In my decades in the banking industry, I have had the privilege of guiding dozens of de novo banks through their formation and launch, advising at every phase from initial concept to opening day. This includes my own hands-on experience starting banks before I founded CCG Catalyst Consulting, where we have supported countless organizers in navigating the complexities of regulatory approvals, capital raising, and operational setup. With the current economic climate under the Trump administration, marked so far by stabilizing interest rates since January 2025, renewed FDIC interest in fostering competition, and opportunities in underserved markets, I am receiving inquiries asking: How do you actually start a bank? Not an easy answer, but as a proponent of community banking let me lay out the process and provide some insights to help prospective founders avoid common pitfalls and build a strong foundation.

The Regulatory Landscape: Setting the Stage for Success

Launching a de novo bank is no small feat, governed by a web of federal and state regulations designed to ensure safety, soundness, and public benefit. Whether pursuing a federal charter from the Office of the Comptroller of the Currency (OCC) or a state charter from agencies like a state’s Department of Financial Institutions, all banks must secure deposit insurance from the Federal Deposit Insurance Corporation (FDIC). If a holding company is involved, Federal Reserve Board (FRB) approval under the Bank Holding Company Act is also required.

Since January starting with inauguration day the environment feels more encouraging than in recent years. The FDIC’s acting leadership has signaled openness to new charters, potentially streamlining processes that have deterred applicants. However, scrutiny remains high: Regulators evaluate factors like organizers’ financial history, capital adequacy, management competence, earnings prospects, and compliance with the Community Reinvestment Act (CRA). Approvals usually come with conditions, such as maintaining an 8% Tier 1 capital-to-assets leverage ratio for the first three years. From my experience, early engagement with regulators through pre-filing meetings is crucial to shave months off the process and reveal red flags before formal submission.

Initial Steps: Assembling the Foundation

The journey begins with preparation, often requiring seed money for organizational expenses such as legal fees, consultants, and market studies. Plan for at least $500,000, though I’ve seen higher amounts depending on the situation. This “seed” funding comes from the organizers themselves and cannot be reimbursed from the bank’s future capital. Here’s a breakdown of the starting blocks:

1. Form the Organizational Group: Gather five or more organizers; these individuals should come from diverse backgrounds in finance, business, and community affairs. These groups often become initial directors and investors. In my own bank starts, I emphasized a mix of local ties and industry expertise to demonstrate community commitment to regulators.
2. Secure Seed Money: Fund pre-opening costs early. Legal fees alone can run $200,000 or more, for charter applications and compliance setup. Consultants for business planning might add another $150,000 or more. I’ve seen groups underestimate this and face delays. You need to budget conservatively.
3. Define Your Vision and Market: Outline business goals, target markets, and structure (e.g., C-Corp, S-Corp, or holding company). Conduct market analysis to identify underserved areas, aligning with CRA requirements. This step is where many falter without thorough feasibility studies.
   
   

From advising clients, I recommend treating this phase as a due diligence exercise: Assume good intent but verify everything with data.

Building the Team: When and How to Bring Key Players

Organizing the team starts immediately. The organizational group forms in the first few months, pooling seed money to cover initial costs. Management team identification follows during business plan development, but formal hiring often waits until after preliminary approval to manage expenses and incorporate regulatory feedback.

• Timing for Organizers and Board: In the first three months select a board with a majority of independent directors experienced in banking. Submit Interagency Biographical and Financial Reports (IBFRs), fingerprints, and background checks early.
• Bringing in Management: Identify key executives (CEO, CFO, chief lending officer) by month 6 for input on the plan. Formal offers come with post-preliminary regulatory approval, ensuring they pass regulatory vetting. In one de novo project I advised, delaying this led to a stronger team after regulator insights.
  
  

Competence is non-negotiable, regulators probe for integrity and track records, so vet thoroughly.

Raising Capital: Strategies and Timing

Capital is the lifeblood, typically minimum is approximately $20 million but depending on your model I have seen regulators require more, much more. Raising starts after preliminary conditional approval to minimize investor risk, with funds escrowed in safe investments until final go-ahead.

• Methods: Private placements via a Private Placement Memorandum (PPM) are standard, targeting accredited investors under SEC Regulation D. Friends and family can participate if they qualify, but avoid general solicitation. IPOs are rare due to complexity.
• Before Approval: Gather non-binding letters of intent (LOIs) from potential investors during the early months to bolster your application. These demonstrate market support without commitment.
• Post-Approval: Convert LOIs to subscriptions after preliminary approval. Aim for local investors to show community buy-in. In my experience, a robust Private Placement Memorandum (PPM) highlighting niches like digital banking or underserved demographics attracts capital faster.
  
  

Challenges include economic volatility, but this year’s pro-competition signals could ease this.

A Phased Approach

The overall de novo process can take 12-24 months, sometimes longer, with heightened supervision for 3-7 years post-launch.