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. Reverse Morris Trust

    A tax-avoidance strategy, in which a corporation wanting to dispose ...
  2. Character Loan

    A character loan is a type of unsecured loan that is made on ...
  3. Commercial Loan

    A debt-based funding arrangement that a business can set up with ...
  4. Commercial Bank

    A financial institution that provides services, such as accepting ...
  5. Loan Loss Provision

    An expense set aside as an allowance for bad loans (customer ...
  6. Legal Lending Limit

    The aggregate maximum dollar amount that a single bank can lend ...
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 Stock Trades Ex-Dividend Tuesday (PM)

    Philip Morris will send its dividend payment on July 11 to shareholders of record as of June 23.
  5. Financial Advisor

    Philip Morris International's Profit Machine

    Even in an abstemious U.S., 18.1% of adults smoke. But that's nothing compared to the rest of the world, served by Philip Morris International.
  6. Investing

    Philip Morris Investing Big on Heated Tobacco (PM)

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

    What’s The Smartest Way To Play Tobacco Stocks?

    While the United States economy continues to grow, the U.S. tobacco industry keeps shrinking.
  8. Investing

    Philip Morris International Bumps Dividend (PM, MO)

    Philip Morris International (NYSE: PM) is extending its streak of payout increases as the company announced it has raised its quarterly dividend by 2% to $1.02 per share. The tobacco industry ...
  9. 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.
  10. Investing

    Philip Morris Takes On Smugglers (PM)

    Tobacco smuggling is big business, and it’s stealing profits from Philip Morris.
RELATED FAQS
  1. 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 >>
  2. I am considering taking a loan from my qualified retirement plan. What is the definition ...

    For the purposes of a qualified plan loan, the reasonable rate of interest that the Department of Labor provides is one consistent ... Read Answer >>
  3. 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 >>
  4. What impact does the Federal Reserve have on a bank's profitability?

    Learn how the Federal Reserve impacts a bank's profitability with its influence on the discount rate, federal funds rate ... Read Answer >>
  5. How do commercial banks us the 'money multiplier' to create money?

    Find out how commercial banks can expand the supply of money in an economy through the fractional reserve system, otherwise ... Read Answer >>
  6. 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 >>
Trading Center