Savings & Loan Associations

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Savings and loan associations (S&Ls), along with savings banks and credit unions, are known as thrift institutions. Thrifts and commercial banks are also known as depository institutions and are distinguished from non-depository institutions such as investment banks, insurance companies, and pension funds. S&Ls traditionally have taken savings, time, and demand deposits as their primary liability, and made most of their income from loaning deposits out as mortgages.

The first savings and loan association was organized in 1831 as the Oxford Provident Building Association of Philadelphia. Like the building societies of England and the credit cooperatives of Europe, it was a membership organization that took savings deposits from its members and in turn made home loans to them. S&Ls soon accepted deposits from the general public and became public depository institutions. They also became the primary source of credit for working individuals to purchase their own homes at a time when commercial banks did not offer mortgages. By the end of the nineteenth century there were nearly 6000 S&Ls in existence.

See also: Savings and Loan (Failures of)