Analysis of the U.S. Savings and Loans Banking Market

This Frost & Sullivan research service titled Analysis of the U.S. Savings and Loans Banking Market provides market drivers and restraints, industry overview, investment themes, and financial highlights. The study covers the savings institutions insured by Federal Deposit Insurance Corporation (FDIC) and regulated by the Office of Thrift Supervision (OTS).

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Market Overview

Regulatory Changes Cause Spate of Mergers and Acquisitions in the U.S. Savings and Loans Banking Market

Market Slated for Growth at a CAGR of 1.2 Percent Until 2016

Indicators of improving economic conditions, such as new private housing starts and declining unemployment rates point to a positive outlook for the U.S. savings and loans banking market. The savings and loan institutions have been exhibiting positive trends, in terms of performance since 2009. The market is poised to grow at a compound annual growth rate (CAGR) of 1.2 percent from 2009 to 2016. “Regulatory changes are likely to trigger mergers and acquisitions in the U.S. savings and loans banking market,” notes the analyst of this research service. “The Dodd-Frank Wall Street Reform Act passed in July 2010 aims to streamline the United States regulatory and supervisory system by abolishing the Office of Thrift Supervision (OTS); the Office of the Comptroller of the Currency (OCC) will regulate savings and loans institutions.”

The act also implements enhanced capital requirements, leverage and risk-based standards for systemically important companies such as U.S. bank holding companies, including holdings of foreign banks, savings and loan institutions (thrift holdings), and systemically important non-banks. As a result of the merger of OTS and OCC, a savings and banking institution could continue as a savings and banking institution, become a national bank under the purview of the OCC or opt for state supervision.

Factors such as insufficient capital funds, competition from commercial banks, deleveraging of assets resulting in increased pressure on balance sheets, and high credit costs are likely to challenge the growth of the market. “Savings and banking institutions are expected to find the recent regulatory changes challenging and could opt for mergers and acquisition as a route to exit the market.” explains the analyst. “This is expected to increase the number of mergers and acquisition transactions in the savings and loans banking market,”

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