Full text of Economic Commentary (Federal Reserve Bank of Cleveland) : Competition between Thrifts Institutions and Banks in Ohio, June 14, 1980

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LIBRARY
July 14, 1980
Table 3 Deposit Share Changes:1973-1978
Change
in share of
thrift

deposits,

percent
Mean
All areas

Number

2.8

SMSAs
Non-SMSA

counties

Distribution

3.7

3.3

-5 or more

-0.1 to -4.9

0
0.1 to 1.9

2 to 4.9

5 to 9.9

10 or more

NOTES:

Thrifts

include

and loan associations
Deposit
IPC deposits

and credit

using the following

federally

commercial

1978;

savings and loans total
31, 1973,

unions

total

savings

Federal
Credit

Union

calculated
banks total

and June 30,
as of

31, 1978; and credit

as of

December

31,

31, 1977.

Federal Deposit

Home

savings

savings capital

and March

December

SOURCES:

were

as of June 30, 1973,

March

1972,and

insured

unions.

changes

data:

Loan

Bank

Insurance Corporation,
Board,

and

National

Administration.

deposits
held by banking organizations
in
1973, the percent change in the number of
thrift offices, and the change in the ratio of
S&L offices to banking offices were significant in explaining
the changes in market
shares by thrift institutions
from 1973 and
1978.6 In areas where banks were the domi6.

Using a multiple-regression
assumed that
between

market-share

technique,

it was

variables:

Measuring Thrift

Competition

The increasingly
significant
presence
of thrifts
in most SMSAs and non-SMSA
counties is convincing evidence of the effectiveness of thrift competition.
As more thrifts
enter the third-party
payment market at the
end of 1980, banks obviously will encounter
more vigorous competition
from S&Ls and
CUs. During the past few years, the Board of
Governors
of the Federal Reserve System
has considered
thrift
competition
when
evaluating the competitive effects of acquisitions and mergers.8 However, thrifts have not
yet been recognized as full competitors
of
banks. The Board consistently
has followed
the Supreme Court interpretation
mercial banks provide a unique

percentage

of fi-

a previous

study,

branch

nancial deposits held by banking organizations

found

percent change in median-house-

uted to market-share

hold income

(X2); percent change in the num-

banks. See Paul R. Watro, "Market

ber of thrift

offices

ers and Losers,"

and change in the

ratio of S&L offices to banking offices (X4).
Based on 63 observations, it was found that:

MSn = - 6.15 + 0.06 (Xln) + 0.06 (X2n)
(2.01)

(1.47)

to be an important

expansion

in 1973 (Xl);

(X3);

(X3n)

(2.15)

1.09 (X4n).

(2.48)

Adjusted

in parentheses.

R2 = 0.25; and t-value is

that contrib-

As this occurs, it will be necessary to incorporate thrift institutions
more fully into the
competitive
analysis of proposed bank mergers and acquisitions.
Including
thrift
institutions
as full
competitors
of banks in bank acquisition
and merger analysis generally would increase
the number of competitors
and reduce the
percentage of total deposits held by the largest banking
organizations
in a market.
Recent shifts in market structure and those
that are likely to occur in the wake of the
new legislation clearly suggest that such an
approach would reflect a more accurate picture of actual competitive
structure in banking service markets. The outcome for regulatory decisions
on individual
mergers and
acquisition applications,
however, would depend on the relative size of thrift institutions
and banks in the relevant markets.
Based on present standards and procedures, most banking markets in Ohio are
considered
highly concentrated
by Justice
Department
guidelines.10
In approximately
80 percent
of the SMSAs and non-SMSA
counties in the state, the four largest banking
organizations
control 75 percent or more of

gains made by individual
Share Gain-

Economic Commentary, Fed-

Even with

their

expanded

powers, thrift

tutions

In response to the appl ication of Toledo Trustcorp, Inc., to acquire National Bank of Defi-

secured business and farm loans.

