Title 12 — Banks and BankingRelease 119-73
§35 Organization of State banks as national banking associations
Title 12 › Chapter CHAPTER 2— - NATIONAL BANKS › Subchapter SUBCHAPTER I— - ORGANIZATION AND GENERAL PROVISIONS › § 35
Summary
A bank set up under state or federal law that has enough untouched capital can become a national banking association if shareholders who own at least 51% of the stock vote for it and the Comptroller of the Currency approves. The new name must include the word "National" and the change must not break state law. A majority of the bank’s directors can sign the articles and a certificate that says owners holding 51% approved the conversion, and those directors can finish the paperwork. Share values can stay the same and current directors can keep serving until others are chosen. When the Comptroller issues a certificate saying the rules were followed, the converted bank and its stockholders, officers, and employees have the same powers, duties, liabilities, and rules as banks organized under the Federal Reserve Act and the National Banking Act. The Comptroller can allow the bank to keep assets that don’t meet national rules at values he sets and under conditions he requires. The Comptroller cannot approve a conversion while the state bank or state savings association is under a formal enforcement order, a memorandum of understanding about a major supervisory issue, or a final enforcement action by a State Attorney General.
Full Legal Text
Title 12, §35
Banks and Banking — Source: USLM XML via OLRC
Any bank incorporated by special law of any State or of the United States or organized under the general laws of any State or of the United States and having an unimpaired capital sufficient to entitle it to become a national banking association under the provisions of the existing laws may, by the vote of the shareholders owning not less than fifty-one per centum of the capital stock of such bank or banking association, with the approval of the Comptroller of the Currency be converted into a national banking association, with a name that contains the word “national”: Provided, however, That said conversion shall not be in contravention of the State law. In such case the articles of association and organization certificate may be executed by a majority of the directors of the bank or banking institution, and the certificate shall declare that the owners of fifty-one per centum of the capital stock have authorized the directors to make such certificate and to change or convert the bank or banking institution into a national association. A majority of the directors, after executing the articles of association and the organization certificate, shall have power to execute all other papers and to do whatever may be required to make its organization perfect and complete as a national association. The shares of any such bank may continue to be for the same amount each as they were before the conversion, and the directors may continue to be directors of the association until others are elected or appointed in accordance with the provisions of the statutes of the United States. When the Comptroller has given to such bank or banking association a certificate that the provisions of this Act have been complied with, such bank or banking association, and all its stockholders, officers, and employees shall have the same powers and privileges and shall be subject to the same duties, liabilities, and regulations, in all respects, as shall have been prescribed by the Federal Reserve Act [12 U.S.C. 221 et seq.] and the National Banking Act for associations originally organized as national banking associations. The Comptroller of the Currency may, in his discretion and subject to such conditions as he may prescribe, permit such converting bank to retain and carry at a value determined by the Comptroller such of the assets of such converting bank as do not conform to the legal requirements relative to assets acquired and held by national banking associations. The Comptroller of the Currency may not approve the conversion of a State bank or State savings association to a national banking association or Federal savings association during any period in which the State bank or State savings association is subject to a cease and desist order (or other formal enforcement order) issued by, or a memorandum of understanding entered into with, a State bank supervisor or the appropriate Federal banking agency with respect to a significant supervisory matter or a final enforcement action by a State Attorney General.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
This Act, referred to in first par., may refer to the Federal Reserve Act, act Dec. 23, 1913, from which this wording is derived; or section 5154 of the Revised Statutes which the Federal Reserve Act amended; or act
June 3, 1864, from which R.S. § 5154 was derived; or Congress might have intended to refer to the preceding provisions of the 1913 amendment. Similar reference in R.S. § 5154 prior to 1913 amendment was to “this Title,” meaning title 62 of the Revised Statutes, which title comprised the National Bank Act (
June 3, 1864, ch. 106, 13 Stat. 99). See section 38 of this title. Note also specific reference to the Federal Reserve Act and the National Banking Act in first par. The Federal Reserve Act, referred to in text, is act Dec. 23, 1913, ch. 6, 38 Stat. 251, which is classified principally to chapter 3 (§ 221 et seq.) of this title. For complete classification of this Act to the Code, see
References in Text
note set out under section 226 of this title and Tables. The National Banking Act, referred to in text, is probably intended to be a reference to the National Bank Act, act June 3, 1864, ch. 106, 13 Stat. 99, which is classified principally to chapter 2 (§ 21 et seq.) of this title. For complete classification of this Act to the Code see
References in Text
note set out under section 38 of this title. Codification R.S. § 5154 derived from act June 3, 1864, ch. 106, § 44, 13 Stat. 112, which was the National Bank Act. See section 38 of this title.
