What Is a Thrift Charter?

by Jason Hinkley ; Updated July 27, 2017
Thrifts promote homeownership.

A thrift charter is a banking charter for lending institutions that are charged with the specific mission of promoting and bank rolling home ownership. In many respects, they operate just like any other bank; however, there are a few key distinctions.

Home Loans

While a thrift bank may also handle commercial loans and personal accounts, home loans are the backbone of a thrift bank's charter. To maintain their charter, a thrift bank most hold over 65% of their assets in housing-related investments.

Charters

Unlike commercial banks, which are chartered by states and approved by the Federal Reserve, thrifts are chartered by the Office of Thrift Supervision (OTS), or through state governments following OTS guidelines. The OTS is responsible for examining thrift institutions every 12 to 18 months to ensure their soundness.

Depositor Insurance

Thrifts are insured by the Deposit Insurance Fund (DIF), which is administered by the FDIC.

Other Names

Thrifts are also known as savings and loan associations and savings banks. These banks became known as thrifts because they originally only handled savings accounts and home mortgages.

About the Author

Jason Hinkley has been writing since 2004. His work has been published in "The Adirondack Review" and on NewPages.com. Jason writes about technology, personal finance and outdoor recreation. He has a Bachelor of Arts in English from the State University of New York at New Paltz.

Photo Credits

  • home sweet home image by David Dorner from Fotolia.com