A national bank is a bank organized under an act passed by Congress, entitled "The National Bank Act," and in addition to doing a general banking business, it has authority to issue circulating notes against bonds deposited with the Treasurer of the United States. The government does not own nor control the bank, but only authorizes its creation and prescribes the mode of doing business. Every banking association doing business under this act is governed by the same principles, is subject to the same inspection, uses the same forms in making reports to the comptroller at Washington, and is liable to the same penalties for the violation of any requirement of the national banking law.


National banks have power to adopt and use a corporate seal to have succession for a period of twenty years; to make contracts; to sue and be sued; to elect directors, and by Its board of directors to elect officers; to make all needful by-laws not in consistent with the national bank act; to discount and negotiate notes, drafts, bills of exchange, etc.; to receive deposits, buy and sell exchange, coin and bullion; to loan money on personal security; and to issue and circulate its own notes.

Stockholder's Liability

The liability of each stockholder of a national bank is to the par value of stock owned, in addition to the amount invested in such stock.

Real Estate

National banks are prohibited from holding real estate other than the buildings in which they do business and land mortgaged to secure a loan which was made in good faith upon personal security


National banks are required to keep on hand at all times a lawful money reserve equaling 25 per cent of the deposits if in a large city, and 15 per cent of the deposits, if located in a small city.

Overcertifying Checks

National banks are prohibited under severe penalty from certifying a check in excess of a depositor's account.


Each national bank shall accumulate a surplus by setting apart one-tenth of its net profits before declaring any dividend, until the surplus equals 20 per cent of the capital stock.

Reports To Comptroller

Banks must make at least five reports to the comptroller during the year.