The thrift industry is gradually diversifying its business, with many institutions placing less emphasis on residential lending, a survey by America's Community Bankers shows.

"That transition, for many institutions, is well under way," according to a preliminary survey report released at the trade group's national mortgage markets conference in Tucson, Ariz., last week. "For many others, the transition is in the planning and implementation stages for the next five years."

But the report also emphasized that mortgage lending would remain an important part of community banking activity. Some large thrifts have converted in recent years to a mortgage banking mode of business, selling most of the loans they originate into the secondary market, and some further flow into mortgage banking is expected in the next few years.

Nationally, 21.7% of thrift institutions presently securitize loans for possible resale, and another 8.9% are planning to do so, the survey found. But that still leaves more than two-thirds of all thrifts with no plan to enter the secondary market.

Accompanying this limited interest in mortgage banking is an equally constricted interest in acquiring servicing rights. Only 7.6% of thrifts now acquire servicing rights without buying the loans, and only 3.4% more intend to buy servicing. And the numbers are skewed upward by the relatively heavy involvement of the institutionswith assets above $1 billion. Almost half already buy or plan to buy servicing rights.

On average, thrifts will be reducing the concentrations of consumer mortgages in their mortgage portfolios by the year 2000 to about 57%, from about 65% at present. Mortgage securities will also play a slightly smaller part, while commercial mortgages are expected nearly to double, to about 10%.

While their interest in secondary market activities is lukewarm, thrifts are expected to expand their involvement significantly in underwriting technology.

For example, just 16.6% of thrifts are now using credit scoring, and 15.1% are planning to adopt scoring soon. Significantly, interest in scoring is heavily concentrated in the larger institutions.

The Federal Home Loan Mortgage Corp.'s Loan Prospector continues to be the most popular automated underwriting system; 13.6% presently use it; and 22.7% plan to do so. The Federal National Mortgage Association's Desktop Underwriter is used by 10.6% of thrifts, and 17.6% more plan to participate.

The trade group's report emphasized that, whatever direction the industry takes, it is in good financial condition right now. Referring to the big one-time assessments thrifts paid to recapitalize the Savings Association Insurance Fund, the report said, "That hefty assessment allows thrift institutions to face the future with optimism about competing successfully in a changing financial marketplace."

More than 400 community banks responded to the survey. The full report will be available next month.

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