Digital-first VALT bank seeks de novo charter in Idaho

Key insight: VALT Bank’s founders aim to build a digital business-banking platform focused on lending, deposits, cash management and advisory tools.

Supporting data: Community-bank numbers have sharply declined over the years, spurring calls for de novo-friendly rules.

Forward look: Trump administration  banking regulators, who’ve called for swifter charter decisions, will review VALT’s business plan and capital.

A group that includes former U.S. Bank veterans is seeking federal approval to establish VALT Bank, a denovo digital business-oriented bank that would be headquartered in Eagle, Idaho, according to an application submitted to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. earlier this month. 

The proposed institution would target what its organizers call “digitally demanding” small and midsized businesses in the U.S., offering business lending and deposit taking, cash management, advisory and automation services through a tech-heavy platform.

“The Bank will provide a broad range of traditional business banking products and services including credit and deposit products as well as treasury and cash management services designed for digitally oriented SMBs,” the public portion of VALT’s filing describes. “The Bank also plans to provide its clients with advisory tools such as data-driven insights, accounting/payroll integration, and automation tools that support SMBs.”

The bank would be wholly owned by a bank holding company known as VALT Investor Group Inc., which plans to seek Federal Reserve approval once the charter and insurance are granted. VALT founder Matt Gediman was a senior vice president and later managing director at U.S. Bank in Southern California.

Regulators will evaluate the application at a time when new bank formation is picking up steam. Despite growth in the level of assets held in the wider banking system over the last couple decades, the number of individually chartered banks has decreased. According to the Federal Deposit Insurance Corp., there were 9,943 banks in 1995, while that number has shrunk to 4,036 as of 2023. De novo banks have become increasingly rare, a fact which has sparked debate in Congress for some time, given the competition and community focus that community bankers say they provide to the system. 

Since the beginning of the Trump administration, lawmakers and financial policy watchers have called for regulatory reforms that encourage the creation of new banks. House Financial Services Committee Chairman French Hill, R-Ark., in February pointed to the sharp decline in the number of community banks in his home state, from 251 in 1995 to just 77 today, as evidence of the regulatory barriers hindering small financial institutions.

As de novo banks have historically failed at higher rates than established firms, the OCC has said it may adjust initial capital requirements on a case-by-case basis, but generally a bank that proposes a straightforward plan would not face such scrutiny. 

OCC announced conditional approval of Columbus, Ohio-based Erebor Bank last month. That startup bank is backed by prominent tech figures with a similar business plan to Silicon Valley Bank, which failed in 2023.

“The OCC may determine that higher amounts of capital than those the organizers proposed are warranted based on local market conditions or the proposed business plan,” OCC guidance notes. “Conversely, a charter application for a community bank that would offer traditional products and services, operate within a small geographic area lacking intense competition, and have a management team implementing a proven business strategy would be noncomplex and, generally, would not require higher capital.”