Before beginning the denovo process there are
key issues to consider.
Community: In order to enhance your area's economic development, the desire to open a new bank in your area should be driven by local needs not currently filled by other financial service providers.
Feasibility: It is necessary to study all elements of your marketplace, from demographics to deposit analysis, in order to determine the feasibility of a new bank in your area.
Organizers: Groups are selected based upon their professional/business skills and experience, their personal reputation and level of involvement in community activities, coupled with their commitment to work to make the bank a success.
Start-Up Costs: Advanced by Organizers in the amount equal to approximately 10% of the total capital raised (depending upon the duration of the organizational and regulatory approval process). Such individual monetary commitments can be (and usually are) financed by a "correspondent" bank that specializes in this type of organizational funding. Therefore, the individual organizers' "cash out of pocket" dollars are kept to a minimum.
Application Requirements: The application requirements should be defined, and the chartering agency selected, prior to the meeting of organizers with the appropriate regulatory staff. This then helps to clarify the group's expectations and timelines.
Strategic Business Plan: This must be developed early on in the formation process and must be comprehensive, realistic and specific.
Financial Statements: The proforma financial statements must reflect potential growth as projected in the business plan. The statements will be compared to other new emerging banks as well as established "peers" of like deposit and loan configuration.
Regulatory Requirements: Each issue must be addressed thoroughly and specifically, with research examples as back up.
Bank Management: Each member of the senior bank management team as well as organizers will be evaluated both individually and collectively by the regulatory agency. Their experience, reputation, skills and competencies will be thoroughly investigated and analyzed.
The Offering: Should be constructed to address adequate capital requirements, special consideration for initial shareholders, as well as additional built in capital mechanisms that support growth and liquidity during the first 3 years of operation.
The Capital: Organizers should commit to purchasing at least 15% of the total offering to demonstrate their confidence and commitment to the project.