How to Get a Banking License: Requirements, Application, and Approval

To get a banking license in the United States, you choose between a national or state charter, raise several million dollars in starting capital, assemble a board and management team that can pass detailed background checks, build a business plan regulators will accept, meet with the chartering agency before you file, submit an interagency application to both your chartering regulator and the FDIC, satisfy pre-opening conditions, and then operate under seven years of heightened supervision. The whole process typically takes years, and most proposals that fail do so long before the paperwork is filed.

Choose a National or State Charter First

Every other decision follows from this one. A national bank operates under the National Bank Act, is chartered and supervised by the Office of the Comptroller of the Currency, and must include the word “national” in its name.¹ A state-chartered bank is organized under the laws of a particular state and supervised by that state’s banking department, with either the Federal Reserve or the FDIC as its federal regulator depending on whether the bank joins the Federal Reserve System.²

The choice determines which agency you’ll deal with day to day, what activities your bank can engage in, and what supervisory costs you’ll pay. National charters give you one rulebook that travels across state lines, which helps if you plan to operate in multiple states. State charters may allow activities a national charter doesn’t, and some organizers find state regulators easier to work with. Neither is universally better. It comes down to your business model, geography, and product plans.

Know Who Will Be Regulating You

Three federal agencies split bank supervision by charter type:²

The OCC charters and supervises national banks and federal savings associations.
The Federal Reserve supervises state-chartered banks that are members of the Federal Reserve System, along with bank holding companies.
The FDIC insures deposits at nearly all banks and supervises state-chartered banks that aren’t Federal Reserve members.³

State banking departments add another layer for state charters. And because nearly every new bank plans to take deposits, you’ll file a separate FDIC application for deposit insurance in parallel with the charter application, whichever charter you choose.

How Much Capital You’ll Need

There’s no single minimum dollar figure. The FDIC evaluates each proposal on its own facts, weighing market dynamics, projected size, complexity, planned activities, and business model.⁴ What is fixed is the ratio: the FDIC expects every new bank to keep a Tier 1 capital-to-assets leverage ratio of at least 8 percent through its first three years.⁵

In plain terms, if your business plan projects $100 million in assets by year three, you’d need roughly $8 million in Tier 1 capital on day one. Most community bank formations raise between $10 million and $30 million in initial capital, though the actual figure depends heavily on the market and business plan. The OCC also requires that all capital stock be fully paid in before a national bank can open.¹

Who’s Allowed to Run the Bank

Regulators scrutinize the people behind the bank as closely as the numbers. The OCC looks at whether the organizers understand banking law and whether management has experience relevant to what the bank will offer.¹ A national bank must have at least five elected directors, and the president (or the person serving in that role) must sit on the board.⁶

Every proposed director and senior officer completes an Interagency Biographical and Financial Report with detailed personal financial disclosures. Regulators run their own name checks with law enforcement and other agencies and require fingerprints. Fingerprints submitted to one regulator won’t be accepted by another, so each agency runs its own process. Name check results stay valid for five years.⁷

Some criminal histories are automatic disqualifiers. Section 19 of the Federal Deposit Insurance Act imposes a lifetime ban on anyone convicted of an offense involving dishonesty, breach of trust, or money laundering from working at or participating in the affairs of any FDIC-insured bank. That includes theft, embezzlement, forgery, tax evasion, and writing bad checks. Pretrial diversion counts the same as a conviction. The only exception is a court order of expungement or an order sealing the record.⁸

One more gate applies at the ownership level: anyone subscribing to 10 percent or more of the initial stock offering must submit their own biographical and financial report and receive staff clearance before buying shares.⁶

Build the Business Plan and Compliance Systems

The business plan is the centerpiece of the application. Regulators use it to judge whether the bank can reasonably achieve and maintain profitability, which is an explicit factor the OCC considers.¹ It has to cover proposed services, target market, competition, and operations, and it has to explain what community need the bank will meet.

Financial projections carry real weight. You’ll submit pro forma balance sheets, income statements, and capital ratios in electronic form as part of the interagency application.⁹ Optimistic growth curves or heavy concentration in a single loan type will draw hard questions.

Before the bank opens, the board must adopt written policies covering every applicable law. Bank Secrecy Act and anti-money laundering compliance gets close attention: a full BSA/AML program with board-approved policies, trained staff, and procedures for identifying and reporting suspicious activity.⁶ Federal regulations require ongoing AML programs and currency transaction and suspicious activity reporting.¹⁰ Risk management systems must address credit, operational, liquidity, and interest rate risk at a minimum, and they need to be built and documented before the bank takes its first deposit.

The Pre-Filing Meeting

The OCC normally requires a pre-filing meeting before organizers can submit a charter application and rarely waives it. Ahead of the meeting, organizers submit briefing materials describing the proposal, biographical information on each organizer, the identity of the proposed CEO, a summary of insider transactions, and the proposed capital amount.¹¹

The OCC expects all organizers to attend. FDIC staff often join to walk through deposit insurance requirements, and Federal Reserve staff may attend if a holding company is involved. Discussion covers the board’s composition and experience, management’s background, submission requirements, and the business plan. Many proposals end here, when organizers realize they aren’t ready.

