National Bank: Meaning, History, Examples

What Is a National Bank?

In the United States, a national bank is a commercial bank that the Office of the Comptroller of the Currency (OCC) charters and supervises. However, many people also refer to national banks as any financial institution operating nationally compared to local banks operating in one city, state, or region.

How National Banks Work

In the U.S., a national bank is a commercial bank that engages in various financial services, such as accepting customer deposits and offering loans. The federal Office of the Comptroller of the Currency charters national banks; state banks are chartered by state banking agencies.

The OCC regulates national banks with regard to banking activities and operations. As of 2023, the OCC oversees 1,062 national banks. However, the nation's four largest banks make up about 43% of the entire banking system's assets.

As of June 2023, these four national banks are:

• JP Morgan Chase
• Bank of America
• Wells Fargo
• Citigroup
  

National banks are required to be members of the Federal Reserve System, and a national bank is an investing member of its district Federal Reserve Bank. National banks belong to the Federal Deposit Insurance Corporation (FDIC). The FDIC insures eligible customer deposits for up to $250,000.

National banks may facilitate daily transactions with their local Federal Reserve Bank (also called the Fed), such as Fed bank wires. National banks must generate call reports to the Fed each quarter and ensure these reports are made public.

History of National Banks

Alexander Hamilton, the first Secretary of the Treasury, was instrumental in forming the first national bank in the United States. The structure, in Philadelphia, Pennsylvania, was completed in 1797 and is a National Historic Landmark today.

First Bank collected taxes, paid government bills, and printed banknotes, similar to a national currency. Only First Bank notes could be used to pay federal taxes. The bank's 20-year charter began in December 1791, but Congress didn't renew it when it expired in 1811.

In 1863, President Lincoln's signature on the National Currency Act established the Office of the Comptroller of the Currency. The OCC would help manage nationally chartered banks and create a uniform national currency.

In 1913, the Federal Reserve Act created the Federal Reserve System to serve as the national bank of the U.S. while propping up a new national currency. Before this, around three-fourths of all U.S. banks were state-chartered, with fragile capitalization.

An amendment to the Glass–Steagall Act of 1933 introduced the Federal Deposit Insurance Corporation (FDIC) to help restore public confidence during ongoing bank failures.

National Bank Examples

As mentioned above, national banks in the United States are typically commercial banks. The Office of the Comptroller of the Currency maintains an up-to-date list of national banks and federal savings associations it charters and regulates. Examples of active national banks the OCC regulates include:

• JPMorgan Chase Bank, National Association
• Hawaii National Bank
• National Bank & Trust
• Neighborhood National Bank
• U.S. Bank National Association

Frequently Asked Questions (FAQs)

The Bottom Line

National banks are an important element of the federal banking system, which is designed to encourage public trust through safety and resilience while still encouraging banks to innovate products and services that customers and businesses need. Federal regulation and FDIC insurance help reassure the U.S. public about national banks and their services.