Corporations chartered under the laws of a state to engage in commercial banking activities. The deposits of state banks are insured by the Federal Deposit Insurance Corporation (FDIC) (see Practice Note, Understanding FDIC Deposit Insurance).

State banks are subject to the banking laws and regulations of the state or states in which they do business, and are subject to oversight by the state banking agency of their home state. In addition, state banks have a primary federal regulator and are subject to certain federal laws. State banks that are members of the Federal Reserve System (known as member banks) have the Federal Reserve Board as their primary federal regulator. Non-member banks are regulated primarily by the FDIC.

The scope of permissible activities of state banks is determined by the law of the state where the bank is chartered or doing business. These activities are similar to, but not necessarily identical with, the activities permitted for national banks. In addition, state banks are generally prohibited under federal law from engaging in any business activity that is not permitted to a national bank (except for activities in which the bank is acting as agent for a customer) (12 U.S.C. § 1831a).

For more information on state banks, see Practice Note, US Banking Law: Overview: State Banks.