Denovo Bill Fosters Bank Formation in Underserved Communities

Only 54 de novo banks have been chartered since 2010, compared to the more than 1,300 that were charted between 2000 and the financial crisis, according to the Independent Community Bankers of America (ICBA). A recent FDIC report on community banking trends noted that the number of local community banks has decreased from 6,802 in 2011 to 4,750 at the end of 2019; the majority of those that ceased operations were bought by other community banks. Combined, these two trends have left many communities – especially rural communities – without a local bank branch.

The Promoting Access to Capital in Underbanked Communities Act of 2021 (H.R. 2561) was introduced in April and proposes to improve this situation with the establishment of a three-year phase-in period for de novos to comply with federal capital standards. Other proposed changes would also help provide underbanked individuals and small businesses with convenient access to a range of financial services at local “brick and mortar” bank branches.

The American Bankers Association supports the Act, noting it would “unlock economic opportunity, growth, and investment in communities most in need, while also promoting competition.” The ICBA said the bill promotes regulatory, capital and lending flexibility, spurs competition, expands access and supports the credit and financial services needs of local communities.

Follow the status of the Promoting Access to Capital in Underbanked Communities Act

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