Savings banks are of two general kinds: mutual and stock. The mutual savings bank has no capital and consequently no stockholders. It is organized for the exclusive benefit of the depositors. Apart from the expenses of running the bank, the depositors get all the profit arising from the investment of their deposits. In the stock savings bank, which has a capital and stockholders, the profits of the business, over and above the customary interest to depositors, go to the stockholders as in other types of banks.
The basic purpose of the savings bank is to encourage thrift and saving. It provides at once a safe place for the working classes to keep their savings, and an expert, reliable agency for their investment in the safest way. The deposits are invested largely in mortgages, bonds, and other high-grade securities. From the return on these loans or investments, interest is paid the depositors or credited to their accounts at periodic intervals, generally twice a year. Most savings banks require depositors to give notice, varying from two weeks to three months, of intended withdrawals, except where the amount is small. Primarily the savings bank serves the wage-earner, not the business man.1