Assets of the top 100 thrifts grew 14.4%, to $645.8 billion, in the 12 months through June 30, reflecting continued consolidation in the sector.

Industry assets grew only 7.7% in the same period as the number of thrifts declined to 1,652 from 1,728.

An American Banker ranking shows Washington Mutual Inc. of Seattle remaining by far the largest thrift company, with $173 billion of assets, up 4.5% from June 30, 1998, as the acquisitive company took a respite after years of big mergers. Golden State Bancorp of San Francisco leaped to No. 2, increasing its assets nearly 67%, to $57 billion, largely as a result of a merger of equals with First Nationwide Holdings that closed Sept. 11, 1998.

Golden West Financial Corp. held onto its No. 3 ranking, though its assets declined 2.7%, to $38 billion, during the 12 months, when the market did not favor the Oakland, Calif., thrift's main product, adjustable-rate mortgages.

It was followed by Sovereign Bancorp. of Wyomissing, Pa., which closed several mergers, building its assets 32.4%, to $24.7 billion. Astoria Financial Corp. of Lake Success, N.Y., vaulted past its New York rival Dime Bancorp into fifth place, bulking up to $23.1 billion by acquiring $6.6 billion-asset Long Island Savings Bank. (See tables on pages 12 and 13.)

Fueling consolidation is an efficiency drive. Thrifts' efficiency ratios -- gross operating expense divided by fully taxable revenue -- averaged 56.9%, but some companies did far better than that, with ratios well below 50%.

George Engelke, the chairman and chief executive officer of Astoria, said he believes the future belongs to companies such as his and Golden West, which strive to be low-cost providers of mortgage finance. Astoria's efficiency ratio was 34.3%; Golden West's, 32.99%.

Mr. Engelke said a series of in-market mergers has helped his company achieve "tremendous cost saves." The company has grown from $3.4 billion of assets since going public in 1993 and has emphasized deals on Long Island that allow it to cut costs, he said.

"A significant part of the balance sheet is in mortgage-backed securities, which doesn't take a lot of people" to manage, Mr. Engelke added, and Astoria's branch offices average more than $100 million apiece in deposits.

Analysts said market conditions have changed since June -- now favoring thrifts that specialize in adjustable-rate loans held in portfolio. Golden West, for example is now experiencing an internal loan growth rate of 18%, according to analyst Jonathan Gray of Sanford C. Bernstein & Co.

The rising rate environment could also help thrifts with large loan servicing portfolios such as Golden State Bancorp, Mr. Gray said.

The analyst said Golden State is highly leveraged, offering shareholders a return on equity exceeding 20%.

But he said its risk is offset by having a mortgage banking unit with a servicing portfolio that is 1.5 times the size of its thrift loan portfolio. Servicing values rise when interest rates go up because fewer borrowers prepay their loans.

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