Before most Americans had checking accounts at commercial banks, they saved at the local savings and loan. Thrift institutions — savings banks and savings associations — were the backbone of American homeownership from the 1930s through the 1970s. Today’s thrifts are smaller in number and closer in function to commercial banks, but the distinction still matters if you’re comparing institutions or studying banking history.
What Is a Thrift?
A thrift is a federally or state-chartered depository institution focused on collecting savings deposits and making home mortgage loans. The term covers two types:
Savings associations (S&Ls / savings and loans): Mutually organized institutions originally designed so members pooled savings to fund each other’s home purchases. Federal savings associations are chartered by the OCC.
Savings banks: Similar to savings associations but typically with stock or mutual ownership structures. Historically dominant in New England and the Northeast.
Thrift vs. Commercial Bank: Key Differences
| Feature | Thrift (S&L / Savings Bank) | Commercial Bank |
|---|---|---|
| Primary regulator | OCC (federal) or state | OCC, FDIC, or Federal Reserve |
| Deposit insurance | FDIC | FDIC |
| Lending focus | Mortgages (historically) | General-purpose loans |
| History | Created for homeownership | General commerce |
| Products today | Very similar to banks | General banking services |
| Number in US (2026) | Under 500 | ~4,000+ |
The Savings and Loan Crisis of the 1980s
The S&L crisis is one of the most significant financial disasters in US history. Here is what happened:
The trap: Thrifts in the 1960s–1970s made 30-year fixed-rate mortgages at 6–8% interest, funded by short-term savings deposits. When inflation spiked and the Federal Reserve raised interest rates dramatically in 1979–1982 (the Fed funds rate hit 20%), S&Ls were in a death trap: paying 12–15% on deposits while earning only 6–8% on existing mortgages.
Deregulation made it worse: The Garn-St. Germain Depository Institutions Act of 1982 allowed thrifts to invest in commercial real estate, junk bonds, and other risky assets. Desperate institutions gambled their way into deeper trouble.
The bailout: Over 1,000 thrifts failed between 1986 and 1995. The Resolution Trust Corporation (RTC) was created to manage the assets of failed S&Ls. Final cost to taxpayers: approximately $130 billion (equivalent to over $300 billion in 2026 dollars).
Modern Thrifts: What Remains
The surviving thrift sector is lean and mostly indistinguishable from commercial banks in the products they offer. Major remaining thrift institutions include:
| Institution | Charter Type | States |
|---|---|---|
| Washington Federal Bank | Federal Savings Association | Western US |
| Dollar Bank | State Savings Bank | PA/OH/VA |
| Dime Community Bank | State Savings Bank | New York |
| Pacific Premier Bank | Federal Savings Bank | Western US |
All are FDIC-insured, OCC or state-regulated, and functionally similar to commercial banks for everyday banking needs.
Should You Bank at a Thrift?
For most consumers, there is no meaningful functional difference between a thrift and a commercial bank. Both offer checking, savings, CDs, mortgages, and online banking. The main reason to choose a thrift today:
- Community focus — many remaining thrifts are smaller, locally oriented institutions
- Mortgage expertise — thrifts with a strong mortgage focus may offer competitive home loan rates
- History with the institution — longstanding relationships
For more on choosing a bank, see top features of trustworthy banks and reasons to have a local bank.
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