Federal Deposit Insurance Corporation
FDIC
Banking
Review
Winter 1995
Vol. 8, No. 1
ConConvveerrted Neted New England Saw England Sa vings Banksvings Banks
Cutbacks in Construction LCutbacks in Construction L endingending
RRecent Deecent De vvelopmentselopments
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FDIC
Banking
Review
Winter 1995
Vol. 8, No. 1
ConConvveerrted Neted New England Saw England Sa vings Banksvings Banks
Cutbacks in Construction LCutbacks in Construction L endingending
RRecent Deecent De vvelopmentselopments
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Federal Deposit Insurance Corporation
FDIC
Banking
Review
Winter 1995
Vol. 8, No. 1
Chairman
Ricki R. Tigert
Division of Research
and Statistics,
Director
Wm. Roger Watson
Deputy Director
Arthur J. Murton
Editor
George E. French
Editorial Committee
Frederick S. Carns
James L. Freund
Detta Voesar
Managing Editors
James L. Freund
Detta Voesar
Readers
Matthew T. Billett
Christine E. Blair
Richard A. Brown
Gary S. Fissel
David S. Holland
John P. O'Keefe
Editorial Secretary
Cathy Wright
Design and Production
Geri Bonebrake
The views expressed are those
of the authors and do not neces
sarily reflect official positions
of the Federal Deposit Insur
ance Corporation. Articles may
be reprinted or abstracted if the
FDIC Banking Review and
author(s) are credited. Please
provide the FDIC's Division of
Research and Statistics with a
copy of any publications con
taining reprinted material.
Single-copy subscriptions are
available to the public free of
charge. Requests for subscrip
tions, back issues or address
changes should be mailed to:
FDIC Banking Review, Office of
Corporate Communications,
Federal Deposit Insurance
Corporation, 550 17th Street,
Room 6061, N.W., Washing
ton, D.C. 20429.
Understanding the Experience of Converted New England
Savings Banks
by Jennifer L. Eccles and John P. O'Keefe page 1
The authors summarize the environment surrounding New England savings
banks in the 1980s, motivations for mutual-to-stock conversion, and the strategies
employed by savings banks after conversion. The financial performance of
converted savings banks is compared with that of non-converted mutual savings
banks in the region, and asset growth rates necessary to produce a sufficient return to
investors are estimated. The authors conclude that growth rates required by the
New England converted savings banks were high. Because rapid growth can be
risky, such fundamental changes in a bank's operating strategy require careful
planning and execution in order to be successful.
Recent Cutbacks in Construction Lending at BIF-Insured
Depository Institutions
by James L. Freund and Maureen C. Crowley page 19
One of the most discussed aspects of the “credit crunch” of the 1990-1992 period
was the sharp decline in construction lending at BIF-insured depository
institutions. This article examines construction lending during that period. The
authors show that the banks that cut back most aggressively had a heavy
commitment to such lending in the late 1980s and/or were experiencing general
earnings or capital problems. In contrast, various tests designed to capture the
influence of real-estate market developments that might affect the demand for
construction loans did not help to explain lending patterns.
Recent Developments Affecting Depository Institutions
by Benjamin B. Christopher page 31
This regular feature of the FDIC Banking Review contains information on regulatory
agency actions, state legislation and regulation, and articles and studies pertinent to
banking and deposit insurance issues.
FDIC
Banking
Review
Winter 1995
Vol. 8, No. 1
Chairman
Ricki R. Tigert
Division of Research
and Statistics,
Director
Wm. Roger Watson
Deputy Director
Arthur J. Murton
Editor
George E. French
Editorial Committee
Frederick S. Carns
James L. Freund
Detta Voesar
Managing Editors
James L. Freund
Detta Voesar
Readers
Matthew T. Billett
Christine E. Blair
Richard A. Brown
Gary S. Fissel
David S. Holland
John P. O'Keefe
Editorial Secretary
Cathy Wright
Design and Production
Geri Bonebrake
The views expressed are those
of the authors and do not neces
sarily reflect official positions
of the Federal Deposit Insur
ance Corporation. Articles may
be reprinted or abstracted if the
FDIC Banking Review and
author(s) are credited. Please
provide the FDIC's Division of
Research and Statistics with a
copy of any publications con
taining reprinted material.
Single-copy subscriptions are
available to the public free of
charge. Requests for subscrip
tions, back issues or address
changes should be mailed to:
FDIC Banking Review, Office of
Corporate Communications,
Federal Deposit Insurance
Corporation, 550 17th Street,
Room 6061, N.W., Washing
ton, D.C. 20429.
Understanding the Experience of Converted New England
Savings Banks
by Jennifer L. Eccles and John P. O'Keefe page 1
The authors summarize the environment surrounding New England savings
banks in the 1980s, motivations for mutual-to-stock conversion, and the strategies
employed by savings banks after conversion. The financial performance of
converted savings banks is compared with that of non-converted mutual savings
banks in the region, and asset growth rates necessary to produce a sufficient return to
investors are estimated. The authors conclude that growth rates required by the
New England converted savings banks were high. Because rapid growth can be
risky, such fundamental changes in a bank's operating strategy require careful
planning and execution in order to be successful.
Recent Cutbacks in Construction Lending at BIF-Insured
Depository Institutions
by James L. Freund and Maureen C. Crowley page 19
One of the most discussed aspects of the “credit crunch” of the 1990-1992 period
was the sharp decline in construction lending at BIF-insured depository
institutions. This article examines construction lending during that period. The
authors show that the banks that cut back most aggressively had a heavy
commitment to such lending in the late 1980s and/or were experiencing general
earnings or capital problems. In contrast, various tests designed to capture the
influence of real-estate market developments that might affect the demand for
construction loans did not help to explain lending patterns.
Recent Developments Affecting Depository Institutions
by Benjamin B. Christopher page 31
This regular feature of the FDIC Banking Review contains information on regulatory
agency actions, state legislation and regulation, and articles and studies pertinent to
banking and deposit insurance issues.