Mutual savings banks can be an attractive option for people looking to keep their funds in a safe place. These banks are quite different from commercial banks, inasmuch as there are no stockholders and the depositors themselves receive, as dividends upon their deposits, all funds in excess of the costs of doing business and the amounts transferred to surplus. There are more than 500 mutual savings banks in the United States, and these are limited to 17 states.
They were originally founded to encourage thrift by persons who would risk their own funds in order to guarantee the success of the undertaking. They are closely supervised by state regulations and the states themselves set the maximum interest rates, which may be charged upon funds left on deposit. The amount and time of withdrawal is very rarely restricted, although the bank may legally do so in a crisis, provided written notice is given; in other words, when this provision is enforced, the depositor must give written notice of his intention to withdraw funds and must then wait 30 or 60 days before being permitted to make the withdrawal. This form of savings bank has several advantages, among which the following are worthy of mention:
1. It is a safe place for the deposit of surplus funds.
2. It issues various combinations of life insurance at very low rates.
3. The Federal Deposit Insurance Corporation membership offers $10,000 maximum insurance (as it does for other types of banks) on each deposit account for some of these banks; in three states (Massachusetts, Connecticut, New Hampshire) the banks contribute to a central fund which provides similar protection.
Since these banks are state regulated, they will be subjected to frequent examination, which, in turn, protects the depositors.
Since the depositor is essentially a stockholder, even though he does not own any stock, he is likely to feel a closer personal identification with this kind of banking institution than he would with some of the larger commercial banks. Bringing his funds into a bank where he may find the profits translated into interest gains for himself will probably give him a feeling of closer relationship to the banking institution.
The modern commercial bank is a little different. With its various departments, the commercial bank and services, may be considered as applying modern merchandising methods to the banking business. Fifty years ago the small depositor was of little importance; indeed, some banks refused to accept deposits, which they felt were undesirable from their point of view.
We have witnessed a remarkable change in recent years. Now the depositor is king. He finds numerous services at his command (checking, savings, personal loans, home improvement financing, appliance and auto loans, foreign exchange, traveler's checks, bank money orders, etc.), and although he is asked to pay fees for these services, he finds it a distinct advantage to be able to do all his banking at one place. His bank has indeed become the department store of banking.
It is each man's preference whether he wants his "department store" of banking options to appear all in one place, or if he prefers a more conservative style of banking and opts for a mutual savings bank. Depending upon what you're looking for, there are practically unlimited options out there today.