View source for Mutual savings bank

{{Short description|Type of financial institution}}
{{for|mutual banks|mutualism (economic theory)}}
{{Banking |banks}}

A '''mutual savings bank''' is a [[financial institution]] chartered by a [[Central government|central]] or regional government, without capital stock, owned by its members who subscribe to a common fund. From this fund, claims, loans, etc., are paid. Profits after deductions are shared among the members. The institution is intended to provide a safe place for individual members to save and to [[invest]] those savings in [[Mortgage loan|mortgage]]s, [[loan]]s, [[stock]]s, [[Bond (finance)|bond]]s and other [[Security (finance)|securities]] and to share in any profits or losses that result.

==History==
The institution most frequently identified as the first modern savings bank was the "[[Trustee Savings Bank|Savings and Friendly Society]]" organized in 1810 by [[Presbyterian polity|Rev.]] [[Henry Duncan (minister)|Henry Duncan]] of the [[Ruthwell]] [[Church of Scotland|Presbyterian Church]] in [[Dumfriesshire]], [[Scotland]]. Duncan established a [[friendly society]] to create a [[Cooperative banking|cooperative]] [[depository institution]] in order to enable his poorest parishioners to hold [[savings account]]s accruing [[interest]] for [[Social insurance|sickness and old-age]].<ref name="lloyds">{{cite web |url=http://www.lloydstsb.com/about_ltsb/tsb.asp |title=Lloyds Bank - Banking With Us - Our History, Heritage & Who We Are |publisher=Lloydstsb.com |access-date=2013-10-16 |url-status=dead |archive-url=https://web.archive.org/web/20121011084801/http://www.lloydstsb.com/about_ltsb/tsb.asp |archive-date=2012-10-11 }}</ref><ref name="GFS">{{cite web|url=http://www.scottish-places.info/people/famousfirst120.html|title=Rev. Dr. Henry Duncan|publisher=Gazetteer for Scotland|access-date=3 July 2014}}</ref> Another precursor of modern savings banks were the ideas of [[Friedrich Wilhelm Raiffeisen]] that led to rural [[credit unions]] and [[cooperative bank]]s. European voluntary organizations and "[[Friendly society|friendly societies]]" provided the inspiration for their state-incorporated American counterparts.

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 the Town of Boston|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]].

[[File:NewBedford21June07NewBedfordInstitutionForSavings.jpg|thumb|left|Mutual savings banks are common in New England. [[New Bedford, Massachusetts|New Bedford]] Institution For Savings was founded in 1825, and converted from mutual to stock status in 1987.]]

Since the 1970s, when the industry was deregulated, thousands of mutual savings banks have been [[Demutualization|converted into stock ownership companies]], raising more than $40 billion. In 2010, only about 600 remained.<ref>{{cite news| url=http://online.barrons.com/article/SB50001424052970203319504576019503765673040.html?mod=BOL_twm_fs| author=David Englander| title=Like Money in the Bank| work=Barron's| date=December 18, 2010}}</ref> These conversions have often resulted in large financial rewards for top bank executives.<ref>{{cite news| url=https://select.nytimes.com/gst/abstract.html?res=F20714FB3A540C768EDDA80894DC494D81&pagewanted=1| author=Saul Hansell| title=Regulators Thwart Plan for Big Payouts In Bank Conversion| newspaper=The New York Times| date=January 25, 1994}}</ref> 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 [[Advance Bank]] (formerly NSW Building Society), [[St.George Bank|St. George]], [[Suncorp Group|Suncorp]], Metway Bank, Challenge Bank, [[Bank of Melbourne (1989)|Bank of Melbourne]] and [[Bendigo Bank]]. A change in regulation meant that building societies and credit unions were no longer required to demutualize upon converting to banks, and several, including [[Heritage Bank]], have converted since 2011 while retaining their status and structure as mutual organizations.

==Use and design==
{{Unreferenced section|date=December 2021}}
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 bank]]s, 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 association]]s.  Marquette Savings Bank is a great example of this, having been praised by ''[[The Economist]]'' for its performance during the [[2008 financial crisis]].

==See also==
{{Portal|Banks}}
* [[Bank]]
* [[Building society]]
* [[Cooperative banking]]
* [[Credit union]]
* [[Capital market]]
* [[Demutualization]]
* [[Mutual organization]]

==References==
{{reflist}}{{Co-operative banking}}
{{Co-operatives |types}}
{{Insurance}}
{{Money and central banking within the contemporary United States (pre–1913)}}

[[Category:Mutual savings banks|*]]
[[Category:Cooperative banking]]