National bank

What is a national bank?

A national bank is a financial institution chartered by the national government. It is also required to be a member of the Federal Reserve System. The comptroller of the U.S. Treasury monitors national banks.

Deeper definition

National banks are an integral part of the country’s financial system. They are commercial entities that help provide the public with access to banking services. These national banks are members of the Federal Deposit Insurance Corp. The FDIC is the government entity that insures bank deposits against bank failure. FDIC protection covers deposits up to $250,000.

Financial institutions characterized as national banks also have the ability to begin the auction of U.S. Treasury bonds. Other responsibilities include:

  • Producing public call reports for the Federal Reserve System.
  • Completing daily transactions with the bank’s local Federal Reserve Bank.

The National Banking Acts of 1863 and 1864 established the national bank. Not every bank meets the criteria for a national bank. Some banks opt to adhere to state banking regulations; instead of a national charter, these banks receive a state charter. State chartered banks follow state, rather than federal, banking guidelines. Usually, consumers will not notice a difference in how a national or state bank operates. The differing regulations, however, may alter the bank’s internal operations.

National bank example

With over 2,000 banks in the national banking system, you are likely to do business with a national bank at some point. To determine whether a bank is a national bank, look for the word “national” in its name or the abbreviation “N.A.” after the bank’s name. For example, First National Bank and Access National Banks are both considered national banks.

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