same

You have to take over settlement to create custom faction. Just like in base warband.

Start by attacking a lord of a weaker faction as a no faction person. I like to go after the Papal States because they are at war with Sardinia and Two Sicilies while only having one city and two forts.

Now, If you don't know (like I did when I tried doing this myself), you can actually besiege castles and towns as a no faction player. After attacking a lord, you will have -1 faction relation with the faction, letting you attack them. Take over a town, and a screen should pop up letting you create your country (setting flag, name, party name, and starting laws).

When it opens the troop customizer, click on a troop you want to customize. Set their name and stats. To equip them, you can click on their icon in the window and it will open a screen to equip them.