www.fdic.gov/regulations/examinations/supervisor
y/insights/sise16/si-se2016.pdf
FDIC Supervisory Insights, Summer 2016
https://www.fdic.gov/regulations/examinations/supervisor
y/insights/sisum16/SI_Summer16.pdf
FDIC Compliance Examination Manual
https://www.fdic.gov/regulations/compliance/manual/inde
x.html
FDIC Trust Examination Manual
https://www.fdic.gov/regulations/examinations/trustmanu
al/
FFIEC BSA/AML Examination Manual
https://bsaaml.ffiec.gov/manual
FFIEC IT Examination Handbook Infobase
https://ithandbook.ffiec.gov/
Financial Services Information Sharing and Analysis
Center Website
https://www.fsisac.com/
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Appendix 1: FDIC Regional Office Contact Information
Atlanta Regional Office
10 10th Street NW
Suite 800
Atlanta, GA 30309-3849
Toll-free: (800) 765-3342
Local: (678) 916-2200
Chicago Regional Office
300 South Riverside Plaza
Suite 1700
Chicago, IL 60606-3447
Toll-free: (800) 944-5343
Local: (312) 382-6000
Dallas Regional Office
1601 Bryan Street
Dallas, TX 75201
Toll-free: (800) 568-9161
Local: (214) 754-0098
Kansas City Regional Office
1100 Walnut St
Suite 2100
Kansas City, MO 64106-2180
Toll-free: (800) 209-7459
Local: (816) 234-8000
New Yo
Chicago Regional Office
300 South Riverside Plaza
Suite 1700
Chicago, IL 60606-3447
Toll-free: (800) 944-5343
Local: (312) 382-6000
Dallas Regional Office
1601 Bryan Street
Dallas, TX 75201
Toll-free: (800) 568-9161
Local: (214) 754-0098
Kansas City Regional Office
1100 Walnut St
Suite 2100
Kansas City, MO 64106-2180
Toll-free: (800) 209-7459
Local: (816) 234-8000
New York Regional Office
350 Fifth Avenue
Suite 1200
New York, NY 10118-0110
Toll-free: (800) 334-9593
Local: (917) 320-2500
San Francisco Regional Office
25 Jessie Street at Ecker Square
Suite 2300
San Francisco, CA, 94105-2780
Toll-free: (800) 756-3558
Local: (415) 546-0160
Additional information is available at https://www.fdic.gov/about/contact/directory.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Appendix 2: Frequently Imposed Conditions
Sample Conditions Included in an FDIC Deposit Insurance Order
1. The applicant will provide a specific amount of initial paid-in capital.
2. The tier 1 capital-to-assets leverage ratio (as defined in the appropriate capital regulation and
guidance of the institution’s PFR) will be maintained at not less than 8 percent throughout the first
three years of operation and an adequate allowance for loan and lease losses will be provided.
3. Any changes in proposed management or proposed ownership to the extent of 10 percent or more
of stock, including new acquisitions of or subscriptions to 10 percent or more of stock, shall be
approved by the FDIC prior to the institution opening for business.
4. The applicant will adopt an accrual accounting system for maintaining the books of the institution.
5. Where applicable, deposit insurance will not become effective until the applicant has been granted
a charter as a depository institution, has authority to conduct such business, and its establishment
and operation have been fully approved by the appropriate state and/or federal supervisory
authority.
6
nt will adopt an accrual accounting system for maintaining the books of the institution.
5. Where applicable, deposit insurance will not become effective until the applicant has been granted
a charter as a depository institution, has authority to conduct such business, and its establishment
and operation have been fully approved by the appropriate state and/or federal supervisory
authority.
6. Where deposit insurance is granted to an interim institution formed or organized solely to facilitate
a related transaction, deposit insurance will only become effective in conjunction with
consummation of the related transaction.
7. Where applicable, a registered or proposed holding company has obtained approval of the Board of
Governors of the FRS to acquire voting stock control of the proposed depository institution prior to
its opening for business.
8. Where applicable, the applicant has submitted any proposed contracts, leases, or agreements
relating to construction or rental of permanent quarters to the appropriate Regional Director for
review and comment.
