Vogel: Mutual Savings Banks

May 2, 2018

Many Vermont companies make significant charitable contributions to the local community and some, like King Arthur Flour, have even met the social, environmental and governance requirements to become B corporations. But in many ways, it’s mutual savings banks, that as a group, stand out when it comes to supporting their local community.

A “mutual” bank is a bank that’s owned by its depositors instead of by stockholders. Mutual savings banks have operated in Vermont for more than 150 years. They were originally created in the early 1800’s to provide banking services, such as providing a safe place for savings, and credit access for ordinary citizens. These banks have always been hybrids; for profit companies with a social mission embedded in their governing charter. And because they don’t pay dividends to stockholders, they pay dividends instead to the community.

Vermont has a number of them, including: The Bank of Bennington, Brattleboro Savings and Loan, Northfield Savings Bank, Passumpsic Savings Bank, Wells River Savings Bank – and the largest mutual bank serving Vermonters is Mascoma Bank.

The Bank of Bennington reports that in addition to donating dollars, last year their staff and board donated more than three thousand hours of community service.

In 2015, Brattleboro Savings and Loan became the first bank in Vermont to procure all of its electricity from solar panels.
In 2002, the board of directors of Northfield Savings Bank passed a resolution that formalized and codified the bank’s practice of donating 10% of its annual profits to community organizations.

And each year, Mascoma Bank also allocates 10% of its pretax earnings directly to nonprofits or to the Mascoma Bank Foundation, which then distributes the earnings to nonprofit organizations that work to “improve life within the Bank’s service area.”
Last year Mascoma Bank and its Foundation donated about $1.5 million to community groups and in the past 5 years, more than $5.5 million.

Being a mutual savings bank sounds old fashioned and most of the mutual savings banks serving Vermont started in the nineteenth century. But because of their dual mission, these banks have a distinctly modern approach, which was illustrated last year when Mascoma Bank also became a B Corporation and added this latest socially and environmentally responsible designation to its historic charter.