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".

BREAKING DOWN '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. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  3. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  4. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  5. What role does a correspondent bank play in an international transaction?

    A correspondent bank is most typically used in international buy, sell or money transfer transactions to facilitate foreign ... Read Full Answer >>
  6. What is the difference between a correspondent bank and intermediary bank?

    Correspondent and intermediary banks serve as third-party banks that coordinate with beneficiary banks to facilitate international ... Read Full Answer >>

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