The depositors and borrowers have voting rights and the ability to direct the managerial goals of the organization. Savings and loan associations are privately or locally managed financial institutions and use individuals’ deposits to provide loans for home buyers, home repairs, constructions and refinancing. Such organizations cannot have more than 20% of their lending as commercial loans.
Savings and loan associations can be state or federally chartered. When formed under the state law, such associations must follow the state’s requirements for incorporation. It must provide articles of incorporation which put forth the organizational structure, rights of its members and relationship between the association and its stockholders. Members of savings and loan associations are stockholders of the organization and are entitled to a share in the profits. The members are liable only for their stock holdings.