Public or incorporated banks may be broadly classified as national and state banks. National banks exist by virtue of national laws. State banks are governed by the acts of state legislatures.

State banks may be further divided into banks of discount and deposit, savings banks, and trust companies. It may also be noted that state banks may exist (a) by virtue of special acts or charters, or, (b) by virtue of general laws under which all such banks acquire the same rights and liabilities.

The establishment of state banks under special legislative charters was the original method employed, but the disadvantages of the charter system are obvious. The charters were costly to the promoters, they could be granted only when the legislature was in session, and they opened the door to corruption on the one hand and to the granting of special privileges on the other.

The enactment of general laws to govern the establishment of banking institutions was made necessary by the evils attending the special charter system. Every state now has a general banking law, providing an inexpensive and ready means of obtaining authority to establish a bank under state regulations. Charters, however, are still granted by some state legislatures, and there are a number of state banks still running under old charters.