Similar to the mutual savings bank is the building-and-loan association. They both receive earnings from a number of small depositors and lend these funds on security consisting usually of real estate. These associations are owned by the contributors of the funds and these persons receive the net profits derived from the granting of the loans. However, there is a difference in operation. The savings bank obtained its resources from persons making deposits, while the loan association secures its funds from individuals buying shares in the organization. Furthermore, the savings bank uniformly lends its money to borrowers who have no connection with the institution, whereas the loan association generally grants accommodation only to its members. Savings banks distribute their funds over a wide range of investments, but loan associations ordinarily confine their activities to assist persons who are buying real estate or building homes.

Another form of co-operative banking is the credit union. Its development has not been extensive in the United States, although the building-and-loan association has experienced a rapid growth. Both aim to encourage thrift among their members by receiving their savings and lending them to borrowers at a reasonable rate of interest. The credit union differs from the loan association in that it supplies credit for a short period of time, and makes these grants exclusively to its own members. Thus each borrower is personally known to his associates in the union and so the loan is based on his character rather than on collateral such as real estate.

The Morris Plan Bank also makes loans to small borrowers who have no bank accounts and who find difficulty in securing credit. These loans are made on a promissory note of the borrower, whose credit is further guaranteed by at least two indorsers, or "co-makers." The Morris Plan Bank is not really a co-operative association, for while it seeks to sell its shares to prospective borrowers, it is a regular business enterprise whose capital is derived largely from stockholders not necessarily recipients of loans.