Thrift Bank

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DEFINITION of 'Thrift Bank'

A financial institution focusing on taking deposits and originating home mortgages. Thrift banks often have access to low-cost funding from Federal Home Loan Banks, which allows for higher savings account yields to customers and increased liquidity for mortgage loans.

Also known as "savings and loan associations".

INVESTOPEDIA EXPLAINS 'Thrift Bank'

Thrift Banks tend to be community-focused, and smaller than retail and commercial banks. While the main lines of business continue to be loan origination and savings deposits, many thrifts offer checking accounts and other basic banking services. The thrift banking system was created in an attempt to transition mortgage loan origination away from insurance companies and into banking institutions, as early mortgages were often set up as interest-only loans that often couldn't be repaid when balloon payments came due.

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RELATED FAQS
  1. What is the difference between a savings & loan company and a bank?

    Savings and loan (S&L) companies provide many of the same services to customers as banks, including deposits, loans, ... Read Full Answer >>
  2. Why do banks used the Five Cs of Credit?

    Banks use rigorous policies and analyses when determining if and how much money to lend to clients. The methods used by banks ... Read Full Answer >>
  3. How do interest rate changes affect the profitability of the banking sector?

    The banking sector's profitability increases with interest rate hikes. Institutions in the banking sector such as retail ... Read Full Answer >>
  4. What are the pros and cons of online checking accounts?

    Online banking offers a convenient alternative to keeping your checking account with a brick-and-mortar bank. With an online ... Read Full Answer >>
  5. What is a standby letter of credit (SLOC)?

    A standby letter of credit, or SLOC, is a financial instrument that provides a guarantee of payment to a beneficiary in the ... Read Full Answer >>
  6. How do commercial banks make money?

    Commercial banks make money by providing loans and earning interest income from those loans. Customer deposits, such as checking ... Read Full Answer >>
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