9. Where applicable, full disclosure has been made to all proposed directors and stockholders of the
facts concerning the interest of any insider in any transactions being effected or then contemplated,
including the identity of the parties to the transaction and the terms and costs involved.
10. The person(s) selected to serve as the principal operating officer(s) shall be acceptable to the
appropriate Regional Director.
11. The applicant will have adequate fidelity coverage.
12. The institution will obtain an audit of its financial statements by an independent public accountant
annually for at least the first three years after deposit insurance is effective and submit certain
audit-related documents to the appropriate FDIC office within specified time frames.
13. The institution shall operate within the parameters of the business plan submitted to the FDIC
erage.
12. The institution will obtain an audit of its financial statements by an independent public accountant
annually for at least the first three years after deposit insurance is effective and submit certain
audit-related documents to the appropriate FDIC office within specified time frames.
13. The institution shall operate within the parameters of the business plan submitted to the FDIC.
During the first three years of operations, the institution shall provide prior notice to the
appropriate Regional Director or its PFR, if not the FDIC, for any proposed major deviation or
material change from the submitted business plan.
14. The institution will develop and implement a CRA plan appropriate for its business strategy, if not
previously submitted.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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15. During the first three years of operation, the institution shall notify the appropriate Regional
Director of any plans to establish a loan production office at least 60 days prior to opening the
facility.
16. In cases primarily involving special purpose de novo institutions, where the applicant’s business
plan indicates there will only be an intercompany or similar deposit, the institution shall acquire,
prior to the effective date of deposit insurance, and continue to maintain the requisite deposits to
be “engaged in the business of receiving deposits other than trust funds,” as defined in Section
303.14 of the FDIC Rules and Regulations.
17. If the transaction does not take effect within the specified time period, or unless a request for an
extension of time has been approved, the consent granted shall expire at the end of the time period.
18. Until the FDIC’s conditional commitment becomes effective, the FDIC retains the right to alter,
suspend, or withdraw its commitment if warranted.
f the FDIC Rules and Regulations.
17. If the transaction does not take effect within the specified time period, or unless a request for an
extension of time has been approved, the consent granted shall expire at the end of the time period.
18. Until the FDIC’s conditional commitment becomes effective, the FDIC retains the right to alter,
suspend, or withdraw its commitment if warranted.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Appendix 3: Examples of Prudential Conditions
1.
Prior to the effective date of deposit insurance, the institution will have appointed and will
thereafter maintain a board of directors that is acceptable to the FDIC. The majority of the board
must consist of independent directors, and each director must possess the knowledge,
experience, and capability to carry out the responsibilities of the position in a safe, sound, and
independent manner. An independent director is a director that is (a) not a principal, member,
officer, or employee of the institution, and (b) not a principal, member, director, officer, or
employee of any affiliate or principal shareholder.
2.
Prior to the effective date of deposit insurance, the institution will have appointed and will
thereafter retain a team of senior executive officers that is acceptable to the FDIC. Each senior
executive officer, as defined in 12 C.F.R. 303.101, must possess the knowledge, experience, and
capability to carry out the responsibilities of the position in a safe and sound manner,
independently of the activities of [applicant’s top tier parent] and its affiliated entities.
3.
Absent the prior written non-objection of the appropriate FDIC Regional Director, each senior
executive officer, as defined in 12 C.F.R
ned in 12 C.F.R. 303.101, must possess the knowledge, experience, and
capability to carry out the responsibilities of the position in a safe and sound manner,
independently of the activities of [applicant’s top tier parent] and its affiliated entities.
3.
Absent the prior written non-objection of the appropriate FDIC Regional Director, each senior
executive officer, as defined in 12 C.F.R. 303.101, must have his or her permanent place of work
physically located at the institution’s main office located in [city, state], such that the individuals
will be capable of providing ongoing and direct oversight of the institution’s activities.
4.
The institution will develop and continue to maintain a current written business plan, adopted at
least annually by the institution’s board of directors. The business plan must be appropriate to
the nature and complexity of the institution’s activities, and must be separate from the business
plans of [applicant’s top tier parent] and its affiliated entities. Further, the institution’s board of
directors will ensure that the senior executive officers are delegated reasonable authority to
implement the institution’s business plan independently of [applicant’s top tier parent] and its
affiliated entities, and that the institution’s management, staff, and other resources are adequate
to carry out the business plan in a safe and sound manner, independent of the activities of
[applicant’s top tier parent] and its affiliated entities.