ance, the Board of Governors stated on April
1980,

"that

while

market

deposits

in certain

banking

is the

for competitive

cases the share of

of commercial

downward

competition

commercial

line of commerce

analysis purposes,
'shaded'

NOTES:

factor

was

services that separates them from other institutions.
Since S&Ls and CUs do not provide
the same set of services as banks, it is argued
that they cannot be fully effective competitors. However, the uniqueness
of bank services has clearly eroded in the past several
years, and this erosion will accelerate
in
1981 as thrifts acquire broader powers. The
acquisition
of third-party
payment services
and broader lending powers by thrifts will
tend to make them direct competitors
of
banks in a larger number of product lines.9

eral Reserve Bank of Cleveland, May 19,1980.

appropriate

+ 0.02

that comcluster of

changes by thrifts

1973 and 1978 (MS) were dependent

on the following

nant financial organizations,
banks apparently
were less concerned about competition
from
S&Ls and CUs than in areas where thrifts
were among the largest competitors.
Thrift
institutions
exhibited a greater propensity to
establish
new offices in areas where they
operated
fewer offices and held a smaller
share of total deposits. Opening new offices
presumably
led to deposit gains, since an
important factor in a consumer's choice of a
financial institution
is the proximity
of its
offices to residence, employment,
or shopping areas.1 Since S&Ls accounted for nearly
all of the gains made by thrifts, deposit-share
growth
generally
was greater
in markets
where S&Ls expanded their offices at a faster
pace than competing banks.

banks may be

to take into consideration

thrift

institutions"

(Federal

ReserveBulletin, May 1980, pp, 426-27).

10.

still will

not be permitted

The Justice Department
lenge proposed
market
firms

ordinarily

acquisitions

were above its guidelines.

concentrated
combined
highly

(the

four

and acquired
These guidefirms

is highly

largest firms

(the

Thrifts have grown faster than banks
in Ohio between 1973 and 1978. If thrifts
and banks continue to grow at the same pace,
thrifts will hold half of the total financial deposits
in Ohio by 1982. Moreover,
the
Depository
Institutions
Deregu lation
and
Monetary Control Act of 1980 will intensify
competition
between thrifts and banks. After
year-end 1980, all financial institutions
will
be permitted to offer NOW accounts, and all
federally insured credit unions will be authorized to provide share drafts. On the other
hand, the legislation
specifies a timetable
over which
interest-rate
ceilings
will be
phased out. Consequently,
thrifts will lose
their comparative
rate advantage
on time
and savings deposits during this phasing-out
process over the next six years.
Competition
for deposits
in a given
area will be assessed more accurately if thrifts
are included
in market-structure
measurements. It can be expected that the Board of
Governors will more fully include thrifts in
its evaluation
of competition
as the character of thrift
institutions
changes
in the
months ahead.

share of

is less than 75 percent).

However,

statewide

resources

in Ohio

with

other

concentration
is relatively

states.

organizations

The

in Ohio

five

control

of banking

low compared
largest

banking

approximately

37 percent of total state banking organizations
as of year-end

1979.

have a

share of 75 percent or more) or less

concentrated

the

four

r[ l) L ,\.' '...:" L S E:R V E
BANI< OF CLEYELAND

ECONOMIC
COMMENTARY

Concluding Comments

11.
would chal-

the market
largest

third of the markets. The market-structure
changes generally would be greater in SMSA
areas where thrifts are usually concentrated.
Rural markets,
however, could be affected
more, given that there are relatively fewer
banking organizations
and higher levels of
concentration
in these areas.

un-

or mergers if the

shares of the acquiring

lines depend on whether

insti-

to offer

the banking deposits.I l If thrift institutions
were included in the four-firm concentration
ratio, however, only one in every two markets would be classified as highly concentrated. The concentration
ratio would be reduced by 20 percent or more in over one-

The views stated herein are those of the author and
not necessarily those of the Federal Reserve Bank
of Cleveland or of the Board of Governors of the
Federal Reserve System.

