Choose Site

It didn’t used to be this way.

The Office of the Comptroller of the Currency’s (OCC) decision to grant a national bank charter to a new community bank outside of a major money center historically was not the stuff of national press coverage. But, in granting a full-service charter to Winter Park National Bank—which was personally delivered to the bank by none other than Keith Noreika, the acting Comptroller of the Currency—the OCC did something that it has not done for the last nine years, and that fact alone made the OCC’s actions noteworthy.

Somewhat buried in the trade press conversations about the new bank’s charter has been the fact that the bank was approved for deposit insurance by the Federal Deposit Insurance Corporation (FDIC). As we have discussed in previous postings, the FDIC has been reluctant to approve new applications for de novo federal deposit insurance since the financial crisis. Thus far in 2017, however, the FDIC has approved six de novo deposit insurance applications (including Winter Park), so perhaps the FDIC is making good on prior actions to increase the transparency and accessibility of federal deposit insurance, and promises to promote the creation of new community banks.

Does the OCC’s action mean that more charter (and deposit insurance) approvals are in the offing? It is too early to know, although the recent level of regulatory activity (primarily on the FDIC side) optimistically suggests a favorable upward trend for new bank openings. Prospective applicants, however, should be prudently realistic about their chances for charter or deposit insurance approval. Further, from our perspective, there has been no material relaxation of federal charter or deposit insurance approval standards. Therefore, applicants should be prepared to go through a rigorous application review process, with a close and skeptically-minded agency review and challenge of projections, the business plan, the quality and experience of management, and the adequacy of capital support for the applicant bank.

We also would not read much (if anything) into the implications of this OCC action for applicants seeking a federal “fintech” charter from the OCC. The OCC’s proposal to charter fintech national banks has provoked significant opposition from several quarters and is surrounded in controversy, meaning that there are multiple issues of a different nature, not present in a basic application to establish a community bank, that the OCC must consider in granting any such charter.