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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