5.
The institution will conduct business pursuant to operating policies that are appropriate to its
business plan, independent from those of [applicant’s top tier parent] and its affiliated entities,
and approved by the institution’s board of directors. The board of directors will also adopt risk
management practices and internal control programs reasonably designed to ensure compliance
with such policies
ution will conduct business pursuant to operating policies that are appropriate to its
business plan, independent from those of [applicant’s top tier parent] and its affiliated entities,
and approved by the institution’s board of directors. The board of directors will also adopt risk
management practices and internal control programs reasonably designed to ensure compliance
with such policies. Further, the board of directors will ensure that the senior executive officers
are delegated reasonable authority to implement the policies independently of [applicant’s top
tier parent] and its affiliated entities. At a minimum, the operating policies and procedures will
include the institution’s [lending, investment, liquidity, asset-liability management, trust, risk
management and internal controls, information technology] activities.
6.
The institution will adhere to U.S. GAAP and maintain separate accounting and other business
records (including customer account records and data) from [applicant’s top tier parent] and its
affiliated entities. The institution’s records and data will be maintained under the control and
direction of authorized officials of the institution and available for review by the FDIC at the
institution’s main office. Further, the institution’s records and data will be sufficiently detailed
and maintained in a manner that provides the institution’s board of directors and senior
executive officers with the objective and transparent information necessary to administer the
institution’s affairs.
f authorized officials of the institution and available for review by the FDIC at the
institution’s main office. Further, the institution’s records and data will be sufficiently detailed
and maintained in a manner that provides the institution’s board of directors and senior
executive officers with the objective and transparent information necessary to administer the
institution’s affairs.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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7.
If management, staff, or other personnel or resources are employed by both the institution and
[applicant’s top tier parent] or any of its affiliated entities, the institution’s board of directors
will ensure that such arrangements are governed by policies and written contracts that provide
the institution’s board of directors and senior executive officers with the authority and control
necessary to administer the institution’s affairs. Further, the written contracts shall explicitly
provide the institution with direct supervisory authority over such personnel, regardless of
whether the effect of the relationship on the institution is direct or indirect, or financial or non-
financial.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Appendix 4: Important Considerations Regarding Compensation and Related Plans
Compensation
•
An institution should maintain safeguards to prevent the payment of compensation, fees, and
benefits that are excessive or could lead to material financial loss. See Appendix A to Part 364
of the FDIC Rules and Regulations, Interagency Guidelines Establishing Standards for Safety
and Soundness (Appendix A - Part 364) for more information on compensation that constitutes
an unsafe and unsound practice
tution should maintain safeguards to prevent the payment of compensation, fees, and
benefits that are excessive or could lead to material financial loss. See Appendix A to Part 364
of the FDIC Rules and Regulations, Interagency Guidelines Establishing Standards for Safety
and Soundness (Appendix A - Part 364) for more information on compensation that constitutes
an unsafe and unsound practice.
•
The Interagency Statement of Policy - Guidance on Sound Incentive Compensation Policies
(Interagency SOP – Incentive Compensation) is intended to assist banking organizations in
designing and implementing incentive compensation arrangements and related policies and
procedures that effectively consider potential risks and risk outcomes.
Stock Benefit Plans or Arrangements (Plans)
•
Plans should encourage the continued involvement of the participants and serve as an incentive
for the successful operation of the institution.
•
Plans should not encourage speculative or high risk activities, or serve as an obstacle to or
otherwise impede the sale of additional stock to the general public.
