SUCCESSION OF A STATE BANK BY 
A NATIONAL BANK 
[puny are two ways in which a state bank may enter the national 
banking system other than through consolidation with an 
existing national bank: 
Re-organization. 
Conversion. 
1. Re-organization—When it is deemed advisable by the directors 
and stockholders to transform their bank into a national association 
by re-organization, the dominant motive is normally the desire to 
effect a re-distribution of stock, and sometimes to provide for a more 
satisfactory investment of loanable funds. 
In re-organization proceedings, the method of incorporation is 
precisely the same as that followed in organizing a new bank, out- 
lined step by step in the preceding chapter. 
After it has received its authority from the Comptroller to begin 
business, the re-organized bank is privileged to enter into a contract 
to purchase the assets of the liquidating state bank, and to assume 
its liabilities to depositors and other creditors, providing that all 
assets so acquired are of a satisfactory value, and conform to the 
requirements of the National Bank and the Federal Reserve Acts; 
and providing that the bank complies with the provisions of the 
National Bank Act relating to branch banks (see subsequent chapter 
on Branches, page 92). A copy of this contract, properly signed and 
executed, is forwarded to the Comptroller’s office, together with an 
agreement signed by the directors of the re-organized bank, to the 
effect that the assets to be acquired from the state bank will not 
include real estate, except banking premises, stocks, loans secured by 
real estate, except those permitted by Sec. 24 of the Federal Reserve 
Act; not any loans in excess of 109, of the capital stock of the national 
bank actually paid-in and unimpaired, and 109, of unimpaired surplus 
fund, except as authorized by the amendments of October 22, 1919, 
and of February 25, 1927, to Section 5200 U. S. R. S. (See Loans, 
Page 60). 
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