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The savings and loan crisis of the early 1990s eliminated the weaker thrifts, with many of the remaining converting from mutual to stock form. Shares are being offered at 65% or less of book value, first to employees, then to depositors, and then to the public. Thrift consolidation will continue over the next 3 to 5 years, with some of the better takeover targets being suitable investment selections.

Thrifts are expected to be entering a period of consolidation and acquisition in the next few years, which should influence stock prices up over the long run, and make for a healthier market. Government regulation has caused the enlargement of the industry, and deregulation will make for improved earnings for some, and consolidation of others. The industry's relative strength has declined tenfold since 1988, and investors should be cautious about acting too quickly.

Individuals should invest in the stocks of thrifts that have high financial strength and high safety ratings. The industry is currently in the midst of numerous acquisitions and consolidations. The volatility of interest rates during 1994 caused individuals to refinance homes and to purchase new homes. This activity has been beneficial for the thrift industry and further increases in interest rates will increase the economic wellbeing of the industry.

The thrift industry is expected to have continued earnings and stock price improvement as a result of several factors. Rising interest rates will improve earnings originating from adjustable rate mortgages. Consolidations will also help reduce administrative costs, which ultimately improve the bottom line. Investments in this industry should be concentrated on companies exhibiting good financial strength and high safety rankings.

Most thrift institutions did well during 1993, with profits and earnings rising, but the industry earnings are not expected to do as well during 1994. Many firms will consolidate and, as a consequence, stock prices will rise. After deregulation, many thrifts collapsed, and the government investigated many firms. The industry is now stronger, and buyers are purchasing thrifts that are in trouble to increase market share.

Thrift firms may make good investments during 1994, as interest rates reach a bottom low. The industry is undergoing consolidation, and the best investments will be in the most highly capitalized firms, which are the most likely to be taken over by other firms. Thrift companies have made a good adjustment to the changing demands of their customers, by offering annuities and mutual funds.

Stock prices for thrift industry companies have remained relatively flat in 1993 although a number of issues are still considered timely. Many thrifts have cleaned up their portfolios of bad loans yet problem assets remain for a number of institutions. Acquisitions of thrift companies are expected to increase, as purchasing has proven to be a quick way to build a large financial organization. Investors are advised to invest in thrift equities that have high capital ratios.

Golden West Financial Corp. could rise by about 10% in 2003 with loan volume, reaching the $20 billion mark again. Shares are above-average for performance with modest appreciation potential out to 2006-2008.