Colorado thrifts' first-quarter performance was a welcome respite to three years of declining earnings.

The state's 16 independent savings and loans were all profitable in the first quarter. In fact Veribanc, a research firm based in Wakefield, Mass., gave every Colorado thrift its highest rating.

Strong first-quarter performances were posted by thrifts ranging in size from First Federal Savings Bank of Colorado, Lakewood, which earned more than $3.2 million, to tiny Del Norte Federal Savings and Loan Association, Del Norte, which netted $33,000.

But those numbers belie a trend of gradually declining performance among Colorado's thrifts, despite their admirable growth and strong capital.

Interest rate squeezes and a rise in noninterest expense have taken their toll on profits since 1992. According to Sheshnuhoff Information Services, 11 of the 16 thrifts posted returns on assets of less than 1% for 1995. One was in the red, Delta Federal Savings Bank in Delta, but the western Colorado thrift managed to earn $50,000 in this year's first quarter.

Return on assets has been declining since early in the decade. The average for the 16 thrifts slid from 1.55% in 1992 to 0.81% by the end of last year; a first-quarter uptick brought it to 0.82%

The decline can be linked to a tighter spread between yields and costs. That measure fell more than 100 basis from the end of 1992 and to the end of last year.

One banker said he thought thrift profits could continue to decline, despite the strong first-quarter results.

"I think the real reason you're seeing the big first-quarter numbers is interest rates tended to tick down and there was a lot of refinancing going on," said Charles B. Isreal, chairman of Centennial Savings Bank in Durango. "Refinancing is the big income generator for savings and loans, and that will probably slack off a bit in the second quarter."

Nevertheless, the state's thrifts are still growing at a decent clip, much like the state. During the 1980s Colorado was hard hit by plunging oil prices, plummeting land values, and the bust of the oil shale industry, but it has been rebounding since. A population boom has boosted home construction and sales.

"The economy is good, population growth is outstripping that of the rest of the nation, and there's diversity - every area in the state has its own individual reason for doing well," Mr. Isreal said.

The upswing has fueled a rise in assets for Colorado's thrifts, from a total of $1.8 billion in 1992 to $2.71 billion by yearend 1995.

"Over the last three years things have been improving, and I think as long as interest rates don't go crazy, things will continue to get better," said Larry D. Smith, chief executive, Salida Building and Loan Association in Salida.

"The rising tide is raising all the ships," said David A. Humphries, chief executive of Delta Federal. "The new airport in Denver was a multibillion-dollar project that trickled down through whole state. I think it generated a lot of private projects that will continue to help the economy for some time."

Warren G. Heller, research director for Veribanc, said the weak institutions have been weeded out.

"The economy is definitely the biggest factor, but you also have to remember that the savings and loans have received plenty of scrutiny from the regulators over the years," he said.

Nationwide, 85.8% of all institutions hold Veribanc's highest rating. Mr. Heller said only a handful of states can boast 100% success rate.

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