Mutual savings bank
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A mutual savings bank is a
and to share in any profits or losses that result.History
The institution most frequently identified as the first modern savings bank was the "
These first savings banks were envisioned as philanthropic endeavors, designed to uplift the poor and working classes. The banks were started by philanthropists who took on the positions of savings bank trustees, managers, and directors as opportunities to teach the working class the virtues of thrift and self-reliance by allowing them the security to save their money. The first incorporated US mutual savings bank was the Provident Institution for Savings in Boston. Its 1816 charter was the first government legislation in the world to safeguard savings banks. In 2015, the oldest (and largest) mutual bank in the U.S. was Eastern Bank of Boston, with approximately $10 billion in assets. It was chartered in 1818 in Salem, Massachusetts, as the Salem Savings Bank. In 2020, Eastern Bank demutualized and listed its stock on the New York Stock Exchange.
Since the 1970s, when the industry was deregulated, thousands of mutual savings banks have been converted into stock ownership companies, raising more than $40 billion. In 2010, only about 600 remained.[3] These conversions have often resulted in large financial rewards for top bank executives.[4] Current mutual saving banks include Dollar Bank, Ridgewood Savings Bank, Middlesex Savings Bank, Liberty Bank, and Marquette Savings Bank.
Mutual banking in Australia
Beginning in the 1980s, several building societies in Australia converted to banks, but were required to demutualize when doing so. These included
Use and design
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Mutual savings banks were designed to stimulate savings by individuals; the exclusive function of these banks is to protect deposits, make limited, secure investments, and to provide depositors with interest. Unlike commercial banks, savings banks have no stockholders; the entirety of profits beyond the upkeep of the bank belongs to the depositors of the mutual savings bank. Mutual savings banks prioritize security, and as a result, have historically been characteristically conservative in their investments. This conservatism is what allowed mutual savings banks to remain stable throughout the turbulent period of the Great Depression, despite the failing of commercial banks and savings and loan associations.
See also
- Building society
- Cooperative banking
- Credit union
- Capital market
- Demutualization
- Mutual organization
- Bank
References
- ^ "Lloyds Bank - Banking With Us - Our History, Heritage & Who We Are". Lloydstsb.com. Archived from the original on 2012-10-11. Retrieved 2013-10-16.
- ^ "Rev. Dr. Henry Duncan". Gazetteer for Scotland. Retrieved 3 July 2014.
- ^ David Englander (December 18, 2010). "Like Money in the Bank". Barron's.
- ^ Saul Hansell (January 25, 1994). "Regulators Thwart Plan for Big Payouts In Bank Conversion". The New York Times.