•
The SOP discusses the following Plan characteristics:
o The duration of rights granted should be limited (exercise period should not exceed ten
years).
o Rights granted should encourage the recipient to remain involved in the proposed
institution.
o Rights granted should not be transferable by the participant.
o The exercise price of stock rights should not be less than the fair market value of the stock
at the time that the rights are granted.
o Rights under the Plan should be exercised or expire within a reasonable time after
termination as an active employee, officer, or director.
o The Plan should contain a provision allowing the PFR to direct the institution to require
plan participants to exercise or forfeit their stock rights if the institution’s capital falls
below the minimum requirements, as determined by its state authority or PFR
under the Plan should be exercised or expire within a reasonable time after
termination as an active employee, officer, or director.
o The Plan should contain a provision allowing the PFR to direct the institution to require
plan participants to exercise or forfeit their stock rights if the institution’s capital falls
below the minimum requirements, as determined by its state authority or PFR.
o Plans to compensate incorporators should not provide for more than one option or warrant
for each share subscribed in the initial stock offering.
o Stock appreciation rights and similar plans should not provide for cash payments to the
recipient based directly on the market value of the institution’s stock during the de novo
period.
•
While each proposed Plan will be evaluated on a case-by-case basis, the accompanying table
summarizes a framework for stock benefits that the FDIC considers to be consistent with
Appendix A - Part 364.
Severance Packages
•
While compensation packages that include severance pay may be necessary to attract qualified
executives, such obligations should not adversely impact the institution.
Employment Agreements
•
Generally, the FDIC has not objected to employment agreement durations of three years or
fewer, or employment agreements with automatic renewal features that are subject to a
satisfactory annual performance appraisal.
October 2025 Applying for Deposit Insurance – A Handbook for Organizers
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Stock Benefits Framework – Based on Role in an Institution’s Organization or Operation
Role
Benefits
Incorporator – no other
role
• Incorporators not continuing as directors or officers should not receive
stock benefits based only on “incorporator” status.
Incorporator – that is
also a proposed director
or senior executive
officer
• Maximum of one option or warrant for each share subscribed in the
initial offering; subject to vesting requirements
ganization or Operation
Role
Benefits
Incorporator – no other
role
• Incorporators not continuing as directors or officers should not receive
stock benefits based only on “incorporator” status.
Incorporator – that is
also a proposed director
or senior executive
officer
• Maximum of one option or warrant for each share subscribed in the
initial offering; subject to vesting requirements.
• On a case-by-case basis, additional stock benefits may be granted to
an incorporator who will also be a senior executive officer, based on
the individual’s demonstrated financial commitment, time, and
expertise.
• In certain cases, additional stock benefits may be allowed for other
roles, such as when the individual is also a provider of organizational
funds or professional services, as described below.
Provider of
organizational funds
(seed money)
• Maximum of one option or warrant for each share received in
repayment of the seed money invested. Stock benefits should only be
granted if seed money is repaid in the form of stock; amounts repaid in
cash should not receive stock benefits.
Provider of professional
or other services
• Maximum of one option or warrant for each share received in lieu of
cash payment for the market value of professional or other services
rendered. Stock benefits may only be granted if fees for services are
being paid in the form of stock; amounts paid in cash should not
receive stock benefits.
Asset
(non-cash) contributor
• Capital is expected to take the form of cash; the valuation of any
assets proposed to be contributed should be supported by one or more
independent appraisal(s).
• Maximum of one option or warrant for each share received in
exchange for the assets contributed.
• Stock benefits should be granted only if payment for the assets to be
contributed is in the form of stock; amounts paid in cash should not
receive stock benefits
orm of cash; the valuation of any
assets proposed to be contributed should be supported by one or more
independent appraisal(s).
• Maximum of one option or warrant for each share received in
exchange for the assets contributed.
• Stock benefits should be granted only if payment for the assets to be
contributed is in the form of stock; amounts paid in cash should not
receive stock benefits.
Loan guarantor
• Stock benefits granted to each individual guaranteeing a loan should
be offered pro rata based on the amount drawn.
• The market value of the stock benefit should not exceed the lower of
the amount drawn on the loan or the amount of the guarantee.
Investor in initial capital
raise
• Any stock benefits granted to investors in the initial capital raise
should be offered proportionately to all investors, and should not
exceed one option or warrant per each share subscribed in the initial
offering.
Post-Opening Stock Benefit Plans
Role
Benefits
Director, officer, or
employee
• Stock benefits that are part of a comprehensive plan to reward future
performance will be reviewed as part of each individual’s total
compensation.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.