Amendments
2010—Pub. L. 111–203 inserted at end “The Comptroller of the Currency may not approve the conversion of a State bank or State savings association to a national banking association or Federal savings association during any period in which the State bank or State savings association is subject to a cease and desist order (or other formal
Enforcement
order) issued by, or a memorandum of understanding entered into with, a State bank supervisor or the appropriate Federal banking agency with respect to a significant supervisory matter or a final
Enforcement
action by a State Attorney General.” 1983—Pub. L. 97–457 substituted “with a name that contains the word ‘national’ ” for “with any name approved by the Comptroller of the Currency” after “national banking association,”. 1935—Act Aug. 23, 1935, added last par.
Statutory Notes and Related Subsidiaries
Effective Date
of 2010 AmendmentAmendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an
Effective Date
note under section 5301 of this title. Exception to Prohibition on Approval of Conversions Pub. L. 111–203, title VI, § 612(d), July 21, 2010, 124 Stat. 1613, provided that: “The prohibition on the approval of conversions under the
Amendments
made by subsections (a), (b), and (c) [enacting section 214d of this title and amending this section and section 1464 of this title] shall not apply, if— “(1) the Federal banking agency that would be the appropriate Federal banking agency after the proposed conversion gives the appropriate Federal banking agency or State bank supervisor that issued the cease and desist order (or other formal
Enforcement
order) or memorandum of understanding, as appropriate, written notice of the proposed conversion including a plan to address the significant supervisory matter in a manner that is consistent with the safe and sound operation of the institution; “(2) within 30 days of receipt of the written notice required under paragraph (1), the appropriate Federal banking agency or State bank supervisor that issued the cease and desist order (or other formal
Enforcement
order) or memorandum of understanding, as appropriate, does not object to the conversion or the plan to address the significant supervisory matter; “(3) after conversion of the insured depository institution, the appropriate Federal banking agency after the conversion implements such plan; and “(4) in the case of a final
Enforcement
action by a State Attorney General, approval of the conversion is conditioned on compliance by the insured depository institution with the terms of such final
Enforcement
action.” [For definitions of terms used in section 612(d) of Pub. L. 111–203, set out above, see section 5301 of this title.] Notification of Pending
Enforcement
Actions Pub. L. 111–203, title VI, § 612(e), July 21, 2010, 124 Stat. 1613, provided that: “(1) Copy of conversion application.—At the time an insured depository institution files a conversion application, the insured depository institution shall transmit a copy of the conversion application to—“(A) the appropriate Federal banking agency for the insured depository institution; and “(B) the Federal banking agency that would be the appropriate Federal banking agency of the insured depository institution after the proposed conversion. “(2) Notification and access to information.—Upon receipt of a copy of the application described in paragraph (1), the appropriate Federal banking agency for the insured depository institution proposing the conversion shall—“(A) notify the Federal banking agency that would be the appropriate Federal banking agency for the institution after the proposed conversion in writing of any ongoing supervisory or investigative proceedings that the appropriate Federal banking agency for the institution proposing to convert believes is likely to result, in the near term and absent the proposed conversion, in a cease and desist order (or other formal
Enforcement
order) or memorandum of understanding with respect to a significant supervisory matter; and “(B) provide the Federal banking agency that would be the appropriate Federal banking agency for the institution after the proposed conversion access to all investigative and supervisory information relating to the proceedings described in subparagraph (A).” [For definitions of terms used in section 612(e) of Pub. L. 111–203, set out above, see section 5301 of this title.]
Executive Documents
Exception as to
Transfer of Functions
Functions vested by any provision of law in Comptroller of the Currency, referred to in this section, not included in
Transfer of Functions
to Secretary of the Treasury, see note set out under section 1 of this title.
Reference
Citations & Metadata
Citation
12 U.S.C. § 35
Title 12 — Banks and Banking
Last Updated
Apr 6, 2026
Release point: 119-73