How to Start a Bank

So you are wondering how to start a bank.

Is starting a bank feasible in today’s competitive financial industry? Is it right for you?

The Regulatory Guidelines in Each State

All of these questions must be addressed before you can begin the process of starting your own bank. It is important to first understand that rules and regulations vary widely from state to state, and you should always obtain the services and advice of your state’s regulatory agency.

Planning Steps in How to Start a Bank

Once you have a clear set of ground rules regarding how to start a bank in a certain state, there are many, crucial elements that must be addressed:

  • Choose your business partners. The partners in your bank are also commonly referred to as the “organizing group.”

  • Develop a comprehensive, all-encompassing business plan that outlines your marketing plan, your projections and your financial situation. You will need to choose your business partners and have a completed business plan before you can begin the process.

  • Arrange for a pre-filing meeting with your state’s department of banking so that you can be briefed on all of the information that must be supplied when applying for a charter. There is typically a great deal of information and documentation needed when filing for a charter; therefore, it is wise to make sure you are prepared to avoid any delays once you begin the charter filing process.

  • Apply for a federal or state charter, which will enable a federal or state agency to authorize the organization of your bank. The federal or state agency is put in place to protect the public from unsafe banking practices and to ensure that your bank’s financial situation is sound and legal.

  • The partners of your bank, otherwise known as the organizing group, will need to identify the management and directors of the bank, including the CEO. The process of finding the right team is an extremely crucial step in starting your own bank, as your appointments may ultimately decide whether the agency accepts or declines your charter.

The number of directors you must hire for your bank varies, but most states impose a minimum number.

  • The partners of your bank must each give a certain amount of money towards the start-up of your bank. The amount required from state to state varies, although it is generally between 10 and 25 percent. The organizing group then becomes shareholders in your bank.

  • Perform in-depth research regarding your market and your target region. This information is crucial, as it is required when you apply for your charter. Consider the physical location of your bank, and delve deeply into the local economy and the competition.


  • Decide whether you will purchase a building, build your own bank, or lease a building.

  • Begin raising money to meet the capital requirements of your particular state and location. The capital requirements vary widely, and they are often quite different for metropolitan and rural banks. The organizing group’s contribution will likely comprise about 10 to 15 percent of the overall capital, so it is up to you and the organizing group to secure the additional capital. It is important to remember that the more shareholders a bank has, the more likely it will succeed.
  • Apply for deposit insurance with the FDIC.

Now that you know how to start a bank, it is time to put the necessary plans, funding, and support in place that will help your bank become the next great financial institution.