The Office of the Comptroller of the Currency announced on Aug. 11 that it will prioritize new bank charter applications as part of a “community bank comeback” initiative. The effort seeks to reverse a steep decline in new bank formation that has left many communities without local banking options.
De novo bank formation — the creation of entirely new banks — has been rare since the 2008 financial crisis due to regulatory uncertainty and high compliance costs. The OCC’s announcement signals a deliberate effort to lower barriers for qualified applicants.
The initiative is expected to benefit rural and underserved communities that have experienced waves of bank branch closures over the past decade. As larger banks consolidate, small towns and urban neighborhoods have lost access to in-person banking services, forcing residents to rely on more expensive alternatives.
The OCC also commended recent FDIC governance reforms, suggesting a coordinated interagency approach to easing entry into the banking industry. New bank applicants must receive approvals from both the OCC, which charters national banks, and the FDIC, which provides deposit insurance.
Between 2009 and 2023, fewer than 70 new bank charters were approved nationwide, compared to hundreds annually in the decades before the financial crisis. The decline has contributed to a steady reduction in the total number of U.S. banks, which has fallen from more than 8,000 to fewer than 4,500.
De novo banks are distinct from fintech charter applications, which have faced separate legal and regulatory challenges. The OCC’s initiative focuses on traditional community banks with physical branch locations and conventional banking activities.
The announcement did not specify changes to the charter application process or capital requirements that might encourage more applications.