In this issue:
Competition between Thrift
and Banks In Ohio

Federal Reserve Bank of Cleveland
Research Department
P.O. Box 6387
Cleveland,OH
44101

Institutions

BULK RATE
U.S. Postage Paid
Cleveland, OH
Permit No. 385

Table 1

Ohio Financial

Institutions

and Their Deposit

Number of
institutions

Competition between Thrift Institutions
and Banks In Ohio
by Paul R. Watro

Technological,

regulatory,

and

economic

changes each have contributed
to more intense competition
between thrift institutions
and commercial
banks.
During the past
decade, thrift institutions
have increasingly
expanded their services, and in particular they
have become more involved with third-party
payment
services.
Today,
credit
unions
(CUs) are providing
share drafts,
while
savings and loan associations
(S&Ls) are
offering
negotiable
order
of withdrawal
(NOW) accounts in several states.
With the passage in March of the
Depository
Institutions
Deregulation
and
Monetary Control Act of 1980, all depository
institutions
will be permitted
to offer NOW
accounts, and all federally insured CUswili be
authorized
to offer share drafts after December 31, 1980. The act also allows federal CUs
to offer residential mortgage loans and S&Ls
to
issue
credit
cards
and
to
have
trust
powers,
greater
lending
flexibility,
higher loan ceilings, and expanded
investment authority.
These regulatory
changes will make
thrift institutions
a growing force in the
market for banking services, particularly
in
the areas of third-party
payment services and
consumer lending. The initial impact of these
changes on individual banks will vary widely
in accordance
with the competitive
balance
in particular
markets. Banks in areas where
the number of thrifts is relatively small iniPaul Watro is an economic analyst at the Federal
Reserve Bank of Cleveland. The research assistance
of Carolyn Kramer is sincerely appreciated.

tially will be affected less than banks in areas
where thrifts are numerous and aggressive.
This Economic Commentary examines
some changes in the competitive
structure of
Ohio's financial markets between 1973 and
1978. The growing strength
of thrifts
is
clearly indicated by a significant increase in
their share of deposits at both the state and
local levels. In addition, the competitive structure of individual banking markets is examined with and without thrift institutions.

Statewide Competition
Thrift institutions
are numerous
and
have become strong and aggressive competitors for financial deposits in Ohio. Thrifts
operate a larger number of institutions
and
currently
hold 45.2 percent of the total deposits in the state (see table 1). Although
S&Ls currently maintain the major portion of
the
thrift
deposits,
CUs are becoming
stronger competitors
for these deposits. Between 1973 and 1978, CUs were the fastest
growing financial institutions
in Ohio; CUs
increased their deposits by 113 percent, while
S&L and bank deposits increased by 89 percent and 40 percent,
respectively.
As a
result, S&Ls and CUs gained an additional
6.8 percent and 0.7 percent, respectively, of
the deposits in the state.
Many factors contributed
to the deposit gains made by thrift institutions.
S&Ls
had more liberal branching laws than banks
in Ohio. S&Ls could establish branches in
more than one county, whereas banks were
prohibited from opening branches outside of

O:>mmercialbanks
Thrift institutions
Savings and loan associations
Credit un ions
Total

1973-1978

Share of
deposits,
percent

Number of
offices

1973

1978

1973

1978

503
1,305
446
859
1,808

484
1,319
301
1,018
1,803

1,986
1,803
944
859
3,789

2,336
2,178
1.160
1,018
4,514

1973
62.3
37.7
35.9
1.8
100.0

1978
54.8
45.2
42.7
2.5
100.0

NOTES: Financial institutions refer to commercial banks, federally insured savings and loan associations,
and federally insured credit unions. No mutual savings banks operate in Ohio.
Deposit data are based on the following: for commercial banks, total deposits of individuals,
partnerships, and corporations (iPC) as of June 30, 1973, and June 30, 1978; for savings and loans, total
savings capital as of March 31,1973, and March 31, 1978; and for credit unions, total savings shares as of
December 31, 1973, and December 31, 1978. The number of institutions and offices is based on the
above dates. In a few instances, CUs operate more than one office, but data were not available on the
total number of offices.

