F114. Savings Institutions (Savings Banks)

Federal Reserve definition for F114 flow of funds table

Savings institutions are financial intermediaries that raise funds mainly through time and checkable deposits and use the funds to provide loans, principally home mortgages, and to invest in securities.

Definition: Savings Institutions, Savings Banks

The savings institutions sector is made up of savings and loan associations, mutual savings banks, federal savings banks, and Massachusetts cooperative banks.

In function, savings institutions are similar to commercial banks, and in recent years the distinction between commercial banks and savings institutions has become blurred as the financial services industry has become more homogeneous.

In the past, savings institutions were legally required to engage primarily in home mortgage finance, and even though they now may hold other types of assets, their traditional emphasis continues to be a major difference between savings institutions and commercial banks.

Mortgages make up close to 70 percent of the credit market instruments that savings institutions hold.

Many savings institutions, particularly savings and loan associations, encountered financial difficulties beginning in the late 1980s.

The federal government undertook a large-scale bailout of the industry, and many of the institutions disappeared through merger and failure.

The industry is now considerably smaller than it had been; the sector's total financial assets were $1.029 billion at the end of 1997, down from a peak of $1.640 billion at the end of 1988.

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