SUBJECT: Lincoln Savings and Loan
The purpose of this memorandum is to analyze and examine the business, financial, and accounting strategies and policies of Lincoln Savings and Loan. This analysis will include LSL’s current business strategies and processes, its business risks and a detailed breakdown of LSL’s financial statements. Business Analysis
Lincoln Savings and Loan (LSL) originally competed as a savings and loan office than was in the business of offering mortgage loans and accepting deposits. In 1984, LSL combined businesses with American Continental Corporation (ACC), which specialized in real-estate development. The new business, LSL/ACC, competes as a unique company, offering different services than many of its competitors. The following business analysis will discuss LSL/ACC’s business strategies, process, risk factors, and finally value creation. Business Strategies
The combination of the two companies created a unique business strategy. LSL quickly expanded its commercial lending business by utilizing ACC’s brand equity, relationship with builders, and real-estate expertise. At the same time, ACC took advantage of LSL’s reputation as a quality lender, lending expertise, and base of core deposits to integrate a financing function into its real-estate business. Generally, the company became a wholesaler of partially developed land. A competitive advantage resulted from the combination of the two companies, as the company now operates in a niche market with a differentiation strategy. As with many savings and loan institutions, LSL probably had a difficult time competing with banks because of the established relationship between banks and their commercial customers. Additionally, LSL must contend with other lending institutions for deposits by offering comparable interest rates as its competitors. At the same time, ACC struggled to compete with savings and loan institutions...