NATIONAL BANKING UNDER THE FEDERAL RESERVE SysTEM
The law does not provide for the conversion of private banks into
national banks. If it is desired to effect a re-organization, as in the
case of a state bank liquidated for that purpose, an organization from
the beginning must be undertaken as provided in the previous chapter.
2. Comversion—In converting a state bank into a national bank,
there is not a dissolution of the state institution, but merely a change
of title and whatever re-arrangements in the converting bank’s affairs
are necessary to make its banking practices conform to the National
Bank and Federal Reserve Laws. The national bank is liable for all
contracts of the former state institution, and may enforce all previous
contracts.
The preliminary conditions necessary to the initial move where a
state bank wishes to convert into a national bank are:
(a) That the laws of the state in which the bank is located shall not forbid con-
version of a state into a national banking association.
That the bank’s unimpaired capital shall be sufficient to entitle it to become
a national banking association (see “Capital,” page 23). Where it is neces-
sary to increase the capital stock of a state bank to make it eligible as a
national bank, or change the par value of shares, the change must be legally
effected under the laws of the state, and a certificate to this effect must be
obtained from the proper state authority.
(¢) That shareholders owning at least 519, of the state bank’s stock shall have
voted in favor of the proposed conversion.
b)
(d) That the bank shall comply with provisions of the National Bank Act
relating to branch Banks (see subsequent chapter on Branches).
These conditions obtaining, the bank notifies the Comptroller of its
purpose to enter the national banking system, asks for a reservation
of title for 60 days, and agrees that any assets which cannot be
legally held by a national bank will be disposed of before authoriza-
tion to begin business as a national bank is given (see “Loans,”
pages 60-64). Form for this application is furnished by the Comp-
troller.
Application to convert into a national bank is followed by an exam-
ination of the converting bank, the expense of which must be met by
the bank in the form of a draft to accompany the examiner’s report.
When the Comptroller has approved the application, he will so notify
the bank, and a meeting of its shareholders should be called, at which a
resolution should be adopted by a vote representing at least 519, of
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