Since the FDIC published Financial Institution Letter (FIL) 50-2009 extending the de novo period for state nonmember institutions from three to seven years, we have heard that FDIC believes the new policy has been misinterpreted in certain respects.  The FDIC has explained to the American Bankers Association that the policy is intended to apply as follows:

  • for banks chartered after August 28, 2009, the entire policy applies, including the requirement to maintain a Tier 1 leverage ratio of 8% for seven years;
  • for banks less than three years old on August 28, 2009, only the new exam schedule and the requirement to submit updated business plans for years four through seven apply; and
  • for banks more than three years old, but less than seven years old, on August 28, 2009, only the new exam schedule applies.

We do not know if the FDIC intends to publicly issue updated guidance to clarify these points.  The text of the Financial Institution Letter itself is relatively vague, although the FDIC’s summary of the Letter explicitly states that the new “procedures apply to existing newly insured institutions.”

In addition, FinCriAdvisor has reported that the OCC, OTS and Federal Reserve have confirmed that they will not be following suit and that their existing de novo periods will remain unchanged.