low profitability for banking as overriding factors. a recurring theme that has surfaced through my discussions with bankers and other industry stakeholders is the regulatory burden imposed upon de novo banks. in particular, community bankers noted the challenges in raising the capital required to establish a new bank. the 2014 board study noted that the states ’ statutory capital requirements for a new statechartered bank could be as low as $ 10 million, but in practice could be as high as $ 30 million. 9 given the high initial capital requirement, a de novo bank has a small margin of error in implementing its business strategy and meeting profit projections. in establishing a new bank, bank executives explained the challenges in developing a business plan and risk - management framework that addresses how the bank can generate a sufficient profit to provide an adequate return to shareholders. for a de novo bank, the cost and burden of starting from ground zero in establishing their risk - management and internal controls are high. de novo banks make strategic decisions in establishing risk - management processes adams and gramlich, “ where are all the new banks? ” matt hanauer, brent lytle, chris summers, and stephanie ziadeh. “ community banks ’ ongoing role in the u. s. economy, ” federal reserve bank of kansas city, economic review 106, no. 2 ( june 24, 2021 ), https : / / www. kansascityfed. org / research / economic - review / community - banks - ongoing - role - in - the - us - economy /. adams and gramlich, “ where are all the new banks? ” and controls that may delay the launch of revenue - generating products and services. further, a de novo bank faces the pressure to grow quickly, which in turn, may lead to riskier lending and other activities. indeed, experience has shown that pronounced problems often surface in the early years of a de novo bank ’ s operations, which explains the elevated capital and supervisory expectations for these banks. the federal reserve and the other banking agencies generally expect a de novo bank to maintain a tier 1 leverage ratio of at least 8 percent for the first three years of its existence and they examine the bank on a more frequent schedule. 10 for a de novo bank, there is a heightened need to hire experienced staff who are quickly able to establish the bank and show progress in meeting the operating goals and profit projections in the business plan. as we all know, difficulty in finding skilled workers is an issue more broadly in the economy, but

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