SOURCES: Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, and National Credit
Union Administration.

their home-office countv.l Even more important, thrifts enjoyed a comparative
interestrate advantage over banks in the 1973-78
period. Regulations enabled S&Ls to pay 0.25
percent more on time and savings deposits
and CUs to pay up to 2.00 percent more on
regular share accounts. Higher interest rates
during most of the 1973-78 period increased
the incentive of individuals and organizations
to economize
on demand-deposit
balances
held by banks. Although Ohio S&Lscurrently
are not authorized
to offer NOW accounts,
the
installation
of remote
service units
(RSUs) and telephone-transfer
services by
some of the larger S&Ls provided a mechanism to utilize savings deposits for transaction
purposes.2
In addition, the introduction
of
1.

On January 1,1979, the Ohio branching law
for banks was changed from home-county
branching to contiguous-county branching.
RSUs are electronic terminals located in retail
establishments to enable customers to make
deposits, withdrawals, and transfers of funds
between accounts without visiting a s&L office.

share drafts by some of the larger credit
unions offered a close substitute for demand
deposits,
as well as a means of earning
interest on third-party
payment
accounts.
Today, approximately
134 CUs in Ohio are
providing share drafts.3

Local and Regional Markets
A more

meaningful

way to gauge the

strength of thrifts is to examine the competitive structure
of local and regional markets for banking services. The area in which
banks compete varies according to the type
of service. For example, banks compete for
large business loans and large certificates
of
deposit in national and international
markets.
In contrast, markets for such services as consumer checking accounts,
savings deposits,
3.

The figure was estimated in June 1980 and
was obtained from the Credit Union National
Association.

and small business loans generally are confined to a smaller regional or local area.
Delineating banking markets is a complex task that requires a large volume of
information
concerning
banking, economic,
commuting,
and demographic
factors. While
banking markets do not necessarily coincide
with pol itical boundaries,
researchers
and
regulators
consumer

often
types

approximate
of financial

markets
services

for
by

counties or standard metropolitan
statistical
areas (SMSAs). In this study, the competitive
structure
of thrifts and banks is analyzed
along SMSA and non-SMSA county lines.
Competition
between thrifts and banks
within individual market areas varies widely
throughout
Ohio. Thrift institutions
are significant competitors
for deposits in all the
SMSAs and non-SMSA counties in the state,
except perhaps in the 15 rural counties where
S&Ls and CUs together
hold less than 20
percent of the total deposits (see table 2).4
Thrifts account
for over one-third
of the
deposits in 30 of the 63 markets and over
one-half of the deposits in eight of the markets. Thrifts maintain their largest market
share in Defiance County (56 percent), where
the two largest financial institutions are S&Ls
and a relatively large CU offers share drafts.
The other seven areas in which penetration
by thrift institutions
is the strongest have at
least two thrifts ranked among the four largest financial organizations.5
Banks generally encounter
more vigorous competition
from thrifts in urban areas.
Thrifts
hold over one-third
of the total
deposits in 13 out of the 14 SMSAs. In addition,
thrifts
hold 42.4 percent
of the
deposits in the average SMSA in Ohio, compared with 27.5 percent of the deposits in
the average rural county.
4.

All Ohio counties are included in these markets
except for Belmont, Washington,and Lawrence
counties, which are part of the Wheeling, WV,
Parkersburg, WV, and Huntington, WV-Ashland, KY, SMSAs, respectively. Counties in
adjacent states that are part of Oh io SMSAs
are included in this study.
These areas include Ashtabula, Logan, Muskingum, and Union counties and the Canton,
Dayton, and Hamilton-Middletown SMSAs.

