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Shelba Murphy

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Is This the Age of De Novos?

Posted by Shelba Murphy

Jun 30, 2017 4:45:00 PM

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de no·vo
/dā ˈnōvō, di ˈnōvō/
Starting from the beginning; anew.
“De novo” is the industry term recognizing the formation of a new financial institution, typically a bank.

Between 2010 and end of 2015, only two new banks opened their doors in the US. Since that time, however, an increase in de novo activity has appeared; with two new openings and seven pending approvals.

There are no doubt several reasons for this shift. One reason could be that the failure rate of banks during the recession is fading into history, and the economy is gradually getting back on its feet. Also, the FDIC has lifted some of the regulatory burden on these institutions. For example, in 2009, a regulation (FIL-50-2009) was created that mandated heighted examination procedures to continue for seven years after a bank’s approval. In 2016, this rule was rescinded and the period has been reduced to three years.

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Topics: Financial Services Industry

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