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FDIC Announces New Procedures to Streamline Deposit Insurance Applications

The new proposals align with other recent pro-chartering policies at the federal agencies. But standards have not been lowered and the FDIC will need to demonstrate a new track record.
By   Max Bonici and Stephen T. Gannon
08.14.26
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The FDIC this week announced a new process to review deposit insurance applications. The FDIC seeks to encourage new bank formation and accelerate the reviews with an eye toward efficiency. The new process has two phases. In phase one, the FDIC tacks in the OCC's direction with a 120-day window that should give applicants a better indication of where they stand before investing large amounts of time and resources in what has most recently been an indefinite, ill-defined, and subjective process. In phase two, the FDIC and applicants will seek to work within a year on the remaining detailed, substantive parts.

Key Takeaways

  • Phase 1. A new 120-day window for "contingent authorization," is largely similar to the OCC's 120-day window for conditional approval determinations and should add much-needed discipline to FDIC deposit insurance application reviews.
  • Phase 2. Involves a period of "within 12 months" from the contingent authorization and "within 6 months" from approval and issuance of the deposit insurance order for finalization. Until a credible quantum of data shows otherwise, a minimum of 18 months for many applicants may still be a reasonable estimate—time will tell.
  • High standards remain. Even though the FDIC deposit insurance reviews are now subject to new front-end clarity, it doesn't mean substantive standards have been lowered. It's entirely possible that contingent authorizations do not follow.
    • The FDIC procedures summarize the breadth of factors the FDIC reviews even as a non-chartering agency: compensation, third-party/vendor activities, background checks, copies of leases, among many other details.
  • The procedures are charter neutral—which should support prospective ILC applications. Industrial banks and industrial loan companies (ILCs) are not disfavored or mentioned. Taken at face value, these procedures suggest that there has never been a better time to apply for an ILC, which necessarily involves an FDIC deposit insurance application.
    • But in the absence of actual ILC approvals, the cleanest/fastest insured depository institution option remains a full national bank charter.

The New Two-Phase Approach

Under the new approach, the FDIC will provide de novo applicants who satisfy requirements with (1) contingent authorization within 120 days of receiving the application and (2) approval within the subsequent 12 months following the receipt of additional information and completion of key organizational steps. When applicants notify the FDIC that the institution is ready to open, the FDIC will affirm that all pre-opening conditions have been met.

The FDIC anticipates that applicants will generally be able to file applications concurrently with both the FDIC and the chartering agency. The FDIC will coordinate with the chartering agency in the interest of efficiency—where the OCC is concerned, that has potential to keep the FDIC moving. The FDIC noted that its new process is generally consistent with the 21st Century ROAD to Housing Act, which, among other provisions, directs the federal banking agencies to review and streamline the de novo application process. The fact that the FDIC couldn't make this change on its own, and at the beginning of the current Administration, to align with the OCC's approach is notable. The difference may reflect the FDIC's inherent caution as the federal deposit insurer and its own institutional habits. It will be important to see if the FDIC sticks to its own schedule and whether the Treasury secretary (who has assumed a coordinating role), others in the Administration, or applicants can hold the FDIC accountable.

Two notable recent de novo bank charters that involved FDIC deposit insurance applications were for Erebor and Augustus National Bank. According to reported FDIC dates, the applications took approximately five months from the date of receipt for Erebor and seven-and-a-half months for Augustus (these dates are different from when they were deemed substantially complete, which demonstrated shorter periods). These were impressive timeframes for all parties concerned.

We have annotated the summary the FDIC provided with some additional color, at the end of this article.

Our Take

The FDIC has taken a step in the right direction that should help applicants by providing more clarity and a more public timeline. It should help them attract investors and raise capital, control for costs, and maintain timelines. It's also an important step if agencies in fact want new charters for institutions of all sizes and legal business models.

The FDIC, however, has not demonstrated the same track record as the OCC over the course of the second Trump Administration. Until more de novo bank charters are granted along with FDIC deposit insurance approvals—including ILC applications—an application involving the FDIC still should be regarded as one of the more time-consuming charter options, especially compared to credible national trust bank charters. But the prospect of accepting U.S. retail deposits is an important differentiating factor.

Annotated FDIC Two-Phase Table

 Phase 1 – Within 120 Calendar Days from Receipt:
Contingent Authorization Phase

Within # of Days from Receipt

Activities

DWT Commentary

3 Business Days

The FDIC sends an acknowledgment letter to the applicant.

