The savings bank is also a form of investment institution. It receives deposits mainly from persons of moderate means who are desirous of selecting a secure depository for their funds, and, since they seldom make withdrawals as compared with commercial depositors, the bank is able to place these savings in long-term investments such as real-estate mortgages and high-grade securities. Savings banks thus perform a distinct service by indirectly investing the surplus funds of persons who are unable, because of inexperience, directly to place their money in investments which have a satisfactory yield and procure at the same time maximum safety.

A savings bank may be organized either as a stock or nonstock institution. Funds may be supplied from the issue of capital stock, and so the earnings are distributed in the form of dividends to shareholders. They elect a board of directors, who control the operation of the bank. While this stock type of organization is found throughout the Western and Southern states, the nonstock, or mutual, savings bank prevails in Northeastern states. This institution has no capital stock, for its resources are contributed not by stockholders, but emanate from the organizers and later from depositors. In place of a board of directors there is a body of trustees who determine the policies of the mutual savings bank in the interest solely of the depositors.