Oregon is implementing a tax incentive program to encourage the establishment of new banks within the state [1, 2].
The move addresses a long-term decline in local banking infrastructure. By incentivizing the creation of de novo banks—banks created from scratch rather than through mergers—the state aims to increase competition and expand financial services for residents.
According to reports, the tax credit will take effect in June [1, 2]. The law was enacted in August 2023 [1, 2]. This legislation seeks to end a period of inactivity in bank charter approvals, as Oregon has not chartered a new bank since 2007 [1, 3].
An Oregon bank group CEO said, “We are a new banking desert—†” [1].
Under the new measure, de novo banks can receive up to $1 million per year in tax credits [2]. This financial incentive is designed to span a three-year period [2].
Oregon lawmakers modeled their legislation on a law from Ohio that is five years old [2]. The goal is to stimulate banking activity by lowering the initial overhead costs for new entrants into the market.
By targeting de novo banks specifically, the state is attempting to avoid the consolidation of existing institutions. Instead, it is focusing on creating entirely new entities to serve the community.
This initiative represents a significant shift in state policy to proactively attract financial institutions. The state is betting that a tax-based incentive will be enough to overcome the regulatory hurdles and high costs associated with starting a new bank.
“Oregon has not chartered a new bank since 2007.”
This legislation targets a systemic lack of new financial institutions in Oregon, attempting to reverse a nearly two-decade gap in new bank charters. By mimicking a successful model from Ohio, Oregon is using fiscal policy to counteract the trend of national bank consolidation, prioritizing local access to credit and financial services over the merger-driven growth of the same few large institutions.
