Ordinarily, a corporation is formed at the state level. However, commercial banks may be incorporated either at the state level or at the national level. State banks are incorporated by a State's Banking Department. A state bank's principal place of business is designated as the state in which it is chartered. A national bank must designate a particular state as its principal place of business.
Federal law preempts states from excluding national banks.
A state's only remedy to excluding a national bank is to secede from the Union. Chartering The owners must also obtain a bank charter . When deciding whether or not to charter a bank, the OCC must balance competitive interests against monopoly interests. When the OCC denies applications, it holds down competition, banks get lazy, costs rise, they raise prices to maintain profitability, lose customers, and fail. When the OCC approves applications, it promotes competition, banks cannot be lazy, they lower prices, compete too vigorously, and fail.