financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. A common form of savings bank, the mutual savings bank, was traditionally the only type that accepted savings deposits exclusively (see banking). Mutual savings banks are state-chartered institutions, owned by their depositors and managed for their mutual benefit by self-perpetuating boards of trustees. Savings deposits may also be received by a credit union or a savings and loan association. However, due to extensive deregulation in the banking industry (primarily during the 1980s), the distinction between savings banks and other financial institutions has become increasingly hazy. Federal deregulation laws in the 1980s gave savings banks the opportunity to become federally chartered institutions, to convert themselves into capital stock corporations, and to come under the supervision of the Federal Home Loan Bank Board. New lending powers, the removal of ceilings on interest rates, and takeovers of struggling small banks by larger ones have made the mutual savings bank, as it was understood until about 1980, largely obsolete.

See M. Mayer, The Money Bazaars: Understanding the Banking Revolution Around Us (1984); F. H. Ornstein, Savings Banking (1985).

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