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In testimony whereof witness my hand and seal of office this

day of

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The association having received authority to commence the business of banking, it is presumed that a suitable banking house or room has been secured, and also a burglar and fire proof vault or safe. In ordering stationery, provision should be made for the printing of the charter number of the bank on letter heads. The Comptroller should be promptly advised of the date on which the bank begins business. Notification blank for the purpose is furnished.


The certificate of officers and directors, a form for which is given elsewhere, is the certificate of the payment in cash of the first installment of the capital. The five remaining installments must also be paid in money and certified to the Comptroller by the president or cashier, under seal of the bank. Installments are due monthly from the date of the issuance of his certificate of authority to commence business (sec. 5140).

The form of installment certificate is as follows:

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dollars, has been paid in cash on account of the capital stock of The the certification of payments to date

located at

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NOTE. The second and subsequent payments need not be restricted to 10 per cent each, as the capital stock of the bank may be paid, if desired, in advance of the time required by law. Do not include in certificates a fraction of a dollar or any payments on surplus.

No payments on account of subscriptions to the capital stock should be carried to stock account, or entered in reports of condition as capital stock, until date of certification to this office. Pending such certification payments should be carried in a separate account to the credit of shareholders and entered in reports to this office as "Liabilities other than those stated."

For the legal method of enforcing the payment of subscriptions to capital stock see section 5141, U. S. R. S.

14. ORGANIZATION OF A NATIONAL BANK TO SUCCEED A STATE BANK. Occasionally it is deemed advisable by directors and other shareholders of a State bank to enter the national banking system by reorganization rather than by conversion. The controlling motive in reorganizing rather than converting in such case is generally the desire to effect such a distribution of stock as will result in the best interests of the bank, and occasionally to provide for a more satisfactory investment of capital and other loanable funds.

The course of procedure in reorganizing in so far as incorporation is concerned is identical with that required in original organization of a national bank. The capital must be paid in cash and not in any assets of the bank the national bank is organized to succeed. Fifty per cent, however, only is required to be paid at reorganization, and the remainder may be paid in installments as provided by the national-bank act.

When the application is forwarded it should be accompanied, as in other cases, by a draft for $100, payable to the order of the Comptroller of the Currency, to cover the expense of investigation. Upon receipt of this draft the chief national-bank examiner for the district will be directed to detail an examiner to make the investigation, the examiner being instructed to arrange with the local correspondent in the case as to the date when the investigation is to be made. The examiner will be instructed to make a thorough examination of the condition of the bank which the national bank is to succeed, and to report upon the character of its assets and the manner in which its business has been conducted. He will also be required to report upon the character and financial standing of the applicants, the ability of the active executive officers of the bank to be succeeded, whether they have the confidence of the community, and the prospect of success of the new bank.

In addition to securing a report from the examiner, the Comptroller will also obtain a report from the Federal reserve bank of the district; from the State banking department, and from such other sources as he may deem advisable.

Upon receipt of charter, the authority to begin business, the directors have authority to enter into a contract with the directors or liquidating agent of the State bank which the national bank has been organized to succeed for the purchase of assets and assumption of liabilities to depositors and other creditors of the State institution, with the understanding, however, that no assets can be acquired which are not of satisfactory value and which do not conform in character to the requirements of the national bank and Federal reserve bank acts. A duly executed and properly signed copy of the contract in question should be filed with the Comptroller of the Currency together with an agreement signed by the directors to the effect that no assets, the holding of which would contravene the provisions of the national and Federal banking laws will be acquired, a statement of the directors according to the following form to be filed: We, the undersigned, a majority of the board of directors of the tional Bank of —, in the -, hereby certify that any assets which may be purchased or otherwise acquired by said national bank from the Bank of will not include real estate, except bank


State of


ing premises, stocks, loans secured by real estate, except such as are permitted by section 24 of the Federal reserve act, nor any loan in excess of 10 per cent of the capital stock of the national bank actually paid in and unimpaired, and 10 per cent of unimpaired surplus fund.

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15. Instructions relative to conversion

of State banks into national

16. Application to convert a State bank
into a national banking associa-

17. Examination of State bank converting.

18. Approval of application to con-

19. Authority for conversion.
20. Articles of association.
21. Organization certificate.
22. Certificate of payment of capital.
23. Directors and officers.


Section 5154, U. S. R. S., as amended by section 8 of the Federal reserve act, provides that—

Any bank incorporated by special law of any State or of the United States or organized under the general laws of any State or of the United States and having an unimpaired capital sufficient to entitle it to become a national banking association under the provisions of the existing laws may, by the vote of the shareholders owning not less than fifty-one per centum of the capital stock of such bank or banking association, with the approval of the Comptroller of the Currency, be converted into a national banking association, with any name approved by the Comptroller of the Currency: Provided, however, That said conversion shall not be in contravention of the State law. In such case the articles of association and organization certificate may be executed by a majority of the directors of the bank or banking institution, and the certificate shall declare that the owners of fifty-one per centum of the capital stock have authorized the directors to make such certificate and to change or convert the bank or banking institution into a national association. A majority of the directors, after executing the articles of association and the organization certificate, shall have power to execute all other papers and to do whatever may be required to make its organization perfect and complete as a national association.

The shares of any such bank may continue to be for the same amount each as they were before the conversion, and the directors may continue to be directors of the association until others are elected or appointed in accordance with the provisions of the statutes of the United States. When the Comptroller has given to such bank or banking association a certificate that the provisions of this act have been complied with, such bank or banking association, and all its stockholders, officers and employees, shall have the same powers and privileges, and shall be subject to the same duties, liabilities, and regulations, in all respects, as shall have been prescribed by the Federal Reserve act and by the national banking act for associations originally organized as national banking associations.

The Solicitor of the Treasury has held that a trust company organized under State laws may be permitted to convert into a national bank under the provisions of this section, provided it complies with

all the conditions of law, and divests itself of all its trust company business, except such as the Federal Reserve Board might specifically authorize it to retain as provided by the Federal reserve act.

In the conversion of a State bank there is not a dissolution of the State corporation, but merely a change of title and governmental supervision; the bank is liable for all obligations and may enforce all contracts made with it while a State corporation. (See Michigan Insurance Bank v. Eldred, 143 U. S. 293, and Metropolitan National Bank v. Claggett, 141 U. S., 520.) In the case of Casey v. Galli (94 U. S., 673) the Supreme Court of the United States held that no authority from a State is necessary to enable a State bank to become a national banking association. However, under the provisions of section 5154, U. S. R. S., as amended by the Federal reserve act, a State bank can not be converted into a national bank if such conversion is forbidden by the laws of the State.


The following is the form of notice to be submitted of intention to convert a State bank into a national banking association:

The name of the place should form a part of the title, thus, "The First National Bank of A- -," but the name of the State should not be included. Consideration will not be given to an application for a title including the word "First," if a national bank exists at the given locality; nor to an application for a title identical with that of a national bank heretofore in existence, nor to one materially similar to that of a National, State, or other bank existing in the place.



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SIR: Notice is hereby given that we, the undersigned, being a majority of the board of directors of "The having a paid in and unimpaired capital of $intend to convert the said bank into a national banking association, in accordance with the provisions of section 5154 of the Revised Statutes of the United States as amended by section 8 of the Federal reserve act, under the title "The to be located at

county of

State of

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with capital of $ We request that the title be reserved for a period necessary conversion papers and instructions sent to


of sixty days and the at

hereby agreeing that any assets of the State bank which can not be legally held by a national bank will be disposed of before certificate authorizing conversion and the commencement of business as a national banking association is issued.

Signatures of directors.


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