Monthly Archives: November 2019

The de novo comeback…
McWilliams and the new FDIC paradigm

Thanks in large part to regulatory reform and legislative action, 2018 was a banner year for application approvals by the Federal Deposit Insurance Corporation — with 14 new institutions making it over the bar.

2019 has shaped up as the potential start of a “de novo comeback,” as at least 12 of those banks began operation, and another 17 banks received FDIC approval in 2019 — some are already operating, and some hope to in 2020.

(Between January 2012 and January 2017, by contrast, a total of five new banks received FDIC approval — an average of one per year.)

Several of the new banks that began operating this year are based on distinctive business models, such as Washington, DC’s MOXY Bank, which plans to rely heavily on technology and financial literacy programs for low- and moderate-income customers. Joining MOXY were Nevada’s Lexicon Bank, New York’s Generations Commercial Bank, and Virginia’s Trustar Bank.

As we’ve noted before, regulators, including FDIC Chairman Jelena McWilliams, appear to have undergone a paradigm shift when it comes to regulatory approaches to new banks.

“I do not profess to know what the right number of banks in the U.S. is, but I recognize that, like many competitive industries, a dynamic banking sector needs new startups entering the marketplace,” McWilliams wrote for American Banker a year ago.