Why Mutual Banks Make Sense
By Jorge Santiago
Mutual banks have been around since the early 1800s. There are currently about 470 in business across the country and nearly all of them are also classified by the FDIC as community banks. They were initially created to provide savings opportunities to the working class, something they couldn’t easily get from commercial banks that focused on business customers. Mutual banks offered individuals a safe place to deposit funds and earn interest, with a tradition of providing quality service to their customers. Those values remain core to mutual banks today, which lead to several benefits that are passed on to customers.
The basic idea behind mutual banks is they are not controlled by stockholders or other direct owners. Rather, their customers – the depositors that bank with them – are considered mutual owners. As a result, mutual banks don’t make decisions based on shareholder interests, but focus on how they can deliver maximum value to their customers and support the communities they serve.
Nearly all mutual banks – like The Milford Bank – are insured by the FDIC, and on average, mutual banks have a Tier 1 capital ratio (an indicator of capital security) well above the minimum level and are considered “well capitalized” by the FDIC. In addition, mutual banks are traditionally conservative when it comes to investments and spending, looking for safe opportunities and avoiding high-risk investments. It’s one of the reasons mutual banks were almost the only banks that successfully navigated the Great Depression and why they continue to provide a safe banking option today.
Mutual banks have a longstanding reputation for quality service that stems from their focus on depositor value rather than corporate ownership. Because customers are viewed as owners, serving their needs and delivering a high level of personalized service is their top priority – including a broad service portfolio, convenience, local access, and banking expertise.
Today, mutual banks offer most of the same services private customers can get from larger commercial banks. They are investing in digital banking technologies to make banking easier and more convenient, including tools to encourage saving. They have knowledgeable local staff ready to provide valuable banking information and advice to help customers make responsible financial decisions.
Commitment to Community
Mutual banks are localized, which means they have a vested interest in their local communities. Not only do their employees live and work in those communities, but so do their customers. As a result, mutual banks tend to be very active in their communities. Many offer special events in their towns – like The Milford Bank’s annual Shred & Recycle Days and the Milford Moves 5k – and regularly support local organizations and businesses through a number of initiatives. Mutual banks espouse community values that reflect their dedication to their customers. The Milford Bank, for instance, supports more than 100 local organizations throughout the year with not only financial support, but also time dedicated by its team to help these community groups.
When deciding where to put your money for safekeeping, you have options. By nature, mutual banks can offer benefits that many larger corporate financial institutions cannot. If you want to know exactly how you local mutual bank can support your banking needs, give them a call or go visit one of their offices for some firsthand detail. Ultimately, the most important factor is that your money is safe and you have access to the services and expertise you need, when you need it. As a client, that’s the commitment you’ll get from mutual banks.