Today, the Federal Deposit Insurance Corporation (FDIC) advised the banking industry of supervisory changes for state nonmember institutions insured seven years or less (de novo period). Under current policy, newly insured institutions are subject to higher capital requirements and more frequent examination activities during the first three years of operation. Based on supervisory experience, the FDIC announced it will now extend the de novo period from the current three-year period to seven years for examinations, capital, and other requirements. During the seven-year de novo period, these institutions will remain on a 12-month risk management examination cycle and be subject to enhanced supervision for Compliance examinations and Community Reinvestment Act evaluations. In addition, material changes in business plans for newly insured institutions will require prior FDIC approval during the first seven years of operation. De novo institutions that are subsidiaries of existing “eligible” holding companies generally will be excluded from these procedures.

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