The spelling of "savings and loan" can be a bit tricky, with both words containing multiple vowels and consonants that can be pronounced in different ways. In IPA phonetic transcription, "savings" is pronounced as /ˈseɪvɪŋz/, with the first syllable stressed and the final -s pronounced as a voiced s. "Loan" is pronounced as /loʊn/, with the first syllable having a diphthong vowel sound and the final -n pronounced as a nasal consonant. Together, "savings and loan" refer to a financial institution that is centered around providing loans and accepting deposits from individual savers.
Savings and loan (abbreviated as S&L) is a financial institution that primarily accepts savings deposits and offers mortgage loans to individuals and small businesses. Also known as thrift institutions or savings banks, savings and loans are specialized banks that are chartered to promote homeownership and the development of local communities. This type of financial institution operates under a specific set of regulations, aimed at safeguarding depositors' funds and maintaining the stability of the housing market.
Savings and loans were initially established in the early 19th century as cooperative organizations, allowing individuals to pool their savings and provide mortgage loans to members of their community. Over time, these institutions evolved to embrace more conventional banking practices, while still retaining their primary focus on housing finance. They offer various types of mortgages, such as fixed-rate, adjustable-rate, and home equity loans, to help individuals and families purchase, refinance, or improve their homes.
The deposits held by savings and loans are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), depending on whether the institution is a bank or a credit union. This insurance protects customers' savings in case of a bank failure or other financial hardships. Nowadays, savings and loans have expanded their services to include other retail banking products like checking accounts, certificates of deposit, and other financial services such as credit cards and personal loans, while still maintaining their commitment to housing finance.