Mergers in the Savings and Loan Industry. Structural Changes, Financial Comparisons, and the Performance of Merging Savings and Loan Associations

First, this study analyzes the financial and charter-ownership characteristics of the acquiring and acquired savings and loan associations (S&L’s) involved in non-supervisory mergers for the period January 1969 through December 1974. Specifically, the differences between the acquiring and acquired S&L’s in charter and ownership characteristics are analyzed. Then the asset sizes of the S&L’s involved in mergers are examined. Thereafter, financial characteristics are examined to identify the differences between the acquiring and acquired associations. Secondly, this study compares the financial characteristics and performance of a large group of acquiring S&L’s to a match group of nonmerging S&L’s. The comparisons relate to the year preceding the merger of the acquiring S&L, and to a 2-year period and a 3-year period following the year of the merger. It is shown that the mergers in the industry have tended to shift more industry assets under direct Federal Home Loan Bank Board regulation, and away from state regulation. It is also shown that acquiring associations are more efficient in an operating sense, and have significantly different mortgage distributions and financing patterns than acquired associations. With respect to the comparisions between acquiring S&L’s and comparable nonmerging S&L’s, the acquiring S&L’s differed significantly from the nonmerging S&L’s in several areas of both asset distribution and operational performance. This was true both for the year preceding the mergers, and for the 2- and 3-year periods following the mergers. Some conclusions concerning the policy implications of these results are discussed.