 

30 Calendar Days

FDIC staff reviews the Application Form and all supporting exhibits/materials. As part of the initial submission, the FDIC will expect to receive the following content with the application:

  • A comprehensive business plan that provides a market and competitive analysis, customer demographics, anticipated products and services, the planned office/branch structure, and any other pertinent items.
  • Accompanying financial projections with supporting assumptions for the first three years of operations, along with appropriate sensitivity analyses and/or stress testing. The financial projections should include quarterly and year-end data, as well as key ratios/metrics. Financial projections should also be provided for the parent organization, if applicable.
  • A chart depicting the complete ownership and organizational structure, including affiliates. Any foreign ownership should be indicated.
  • A description of the planned capital raise, the proposed amount of capital needed to support the business plan, and any known or anticipated investor commitments. This should include a draft offering circular, if available.
  • The identity of the proposed Chief Executive Officer, any other senior executive officers (if known), and any board members (if known).
  • An Interagency Biographical and Financial Report (IBFR) for each known director, senior executive officer, and principal shareholder.
  • Details regarding the proposed senior executive officer positions and an outline of the preliminary compensation plans, if known.
  • A description of any contract, transaction, professional fees, or other type of planned business relationship involving the insured deposit institution (IDI) and its parent company, affiliates, or any insider.
  • A list of the functions/services that the IDI plans to outsource, and a list of the functions/services that the IDI will perform internally, along with any supporting details.
  • Copies of any related application(s) to other regulatory agencies (federal or state) or details regarding any such application(s) if not yet filed.
  • A copy of the public notice.

The FDIC communicates with the organizers regarding the application's completeness, and if necessary, issues an additional information request (AIR) letter. To the extent possible, such communication and the issuance of AIRs is coordinated with the chartering authority.

FDIC staff initiate background checks, which may extend beyond Phase 1.

A pre-filing meeting with the FDIC is still encouraged.

New applicants, especially fintechs, may find some of this information more detailed than they are accustomed to at this stage of the process. These requirements underscore the importance of demonstrating how operations will work and not merely financial/business viability.

Under the new procedures, there likely is merit in a well-prepared, organized and complete filing. While submissions may be made on a rolling basis, it is best discussed with staff to avoid unnecessary delays.

Attorneys and consultants can help prepare these materials and timely responses from the FDIC and the chartering agency.

 

90 Calendar Days

FDIC/other agency representatives meet with the organizers to conduct initial management and topical interviews. The interviews are coordinated with the chartering authority and/or the appropriate Federal Reserve Board (FRB) office, to the extent possible.

In other recent application contexts, successful applicants have demonstrated that they will have experienced and capable management and directors.

120 Days

(Contingent Authorization)

The FDIC issues a CA letter, if warranted, detailing all pre-opening conditions.

These conditions are important milestones and expectations ahead of being authorized for FDIC deposit insurance.

Carefully planning and implementing them during Phase 2 will avoid delays.
 Phase 2 – Within 12 Months (or Less)
from Contingent Authorization:
Organizational Phase

Within # of Months from CA

Deliverable

DWT Commentary
 12 months

During Phase 2, communication between the organizers, the FDIC, and the other regulatory agencies remains ongoing.

FDIC staff reviews supplemental application materials as soon as they are received. Applicants are encouraged to submit individual Phase 2 items promptly as soon as they are available to allow timely ongoing review. As part of Phase 2, the FDIC expects to receive the following supplementary application content:

  • The names of any board members, senior executive officers, or principal shareholders that have not yet been identified, along with IBFRs for each proposed individual.
  • Employment agreements and final compensation plans including any stock benefit plans and any other incentive or bonus programs.
  • Complete details regarding the capital raise including the final offering circular, any other related investor-related documents, and a final shareholder list.
  • Final organizational documents (e.g., articles of incorporation, by-laws, etc.).
  • Final contracts and agreements for any planned business relationship involving the IDI and its parent company, affiliates, or any insider.
  • Key third-party/vendor agreements and contracts, as applicable, such as those related to the core processing provider, other technological resources, primary products or services, funding, asset/liability management, audit, and other corporate services.
  • The specific office/branch locations and copies of any leases or related agreements.
  • Final risk management and compliance policies, procedures, and internal operating controls.
  • Final plans related to compliance with the Community Reinvestment Act.
  • Any other information relevant for evaluating the statutory factors including, if necessary, updated financial projections.
  • If necessary and, to the extent possible, in coordination with the chartering authority, the FDIC issues AIR letter(s) depending on the materials received.
  • FDIC staff performs additional background checks and completes prior checks.
  • If necessary, depending on the nature or complexity of the proposed IDI's operations, FDIC staff conducts any follow-up investigations or reviews for specific target areas or functions. The interviews are coordinated with the chartering authority and/or the appropriate FRB office, to the extent possible.

Final Approval Items

  • FDIC staff meet with the organizers to discuss any remaining pre-opening conditions, including prior notification (60 or 90 days) of the planned opening date, and to encourage the necessary preparations for beginning operations. The chartering authority and, if applicable, FRB will be invited to attend the meeting.
  • FDIC staff seeks the applicant's written agreement to all proposed conditions that will be included in the FDI Order.
  • The FDIC issues a transmittal letter communicating the final disposition of the application.
 Attorneys and consultants can help prepare timely responses from the FDIC and the chartering agency. Applicants that can maintain momentum will be at an advantage.

The additional operational information is quite detailed and comprehensive. That is not a change from the FDIC's high standards, but notable for new applicants.
 Within 6 Months from Approval and Issuance of the Deposit Insurance Order
 
  • A pre-opening examination is scheduled and completed 30 days before the IDI's proposed opening. The FDIC will coordinate the pre-opening examination with the chartering authority, when possible.
  • A deposit insurance certificate is issued.
  

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Max Bonici and Steve Gannon are partners in DWT's Washington, D.C., office. For questions or more insights, please reach out to the authors or another member of our financial services team and sign up for our alerts.

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