Chapter Seventeen

Savings Associations and Credit Unions

Slide 17–3

Thrift Institutions

• Mutual Savings Banks– Depositors owners of the firm – Stock in the bank, not sold or issued

• Savings and Loan Association – Created by Congress– Insured deposits and scandals– S&L bailout

• Credit Unions– Ownership – Membership

Slide 17–4

Savings and Loan Industry Today

• Will Review– Number of institutions

– Types of loans

– S&L size

– S&L assets

– S&L liabilities and net worth

– Capital

Slide 17–5

Decline in Number of Savings and Loan Associations

Figure 17-3: Number of Savings and Loans in the United States, 1993–2001

FDIC statistics on banking industryhttp://www2.fdic.gov/qbp

Slide 17–6

Figure 17-2: Total Assets of Savings and Loan Associations, 1979–2001

Slide 17–7

Savings and Loan Assets

Figure 17-1: Distribution of Savings and Loan Assets, 2001

Slide 17–8

Figure 17-4: Average Assets per Savings and Loan Association, 1984–2001

Slide 17–9

S&L Balance Sheet

Figure 17-5: Consolidated Balance Sheet for Savings and Loan Associations ($ billions, second quarter, 2001)

Slide 17–10

The Future of the S&L Industry (Net Income)

Figure 17-6: Net Income of Savings and Loan Associations, 1984–2000

Slide 17–11

Savings and Loan’s Return on Equity

Figure 17-7: Average Return on Equity for Savings and Loan Institutions, 1993–2001

Slide 17–12

Credit Unions

• Mutual Ownership– Owned by depositors

• Common Bond Membership– Defined field of membership

• Nonprofit, Tax-Exempt Status– Lower service fee

• Regulation and Insurance

• Central Credit Unions– Help with members’ credit

needs

– Invest excess funds

– Hold clearing balances

– Provide educational services

• Credit Union Size

• Trade Associations

National Credit Union Administrationhttp://www.ncua.gov

Slide 17–13

10 Largest Credit Unions

Slide 17–14

Figure 17-8: Number of Credit Unions, 1933–2001

Slide 17–15

Types of Accounts

• Regular Share Accounts– Savings accounts

– Receive no interest

– Do receive dividends

• Share Certificates– Compatible to CDs

• Share Draft Accounts– Pay interest

– Write drafts against account

Slide 17–16

Figure 17-9: Share Distribution

Slide 17–17

Types of Credit Union Loans

Figure 17-10: Loan Distribution

Slide 17–18

Advantages and Disadvantages of Credit Unions

• Advantages– Employer support

– Tax advantage

– Strong trade associations

• Disadvantages– Common bond requirement

Slide 17–19

Figure 17-11: Credit Union Membership, 1933–2002

Slide 17–20

Future of Credit Unions

Figure 17-12: Credit Union Assets, 1993–2002