Mutual savings bank

A mutual savings bank is a financial institution chartered by a 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 divided up among the members. The business is mentioned to provide a safe place for individual members to save and to invest those savings in mortgages, loans, stocks, bonds and other securities and to share in all profits or losses that result. The members own the business.

History

The corporation near frequently remanded as the first modern savings bank was the "Savings and Friendly Society" organized in 1810 by Rev. Henry Duncan of the Ruthwell Presbyterian Church in Dumfriesshire, Scotland. Duncan established a friendly society to clear a cooperative depository institution in lines to permits his poorest parishioners to gain savings accounts accruing interest for sickness and old-age. Another precursor of modern savings banks were the ideas of Friedrich Wilhelm Raiffeisen that led to rural credit unions and cooperative banks. European voluntary organizations and "friendly societies" gave the inspiration for their state-incorporated American counterparts.

These number one savings banks were envisioned as philanthropic endeavors, intentional to uplift the poor and workings classes. The banks were started by philanthropists who took on the positions of savings bank trustees, managers, and directors as opportunities to teach the works 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 about $10 billion in assets. It was chartered in 1818 in Salem, Massachusetts, as the Salem Savings Bank. In 2020, Eastern Bank demutualized and intended 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. These conversions have often resulted in large financial rewards for top bank executives. Current mutual saving banks add Dollar Bank, Ridgewood Savings Bank, Middlesex Savings Bank, and Liberty Bank.

Beginning in the 1980s, several building societies in Australia converted to banks, but were known to demutualize when doing so. These included Advance Bank formerly NSW Building Society, St. George, Suncorp, Metway Bank, Challenge Bank, Bank of Melbourne and Bendigo Bank. A modify in regulation meant that building societies and extension unions were no longer call to demutualize upon converting to banks, and several, including Heritage Bank, have converted since 2011 while retaining their status and sorting as mutual organizations.