Locality Bank CEO Keith Costello advocates for de novo banking reforms in congressional hearing
May 11, 2025 | Financial Services: House Committee, Standing Committees - House & Senate, Congressional Hearings Compilation
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On May 11, 2025, the U.S. House Committee on Financial Services convened to discuss the future of bank mergers and the formation of new banks, known as de novo banks. The meeting featured testimonies from several banking leaders, including Keith Costello, president and CEO of Locality Bank, and Mary Ostegui, president and CEO of Bank Miami. Their insights highlighted the challenges and opportunities facing community banks in a rapidly evolving financial landscape.
Costello, who launched Locality Bank in Fort Lauderdale in 2022, emphasized the critical role that de novo banks play in fostering local economies. He noted that the number of community banks has significantly declined since the financial crisis, with many small businesses struggling to access necessary banking services. Costello attributed this decline to increased regulatory burdens and capital requirements that make it difficult for new banks to enter the market. He advocated for the Promoting New Bank Formation Act (HR 478), which aims to reduce these barriers and encourage the establishment of more community-focused banks.
Ostegui echoed these sentiments, sharing her experience in founding Bank Miami, which opened just two months prior to the meeting. She pointed out that the number of banks in Miami-Dade County had dropped dramatically despite population growth, indicating a clear need for more localized banking services. Ostegui highlighted the lengthy and costly process of raising capital under current regulations, which can deter potential investors and delay the opening of new banks. She supported HR 478, noting that it would provide more flexibility in capital requirements and allow banks to adapt to changing market conditions.
The discussions underscored a broader concern about the consolidation of the banking industry and the diminishing presence of community banks. Both Costello and Ostegui stressed that without new entrants into the banking sector, small businesses would continue to face challenges in accessing tailored financial services. They called for legislative reforms to create a more competitive banking environment that better serves local communities.
The meeting concluded with a commitment from committee members to consider the proposed reforms and their potential impact on the banking landscape. As the financial sector continues to evolve, the need for diverse banking options remains critical for fostering economic growth and supporting small businesses across the country.
Costello, who launched Locality Bank in Fort Lauderdale in 2022, emphasized the critical role that de novo banks play in fostering local economies. He noted that the number of community banks has significantly declined since the financial crisis, with many small businesses struggling to access necessary banking services. Costello attributed this decline to increased regulatory burdens and capital requirements that make it difficult for new banks to enter the market. He advocated for the Promoting New Bank Formation Act (HR 478), which aims to reduce these barriers and encourage the establishment of more community-focused banks.
Ostegui echoed these sentiments, sharing her experience in founding Bank Miami, which opened just two months prior to the meeting. She pointed out that the number of banks in Miami-Dade County had dropped dramatically despite population growth, indicating a clear need for more localized banking services. Ostegui highlighted the lengthy and costly process of raising capital under current regulations, which can deter potential investors and delay the opening of new banks. She supported HR 478, noting that it would provide more flexibility in capital requirements and allow banks to adapt to changing market conditions.
The discussions underscored a broader concern about the consolidation of the banking industry and the diminishing presence of community banks. Both Costello and Ostegui stressed that without new entrants into the banking sector, small businesses would continue to face challenges in accessing tailored financial services. They called for legislative reforms to create a more competitive banking environment that better serves local communities.
The meeting concluded with a commitment from committee members to consider the proposed reforms and their potential impact on the banking landscape. As the financial sector continues to evolve, the need for diverse banking options remains critical for fostering economic growth and supporting small businesses across the country.
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