File the Application

The formal filing uses the Interagency Charter and Federal Deposit Insurance Application, a combined form that goes to your chartering authority (the OCC for a national bank, or the state banking department for a state bank) and to the FDIC for deposit insurance.¹² The package includes the completed form, the business plan with financial projections, biographical and financial reports for every proposed director and officer, organizational documents such as articles of association and bylaws, and your proposed policies and procedures.

Filing fees vary by charter type and regulator, and state filing fees range widely by jurisdiction. Within three business days of receiving the application, the FDIC sends written acknowledgment and directs publication of the filing in a local newspaper if that hasn’t already happened.¹² Within about 30 days the FDIC tells you whether the application is substantially complete or needs more information.

How Regulators Evaluate the Application

Once accepted as substantially complete, the application goes through statutory review. The FDIC weighs seven factors under Section 6 of the Federal Deposit Insurance Act: financial history and condition of the proposed institution, capital adequacy, future earnings prospects, character and fitness of management, risk to the Deposit Insurance Fund, convenience and needs of the community to be served, and consistency of corporate powers with the purposes of the FDI Act.¹³ The OCC applies a similar framework for national bank charters, focused on safety and soundness, fair access, regulatory compliance, and fair treatment of customers.¹

A field investigation follows, wrapping up within about 60 days after the application is deemed complete. It includes in-person interviews with proposed management and site visits. Expect requests for additional information. The FDIC aims to act on deposit insurance applications within four months of accepting them as substantially complete, with complex proposals taking longer.¹²

Charter applications also trigger a public comment period, generally 30 days from publication of the required notice. Anyone can submit written comments supporting or opposing the filing.¹⁴ Comments from community members, competing banks, or advocacy groups can affect the review, particularly on whether the bank will meet the credit needs of the community, including low- and moderate-income neighborhoods under the Community Reinvestment Act.

Conditional Approval and the Pre-Opening Exam

Approval almost always comes with conditions that must be satisfied before the bank can open. Based on recent OCC decisions, typical conditions include preparing financial statements on an accrual basis under generally accepted accounting principles, engaging an independent auditor for annual audits for at least the first three years, requiring each director to own qualifying shares, obtaining adequate fidelity bond coverage against employee dishonesty, clearing any 10-percent-plus shareholders through the biographical and financial review, and completing all operational policies before the pre-opening examination so the board can formally adopt them at its first meeting.⁶

Only after those conditions are satisfied do regulators conduct a pre-opening examination. If it’s satisfactory, the OCC grants final charter approval and the bank can start taking deposits and making loans.

The Seven-Year De Novo Period

Opening the doors is not the finish line. Newly insured institutions sit under heightened supervision for seven years. The FDIC keeps them on a 12-month risk management examination cycle with no option for the extended 18-month intervals available to established banks, with a limited-scope exam within the first six months and a full-scope exam within the first 12 months.¹⁵

Any material change to the business plan during the de novo period requires prior FDIC approval. Making an unapproved change can trigger civil money penalties or enforcement action. Before the end of year three, you’ll submit updated financial statements and a business plan for years four through seven, including how you’ll maintain capital, handle dividends, plan branching, and offer products.¹⁵ For seven years, regulators are verifying that the bank you promised in your application is the bank you’re actually running.

1
eCFR. 12 CFR 5.20
2
Board of Governors of the Federal Reserve System. Understanding Federal Reserve Supervision
3
HelpWithMyBank.gov. Who Regulates My Bank?
4
Federal Deposit Insurance Corporation. A Handbook for Organizers of De Novo Institutions
5
Federal Deposit Insurance Corporation. Update on Key Policy Issues, Remarks by FDIC Acting Chairman Travis Hill
6
Office of the Comptroller of the Currency. Corporate Decision 1367
7
FedEZFile Fluent. Information – Interagency Biographical and Financial Reports, Name Checks and Fingerprints
8
Federal Deposit Insurance Corporation. Your Guide to Section 19
9
Federal Deposit Insurance Corporation. Interagency Charter and Federal Deposit Insurance Application
10
eCFR. 31 CFR Part 1020 – Rules for Banks
11
Office of the Comptroller of the Currency. Comptrollers Licensing Manual – Charters
12
Federal Deposit Insurance Corporation. Applying for Deposit Insurance – A Handbook for Organizers of De Novo Institutions
13
Federal Deposit Insurance Corporation. Section 6 – Factors To Be Considered
14
eCFR. 12 CFR 5.10 – Comments
15
Federal Deposit Insurance Corporation. Enhanced Supervisory Procedures for Newly Insured FDIC-Supervised Depository Institutions