Table 2

Deposit

Share of Thrifts:
Share of
thrift deposits,
percent

Mean
All areas
SMSAs
Non-SMSA counties
Distribution

30.8
42.4

1978

Number

27.5

63
14
49

0-4
5 -19
20 -34
35 -49
50 or more

5
10
18
22
8

NOTES: Thrifts include federally insured savings
and loan associations and credit unions.
The share of thrift deposits was calculated
using the following data: commercial banks total
IPC deposits as of June 30, 1978; savings and loans
total savings capital as of March 31, 1978; and
credit unions total savings shares as of December
31,1977.

SOURCES: Federal Deposit Insurance Corporation,
Federal Home Loan Bank Board, and National
Credit Union Administration.

Thrifts
significantly
increased
their
share of deposits between 1973 and 1978 in
all of the areas examined
in this study,
except for the Cincinnati
SMSA and seven
rural counties
(Jackson,
Knox, Harrison,
Noble, Monroe, Tuscarawas,
and Defiance).
The share of thrift deposits increased by at
least 2 percent in 41 markets and by 5 percent or more in 21 markets (see table 3).
The greatest gains occurred in Morrow and
Marion
counties,
where
thrifts
increased
their
share
by 14.5 percent
and 10.8
percent, respectively.
S&Ls and CUs operating in urban areas
experienced
slightly greater success in attracting an additional share of the deposits in their
areas. The share of thrift deposits increased
by 3.7 percent in the average SMSA, compared with an increase of 3.3 percent in the
average rural county.
To ascertain some of the reasons that
contributed
to the gains made by thrifts, an
analysis of several factors was undertaken.
It
was found that the percentage
of financial

Table 1

Ohio Financial

Institutions

and Their Deposit

Number of
institutions

Competition between Thrift Institutions
and Banks In Ohio
by Paul R. Watro

Technological,

regulatory,

and

economic

O:>mmercialbanks
Thrift institutions
Savings and loan associations
Credit un ions
Total

1973-1978

Share of
deposits,
percent

Number of
offices

1973

1978

1973

1978

503
1,305
446
859
1,808

484
1,319
301
1,018
1,803

1,986
1,803
944
859
3,789

2,336
2,178
1.160
1,018
4,514

1973
62.3
37.7
35.9
1.8
100.0

1978
54.8
45.2
42.7
2.5
100.0

SOURCES: Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, and National Credit
Union Administration.

Local and Regional Markets
A more

meaningful

way to gauge the

The figure was estimated in June 1980 and
was obtained from the Credit Union National
Association.

often
types

approximate
of financial

markets
services

for
by

Table 2

Deposit

Share of Thrifts:
Share of
thrift deposits,
percent

Mean
All areas
SMSAs
Non-SMSA counties
Distribution

30.8
42.4

1978

Number

27.5

63
14
49

0-4
5 -19
20 -34
35 -49
50 or more

5
10
18
22
8

SOURCES: Federal Deposit Insurance Corporation,
Federal Home Loan Bank Board, and National
Credit Union Administration.

Table 1

Ohio Financial

Institutions

and Their Deposit

Number of
institutions

Competition between Thrift Institutions
and Banks In Ohio
by Paul R. Watro

Technological,

regulatory,

and

economic

O:>mmercialbanks
Thrift institutions
Savings and loan associations
Credit un ions
Total

1973-1978

Share of
deposits,
percent

Number of
offices

1973

1978

1973

1978

503
1,305
446
859
1,808

484
1,319
301
1,018
1,803

1,986
1,803
944
859
3,789

2,336
2,178
1.160
1,018
4,514

1973
62.3
37.7
35.9
1.8
100.0

1978
54.8
45.2
42.7
2.5
100.0

SOURCES: Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, and National Credit
Union Administration.

Local and Regional Markets
A more

meaningful

way to gauge the

The figure was estimated in June 1980 and
was obtained from the Credit Union National
Association.

often
types

approximate
of financial

markets
services

for
by

Table 2

Deposit

Share of Thrifts:
Share of
thrift deposits,
percent

Mean
All areas
SMSAs
Non-SMSA counties
Distribution

30.8
42.4

1978

Number

27.5

63
14
49

0-4
5 -19
20 -34
35 -49
50 or more

5
10
18
22
8

SOURCES: Federal Deposit Insurance Corporation,
Federal Home Loan Bank Board, and National
Credit Union Administration.

