DEFINITION of 'Morris Plan Bank'

A type of bank first established in 1910 to lend money to individuals who couldn't obtain loans from mainstream banks. Fidelity Savings & Trust Co. was the first Morris Plan bank. By 1931, there were 109 Morris Plan banks; however, that number declined after the economy recovered from the Great Depression and commercial banks began offering similar loans.

BREAKING DOWN 'Morris Plan Bank'

Named after the Morris Plan's founder, Virgina lawyer Arthur Morris, Morris Plan banks had a unique lending strategy. They did not require collateral for loans, but instead considered the character and community standing of applicants by requiring two endorsers. All three were required to fill out an application covering character, financial history, employment and wages. If the loan was granted, the borrower ended up paying a relatively high rate of interest.

RELATED TERMS
  1. Industrial Bank

    A financial institution with a limited scope of services. Industrial ...
  2. Commercial Bank

    A commercial bank is a type of financial institution that accepts ...
  3. Loan Loss Provision

    An expense set aside as an allowance for bad loans (customer ...
  4. Lending Freeze

    A period of time when banks either do not have excess money to ...
  5. Legal Lending Limit

    The aggregate maximum dollar amount that a single bank can lend ...
  6. Limited Service Bank

    Any type of banking business facility that is located separately ...
Related Articles
  1. Investing

    Philip Morris Stock Trades Ex-Dividend Tuesday

    Philip Morris will send its dividend payment on April 11 to shareholders of record as of March 23.
  2. Investing

    5 Things Philip Morris Wants You to Know (PM)

    With the power of the well-known Marlboro brand behind it, Philip Morris International (NYSE: PM) has become a player in the worldwide tobacco market. For a time, that gave Philip Morris an ...
  3. Investing

    3 Reasons to Buy Philip Morris International Stock (PM, AAPL)

    Among international tobacco companies, Philip Morris International (NYSE: PM) is the best known in the U.S., with competitors like British American Tobacco (NYSEMKT: BTI) taking a back seat ...
  4. Investing

    Philip Morris International Faces a New Threat (PM)

    After decades of litigation and regulatory challenges in the U.S., investors initially believed Philip Morris International would offer freedom from the challenges facing U.S. tobacco companies. ...
  5. Investing

    Philip Morris Investing Big on Heated Tobacco (PM)

    Philip Morris is making big moves in anticipation of a growing trend.
  6. Investing

    Philip Morris Doubles Down on Greece for IQOS

    The Marlboro maker plans to use the still-recovering country as a base to export iQOS products.
  7. Insights

    Philip Morris: 4 Secrets You Didn't Know (PM)

    Here are five secrets about Philip Morris International, maker of the iconic Marlboro brand cigarettes, that you probably didn't know.
  8. Investing

    Why Philip Morris Could Own the U.S. E-Cig Market

    As Philip Morris International (NYSE: PM) prepares to submit its application for FDA approval of its next-generation iQOS electronic cigarette, it has a clear target in mind: domination of the ...
  9. Investing

    Why Philip Morris is Up 24% in 2017

    Shares of the tobacco leader are up on Thursday after management indicates lower currency headwinds.
  10. Personal Finance

    Getting a Loan Without Your Parents

    Use the 5 "W"s to finance your dreams without banking on a second signature.
RELATED FAQS
  1. How do name-brand products compete with their generic competitors?

    On April 2, 1993, Phillip Morris announced that it was cutting the price of its cigarettes to compete with the growing number ... Read Answer >>
  2. To what extent do banks have exposure to different business lines?

    Learn how banks are exposed to risk and what the different types of exposure mean. Find out about the 2014 U.S. commercial ... Read Answer >>
  3. What economic indicators are important to consider when investing in the banking ...

    Find out which economic indicators are most useful for investors in the banking sector, especially those influenced by central ... Read Answer >>
  4. What are the major categories of financial institutions and what are their primary ...

    Understand the various types of financial institutions that exist in today's economy, and learn the purpose each serves in ... Read Answer >>
  5. How is a bank guarantee different from a traditional loan?

    Read about the differences between a traditional bank loan and a bank guarantee, and why a third party might require a guarantee ... Read Answer >>
  6. What is the difference between a bank guarantee and a bond?

    Understand what a bank guarantee is and what a bond is, and which one is a debt instrument. Learn the differences between ... Read Answer >>
Trading Center