The approval order expires if the bank is not established within 12 months, unless extended by the FDIC, the regulator said in a Tuesday (Dec. 16) press release.
“FDIC staff found the Erebor Bank satisfied the statutory factors for approval, subject to certain conditions,” the release said.
The conditions require the bank to implement protocols to comply with the FDIC’s regulations regarding processing of deposit accounts in the event of a bank failure and maintain a minimum 12% tier 1 leverage ratio during its first three years of operation, according to the release.
In addition, if Erebor Bank ceases to be considered “well capitalized” or falls below the minimum capital levels required by its primary federal regulator, the bank is required to exercise its rights under its Capital Call Agreement to obtain the amount of capital necessary to be considered “well capitalized,” per the release.
It was reported in July that a group of tech billionaires was forming Erebor Bank to fill the space left by the demise of Silicon Valley Bank, which before its 2023 collapse catered to startups and the cryptocurrency sector.
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The report said the backers of Erebor Bank include Palmer Luckey, co-founder of military contractor Anduril; Joe Lonsdale, founder of venture capital firm 8VC and co-founder of defense company Palantir; and Founders Fund, Peter Thiel’s venture capital fund.
Erebor Bank gained conditional approval for its de novo national bank charter application from the Office of the Comptroller of the Currency (OCC) in October.
Comptroller of the Currency Jonathan V. Gould said at the time in a press release that the conditional approval demonstrated his commitment to “a dynamic and diverse federal banking system” and served as proof that the OCC under his leadership “does not impose blanket barriers to banks that want to engage in digital asset activities.”
The OCC’s conditional approval letter for Erebor Bank said that final approval and authorization for the bank to open are subject to the bank meeting preopening requirements.