LIBRARY
July 14, 1980
Table 3 Deposit Share Changes:1973-1978
Change
in share of
thrift

deposits,

percent
Mean
All areas

Number

2.8

SMSAs
Non-SMSA

counties

Distribution

3.7

3.3

-5 or more

-0.1 to -4.9

0
0.1 to 1.9

2 to 4.9

5 to 9.9

10 or more

NOTES:

Thrifts

include

and loan associations
Deposit
IPC deposits

and credit

using the following

federally

commercial

1978;

savings and loans total
31, 1973,

unions

total

savings

Federal
Credit

Union

calculated
banks total

and June 30,
as of

31, 1978; and credit

as of

December

31,

31, 1977.

Federal Deposit

Home

savings

savings capital

and March

December

SOURCES:

were

as of June 30, 1973,

March

1972,and

insured

unions.

changes

data:

Loan

Bank

Insurance Corporation,
Board,

and

National

Administration.

Using a multiple-regression
assumed that
between

market-share

technique,

it was

variables:

Measuring Thrift

Competition

percentage

of fi-

a previous

study,

branch

nancial deposits held by banking organizations

found

percent change in median-house-

uted to market-share

hold income

(X2); percent change in the num-

banks. See Paul R. Watro, "Market

ber of thrift

offices

ers and Losers,"

and change in the

ratio of S&L offices to banking offices (X4).
Based on 63 observations, it was found that:

MSn = - 6.15 + 0.06 (Xln) + 0.06 (X2n)
(2.01)

(1.47)

to be an important

expansion

in 1973 (Xl);

(X3);

(X3n)

(2.15)

1.09 (X4n).

(2.48)

Adjusted

in parentheses.

R2 = 0.25; and t-value is

that contrib-

gains made by individual
Share Gain-

Economic Commentary, Fed-

Even with

their

expanded

powers, thrift

tutions

In response to the appl ication of Toledo Trustcorp, Inc., to acquire National Bank of Defi-

secured business and farm loans.

ance, the Board of Governors stated on April
1980,

"that

while

market

deposits

in certain

banking

is the

for competitive

cases the share of

of commercial

downward

competition

commercial

line of commerce

analysis purposes,
'shaded'

NOTES:

factor

was

eral Reserve Bank of Cleveland, May 19,1980.

appropriate

+ 0.02

that comcluster of

changes by thrifts

1973 and 1978 (MS) were dependent

on the following

banks may be

to take into consideration

thrift

institutions"

(Federal

ReserveBulletin, May 1980, pp, 426-27).

10.

still will

not be permitted

The Justice Department
lenge proposed
market
firms

ordinarily

acquisitions

were above its guidelines.

concentrated
combined
highly

(the

four

and acquired
These guidefirms

is highly

largest firms

(the

share of

is less than 75 percent).

However,

statewide

resources

in Ohio

with

other

concentration
is relatively

states.

organizations

The

in Ohio

five

control

of banking

low compared
largest

banking

approximately

37 percent of total state banking organizations
as of year-end

1979.

have a

share of 75 percent or more) or less

concentrated

the

four

r[ l) L ,\.' '...:" L S E:R V E
BANI< OF CLEYELAND

ECONOMIC
COMMENTARY

Concluding Comments

11.
would chal-

the market
largest

un-

or mergers if the

shares of the acquiring

lines depend on whether

insti-

to offer

The views stated herein are those of the author and
not necessarily those of the Federal Reserve Bank
of Cleveland or of the Board of Governors of the
Federal Reserve System.

