Home
/ Insights
/ Articles
/ Beyond the Charter: Why the First 12 Months Defines a De Novo Bank’s Long-Term Success

Beyond the Charter: Why the First 12 Months Defines a De Novo Bank’s Long-Term Success

Securing a bank charter is a milestone few institutions reach – but the real test begins the moment the charter is granted. The post-charter launch period is when a de novo bank proves it can translate its business plan, governance commitments and strategic vision into safe, sound and scalable operations. Regulators refer to this as a period of “heightened supervisory attention,” but for the institution, it’s an opportunity to build credibility, operational discipline and a culture of prudent growth.

Below are the priority actions every de novo bank must execute in the first 12 months after charter approval.

Stand Up Governance and Reporting Cadence

A de novo bank must demonstrate that its governance structures are not just designed well but are also functioning effectively.

Key actions include:

Finalizing board committee charters (e.g., Audit, Risk, Asset Liability (“ALCO”) and information technology (“IT”)/information systems) and executing meeting cadence
Establishing board reporting templates and key performance indicator/key risk indicator dashboards
Conducting initial enterprise-wide risk assessments and validating risk appetite statements
Approving key policies and procedures for operations, compliance, IT and financial management

Operationalize the Compliance & Risk Frameworks

Regulators place heavy emphasis on whether the compliance and risk functions mature quickly.

Initial priorities:

Finalize Bank Secrecy Act/anti-money laundering program and ensure transaction monitoring, know your customer, Office of Foreign Assets Control and customer identification program capabilities are production-ready
Conduct model validations for critical systems
Complete vendor management onboarding and ongoing monitoring protocols
Implement issue management, internal controls testing and quality assurance frameworks

Launch Banking Operations with Tight Controls

Before taking the first deposit or underwriting the first loan, the de novo bank must validate that its operational backbone is stable.

Actions include:

End-to-end process walk-throughs for deposit operations, lending and digital onboarding
Core system configuration checkouts and data integrity validation
Fraud controls calibration, including automated clearing house, wires, card activity and new-account fraud
Testing of business continuity, incident response and cybersecurity controls

Talent Build-Out and Culture Formation

The first hires after charter approval shape the institution’s risk culture and customer experience.

Focus areas:

Hiring for critical second line and operations functions
Training teams on regulatory expectations, risk culture and escalation protocols
Establishing performance management tied to safe growth and customer protection
Integrating contractors or outsourced partners into the bank’s governance framework

Execute the Strategic Growth Plan Responsibly

Regulators expect de novo organizations to grow methodically – not aggressively.

Key steps:

Implement disciplined onboarding thresholds for deposits and loans
Monitor early-stage credit performance, concentration risks and liquidity buffers
Refine pricing strategies based on early portfolio behavior
Conduct quarterly strategic plan reviews with real performance data

Deploy Financial Management & Capital Planning

Capital planning disciplines must start early to demonstrate readiness for scale.

Post-charter requirements:

Establish robust ALCO reporting and rate-sensitivity monitoring
Implement liquidity stress testing and contingency funding plans
Develop a three-year capital forecast to be updated quarterly with actuals
Monitor cost-of-funds and efficiency ratios closely during early growth

Strengthen Regulatory Relationship Management

Regulatory credibility is earned through proactive communication, transparency and discipline.

Actions include:

Regular touchpoints with regulators from the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation as well as state regulators
Timely submission of all required call reports and supervisory filings
Rapid remediation of exam findings, matters requiring attention and internal audit issues
Maintenance of an open, early-escalation model with supervisors

Prepare for the 12-Month De Novo Exam

The first full exam after launch is a defining moment for a de novo bank.

Preparation includes:

Documenting decisions, controls, exceptions and remediation steps
Ensuring policies match actual practices – no “policy-program gaps”
Refreshing risk assessments and internal audit scoping
Demonstrating culture, oversight and risk discipline in action

Successful Banking Is a Marathon, Not a Sprint

A de novo bank’s long-term success is often determined in the first year after charter approval. Institutions that treat the post-charter period as a controlled maturation process – not a growth race – establish the credibility, discipline and operational strength that supervisors expect, and customers rely on. The strongest de novo organizations emerge from year one with not only a functioning bank, but with a governance environment that is built for scale.