Pub. 9 2018 Issue 3

www.wvbankers.org 22 West Virginia Banker Will the De Novo Wave Reach West Virginia? By BT Atkinson, Neil Grayson, and Randy Saunders, Nelson Mullins Riley & Scarborough LLP F ollowing nearly a decade of historically low numbers of de novo banks, bankers and investors throughout the country are once again excited by the opportunity presented by the formation of a new bank. Prior to the Great Recession, it was not unusual for over a hundred de novo banks to open nationwide in any given year. This number precipitously dropped between 2007 and 2009 – virtually grinding to a halt in 2010, when the FDIC increased its enhanced supervisory period, during which a bank is pro- hibited from changing its business plan, from three years to seven years. Then, in 2016, the FDIC decreased the enhanced supervisory period back to three years and signaled an openness to de novo bank applications by holding seminars and publish- ing guides to aid in the drafting of business plans. At the time, FDIC Chairman Gruenberg proclaimed that, “De novo institutions fill important gaps in our local banking markets, providing credit and services to communities that may be overlooked by larger institutions. The FDIC welcomes appli- cations for deposit insurance.” Five de novo banks opened in 2017, and in the first quarter of 2018 alone, three de novo banks have opened for business. There are at least twenty publicly announced de novo bank groups nationwide in the formation process with many other groups privately considering the formation of a de novo bank. While there is evidence of a revitalization of de novo banks across the nation, the question remains: do the tides sweep- ing the industry stop short of West Virginia? The most recent de novo branch applications approved by the West Virginia Board of Banking and Financial Institutions (WVBBFI) were the First Bank of Charleston, Inc. (2003) and Main Street Bank Corp. (2001). While the assets of West Virginia state banks increased by nearly 90% from 2005 to 2017, the number of state banks operating in West Virginia declined by 6% in the same period. The number of banks in the United States was cut by over half during this period. This