In this issue:
Competition between Thrift
and Banks In Ohio

Federal Reserve Bank of Cleveland
Research Department
P.O. Box 6387
Cleveland,OH
44101

Institutions

BULK RATE
U.S. Postage Paid
Cleveland, OH
Permit No. 385

LIBRARY
July 14, 1980
Table 3 Deposit Share Changes:1973-1978
Change
in share of
thrift

deposits,

percent
Mean
All areas

Number

2.8

SMSAs
Non-SMSA

counties

Distribution

3.7

3.3

-5 or more

-0.1 to -4.9

0
0.1 to 1.9

2 to 4.9

5 to 9.9

10 or more

NOTES:

Thrifts

include

and loan associations
Deposit
IPC deposits

and credit

using the following

federally

commercial

1978;

savings and loans total
31, 1973,

unions

total

savings

Federal
Credit

Union

calculated
banks total

and June 30,
as of

31, 1978; and credit

as of

December

31,

31, 1977.

Federal Deposit

Home

savings

savings capital

and March

December

SOURCES:

were

as of June 30, 1973,

March

1972,and

insured

unions.

changes

data:

Loan

Bank

Insurance Corporation,
Board,

and

National

Administration.

Using a multiple-regression
assumed that
between

market-share

technique,

it was

variables:

Measuring Thrift

Competition

percentage

of fi-

a previous

study,

branch

nancial deposits held by banking organizations

found

percent change in median-house-

uted to market-share

hold income

(X2); percent change in the num-

banks. See Paul R. Watro, "Market

ber of thrift

offices

ers and Losers,"

and change in the

ratio of S&L offices to banking offices (X4).
Based on 63 observations, it was found that:

MSn = - 6.15 + 0.06 (Xln) + 0.06 (X2n)
(2.01)

(1.47)

to be an important

expansion

in 1973 (Xl);

(X3);

(X3n)

(2.15)

1.09 (X4n).

(2.48)

Adjusted

in parentheses.

R2 = 0.25; and t-value is

that contrib-

gains made by individual
Share Gain-

Economic Commentary, Fed-

Even with

their

expanded

powers, thrift

tutions

In response to the appl ication of Toledo Trustcorp, Inc., to acquire National Bank of Defi-

secured business and farm loans.

ance, the Board of Governors stated on April
1980,

"that

while

market

deposits

in certain

banking

is the

for competitive

cases the share of

of commercial

downward

competition

commercial

line of commerce

analysis purposes,
'shaded'

NOTES:

factor

was

eral Reserve Bank of Cleveland, May 19,1980.

appropriate

+ 0.02

that comcluster of

changes by thrifts

1973 and 1978 (MS) were dependent

on the following

banks may be

to take into consideration

thrift

institutions"

(Federal

ReserveBulletin, May 1980, pp, 426-27).

10.

still will

not be permitted

The Justice Department
lenge proposed
market
firms

ordinarily

acquisitions

were above its guidelines.

concentrated
combined
highly

(the

four

and acquired
These guidefirms

is highly

largest firms

(the

share of

is less than 75 percent).

However,

statewide

resources

in Ohio

with

other

concentration
is relatively

states.

organizations

The

in Ohio

five

control

of banking

low compared
largest

banking

approximately

37 percent of total state banking organizations
as of year-end

1979.

have a

share of 75 percent or more) or less

concentrated

the

four

r[ l) L ,\.' '...:" L S E:R V E
BANI< OF CLEYELAND

ECONOMIC
COMMENTARY

Concluding Comments

11.
would chal-

the market
largest

un-

or mergers if the

shares of the acquiring

lines depend on whether

insti-

to offer

The views stated herein are those of the author and
not necessarily those of the Federal Reserve Bank
of Cleveland or of the Board of Governors of the
Federal Reserve System.

In this issue:
Competition between Thrift
and Banks In Ohio

Federal Reserve Bank of Cleveland
Research Department
P.O. Box 6387
Cleveland,OH
44101

Institutions

BULK RATE
U.S. Postage Paid
Cleveland, OH
Permit No. 385

Full text of Economic Commentary (Federal Reserve Bank of Cleveland) : Competition between Thrifts Institutions and Banks in Ohio, June 14, 1980

FRASER