What's the difference?

• Author: Kaelble, Steve
• Position: Financial institutions

Just about anyone can do anything these days.

It used to be so simple.

You went to the bank to get a car loan. You went to the savings and loan for your mortgage. You had your checking account at the bank and your savings account at the S&L or credit union.

Simple, indeed, but not convenient enough for some people. As a result, the once-distinct lines between the various kinds of financial institutions are quite blurred these days. Banks, S&Ls and credit unions all offer many of the same products and services. And other types of financial-services companies have entered the fray as well. So how does one decide what kind of institution is best for any given purpose? What's the difference, anyway?

"I don't know of much difference except for some regulatory aspects," says Jerry Sejda, head of operations at American Savings in Munster. "From a customer's aspect, there is no difference."

"We provide for the most part the same services and products as a commercial bank," agrees Frank Pavlic, chairman, president and CEO of First Federal Savings Bank of Indiana in Merrillville.

"Credit unions pretty much are full-service financial institutions in terms of customer services on the lending and deposit side," adds Vic Pantea, chief operating officer of Teachers Credit Union in South Bend, the state's largest credit union.

"We offer passbook-type savings, money market accounts, certificates of deposit in all different amounts and durations, loans for just about any purpose, credit cards, automatic-teller machines, participation in point-of-sale networks," he continues. "Many of the larger credit unions are competing head-on with banking organizations."

Indeed, the difference between types of institution must be smaller than it once was, because acquisitions have begun to cross the lines. First of America Bank--Indiana gained a big presence in the Indianapolis area through the acquisition of an S&L, and Huntington Bank recently announced plans to acquire Railroadmen's Federal Savings & Loan of Indianapolis.

But it wasn't always this way. Before regulatory changes of about 15 years ago, S&Ls pretty much kept to their original lines of business--lending money to home buyers and tending depositors' savings accounts. Credit unions stuck with mostly retail and consumer lending and traditional savings accounts. Banks handled the commercial types of business, including checking accounts and trust services.

Savings and loans, in fact, were and still are...