Thrifts reported that earnings held steady in the second quarter, at $4.21 billion, while the return on average assets dropped 3 basis points from the first quarter, to 1.11%, the Office of Thrift Supervision said Wednesday.
The agency blamed the decline in profitability on lower fee income and higher loan-loss provisions and noninterest expenses.
Though increases in delinquency and foreclosure rates have not affected thrifts' asset quality, the OTS warned savings and loans to keep close watch of credit quality and borrower weakness, and to monitor the performance of alternative mortgage products.
The quarterly earnings total for thrifts increased 4% from the second quarter of last year but was unchanged from the first quarter. The aggregate net interest margin increased 3 basis points from the first quarter but fell 5 basis points from a year earlier, to 2.8% of average assets.
Mortgage originations for one- to four-family homes rose 4% from the first quarter but fell 12% from a year earlier, to $148.4 billion. Adjustable-rate mortgages made up 37% of thrift originations, versus 44% in the first quarter and 42% in the second quarter of last year, the OTS said.
The ratio of troubled assets to total assets fell 2 basis points from the first quarter, to 0.62%. The number of the problem thrifts dropped to four, from six in the first quarter and seven a year earlier.
