Denovo Valt bank gets swift trust charter approval

• Key insight: The Office of the Comptroller of the Currency granted VALT conditional approval for its national trust charter application just as the agency is encouraging more new bank formations.
• Supporting data: The OCC’s conditional approval came precisely 120 days after the firm filed its application for a national trust charter.
• Forward look: VALT must still secure additional regulatory approvals before it will fully launch. 

The Office of the Comptroller of the Currency earlier this month granted VALT’s application for a national trust charter, clearing a key regulatory hurdle at a time when the OCC is pushing for more new banks to form. 

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The approval, issued exactly 120 days after the firm submitted its de novo charter application in November, is in line with the Trump administration’s stated goal of providing a predictable and timely review of complete filings. VALT Founder Matt Gediman told American Banker the conditional approval is a welcome step and that the company is focused on working through the remaining regulatory requirements ahead of the bank’s launch. 

“We’re pleased to have received conditional approval from the OCC[,] it’s an important milestone, and our focus is now on meeting the outstanding regulatory conditions as we move toward opening” Gediman, formerly an executive at U.S. Bank in Southern California said. “The approval was straightforward and consistent with our expectations, including a $25 million initial capital level and a 9% Tier 1 leverage ratio.”

The bank is a de novo digital business oriented bank that would be headquartered in Eagle, Idaho. Its backers say it will serve “digitally demanding” small and midsize businesses in the U.S., offering business lending and “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” small- and medium-sized businesses, as well as “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. 

VALT must now secure Federal Deposit Insurance Corp. deposit insurance, obtain Federal Reserve membership, complete audits, and implement anti-money laundering controls before opening. The bank must also notify regulators of major changes from its business plan and get prior approval for changes during its organizational phase and first few years of operation.

The approval comes as regulators are encouraging new bank formation after years of decline in the number of banks system-wide. 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.