Savings Banks & Thrifts in the US Industry Market Research Report Now Available from IBISWorld

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Savings banks and thrifts will not gain any rest over the next five years, with revenue continuing to sink as a result of the subprime crisis and heightened competition. Consumers will continue to place their trust in large commercial banks, in light of the number of bank failures that occurred in the recession. While government regulation is expected to increase, it will substantially hurt profit, resulting in a greater number of consolidations and mergers. For these reasons, industry research firm IBISWorld has updated its report on the Savings Banks & Thrifts industry.

IBISWorld Market Research

IBISWorld Market Research

Fallout from the subprime loan crisis will continue to plague the industry

A decline in deposits and exposure to subprime mortgages have decimated the Savings Banks and Thrifts industry during the past five years. Industry participants, which include savings and loan associations, savings institutions and thrifts, experienced a stagnation in deposits over the period, while commercial bank deposits have grown more than 8.0% annually in comparison. According to IBISWorld industry analyst Eben Jose, “This exodus of deposits from savings institutions to commercial banks has decreased the amount of lendable money to borrowers, impairing industry revenue.”

In the five years to 2012, revenue is expected to fall at an average annual rate of 5.2% to $82.2 billion. “A decline in deposits and the effects of the subprime crisis led to this slowdown,” says Jose. Savings banks have been losing deposits to commercial banks, which has dealt a critical blow to industry operators, since lending out to these deposits at a higher rate drives the majority of revenue. Subprime loan exposure has hammered banks' balance sheets, causing large write-downs and profit losses. From 2011 to 2012, revenue is expected to experience a further decline of 4.1%, after a decrease of 3.7% over 2011.

Consolidation is a major trend that has affected the Savings Banks and Thrifts industry during the past five years and will continue to trouble operators. In 2008, the industry's largest player, Washington Mutual, failed because a lack of consumer confidence led to a 10.0% fall in deposits. This fall in consumer confidence was a result of huge subprime loan losses. Also in 2008, industry players IndyMac and Downey Savings failed, representing the fourth and 13th largest bank failures in US history, respectively. More than 150 banks have failed since 2008, causing the number of firms to drop in 2008 and 2009. This trend is expected to continue as the commercial banking structure absorbs savings banks in the coming years. Industry consolidation will contribute to declining revenue. In the next several years, the industry concentration will continue to decrease as only the strongest firms will survive. Weak banks will either be acquired or be forced to close their door because of a decreasing amount of deposits due to the movement of customers to commercial banks that are viewed as "too big to fail" and offer a greater variety of services. Commercial banks will also be able to use larger revenue per company to enact price cutting measures on a variety of items like ATM and account fees to gain more deposits.

In the five years to 2017, savings institutions will continue to feel the effects of the subprime crisis and lose deposits to commercial banks. Increases in commercial real estate defaults will increase the stress on operators' balance sheets, and the industry will be unable to compete with larger, multifunctional commercial banks. These factors will decrease profit margins and continue to hamper revenue.

For more information, visit IBISWorld’s Savings Banks and Thrifts in the US industry report page.

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IBISWorld industry Report Key Topics

The industry includes companies that accept customer deposits and place them into interest-bearing products like savings accounts and certificates of deposit (CDs). Industry firms then loan these deposits at higher interest rates through consumer and business loans and make profit on the difference. This industry only covers firms governed by the Office of Comptroller of the Currency; commercial banks and credit unions are not included in this industry.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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