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A mutual savings bank is a financial institution chartered through a state or federal government to provide a safe place for individuals to save and to invest those savings in mortgages, loans, stocks, Bonds and other securities.

The institution most frequently identified as the first modern savings bank was the “Savings and Friendly Society” organized by the Reverend Henry Duncan in 1810, in Ruthwell, Scotland. Duncan established the small bank in order to encourage his working class congregation to develop thrift. European voluntary organizations and “friendly societies” provided the inspiration for their state incorporated American counterparts.

These first United States 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 lower classes 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.

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 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 conservativism 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.

In America, most mutual savings banks are located in the Northeast, and are owned by their depositors and borrowers. A mutual savings bank does not issue capital stock. Profits are distributed to the owner/customers in proportion to the business they do with the institution.

The Mutual Savings Bank Crisis of the 1980s was the first of the banking crises addressed by the FDIC in the 80s. The crisis was brought on by new options in the financial services market that caused disintermediation. In order to rescue the mutual savings industry, the FDIC was forced to experiment with a number of different regulatory attempts. Many mutual savings banks including Richard Parsons's Dime Savings Bank were forced to submit to assisted mergers and demutualization. The mutual savings crisis management served as a training ground for the Savings & Loan and Commercial Banking Crises.

• Building Society
• Cooperative banking
• Credit union
• Mutual organization

• http://www.fdic.gov/bank/historical/history/index.html
• http://www.ots.treas.gov/glossary/gloss-m.html
• http://www.census.gov/hhes/www/rfs/glossary.html