This is the third installment of our series1 evaluating the choice between starting a “new†bank through the de novo chartering process or purchasing an existing bank to implement the new business plan. Since we first wrote on this topic, we have been fortunate to assist a number of clients in forming both de novo2 and de facto de novo banks, including even during the turbulent financial markets in 2023.3 The recent economic downturn, partially caused by the Federal Reserve’s efforts to combat inflation, has noticeably slowed de novo bank organizational efforts. The depressed stock prices for banks and the high-profile failures of several banks in 20234 have also curtailed the interest of both prospective organizers and investors in pursuing new banks. In addition, in our experience, the supportive attitude of the FDIC to de novo banks under former Chairwoman Jelena McWilliams has been supplanted by a less favorable attitude and more prolonged reviews from the agency under current Chairman Martin Gruenberg. Nevertheless, we believe there continue to be significant opportunities to pursue, particularly with de facto de novo banks, as banks acquired in challenging environments can present huge opportunities to investors or acquirers.
