Savings and loan (S&L) companies provide many of the same services to customers as commercial banks, including deposits, loans, mortgages, checks and debit cards. However, savings and loans associations place a stronger emphasis on residential mortgages, whereas banks tend to concentrate on working with large businesses and on unsecured credit services such as credit cards. S&Ls are also owned and chartered differently than commercial banks, and are generally more locally oriented.
Commercial Banks can be chartered at either the state or federal level. The same is true for S&Ls, also sometimes referred to as thrift banks, savings banks, or savings institutions. The Office of the Comptroller of the Currency (OCC), however, is in charge of monitoring all nationally chartered commercial banks and S&Ls.
S&Ls can be owned in either of two ways. Under what is known as the mutual ownership model, an S&L can be owned by its depositors and borrowers. Alternatively, an S&L can be established by a consortium of shareholders controlling stock issued by a thrift's charter.
By law, S&Ls may loan up to 20% of their assets for commercial loans, and only half of that can be used for small business loans. Moreover, for Federal Home Loan Bank borrowing approvals, an S&L must be able to show that 65% of its assets are invested in residential mortgages and other consumer-related assets. The banking industry does not have these types of limitations.
In contrast to the S&L's narrower focus on residential mortgages, banks typically provide a broader range of financial offerings, often including credit cards and wealth management and investment banking services. Although commercial banks are permitted to provide residential mortgages, they tend to focus on loans targeting the construction and expansion needs of regional, national and international businesses.