The term mutual savings bank refers to a financial institution designed to promote savings, or thrift, by individuals. Mutual savings banks specialize in protecting the deposits of their customers by making limited, very secure investments.
Mutual savings banks (MSB) first appeared in the United States in the early 1800s. Provident Institution for Savings of Boston was the first chartered mutual savings bank in the United States.
Oftentimes founded by philanthropists, these banks were established to promote savings among the working class and teach members the value of thrift. As is the case with credit unions, these banks were owned by its members.
Mutual savings banks are state or federally-chartered financial institutions. Bank members share in a common fund, which is directed to relatively safe investments such as mortgages, loans, bonds and even common stock. Profits and losses generated by the bank's operations and investments are shared by members.