WASHINGTON -- Thrifts in the private sector posted their third consecutive quarterly profit at the end of September, but losses at the weakest institutions dragged down the overall results, the Office of Thrift Supervision said Wednesday.

The 2,148 thrifts that remain in private hands earned an aggregated $271.8 million in the third quarter. The figure was 28% less than the $377 million earned by those institutions in the second quarter and 15% less than the $319 million they earned in the 1990 third quarter.

Insolvent Thrifts' Effect

The deterioration was sharpest among insolvent thrifts earmarked for transfer to the Resolution Trust Corp. Their losses shot up 26% from the second quarter, to $603 million, reflecting weakness in the economy, OTS Director T. Timothy Ryan told reporters.

Earnings of the strongest thrifts, by contrast, declined less than 3% in the quarter. They benefited from a drop in funding costs, which helped boost interest income.

The OTS also revamped its assessments of the condition of the surviving thrifts and cut the number of institutions slated for transfer to the RTC to 79 as of Sept. 30, from 118 on June 30.

"You can see we're getting to the end of the line," Mr. Ryan said. "We're going to be left with institutions that are relatively strong."

Industry leaders said thrifts are continuing to regain strength. "There are a large number of strong, healthy savings institutions that have maintained a track record of consistent earnings dating back more than a year," said Frederick L. Webber, president of the U.S. League of Savings Institutions.

The industry results look a bit better if all private-sector thrifts - not just the current group of 2,148 - are included in the historical quarterly data. Since the worst performers are gradually being weeded out, fewer are left to diminish aggregate profit.

Viewed this way, third-quarter profits declined a scant 1% from the $275.4 million earned by 2,216 thrifts in private hands during the second quarter. And profit for the most recent period improved markedly from the third quarter of 1990, when 2,388 thrifts posted a net loss of $774 million.

Breakdown by 4 Groups

In the current OTS groupings:

* A Group 1 of 996 well-capitalized and profitable institutions, with $314 billion in assets, earned $602 million in the third quarter, down from $618 million in the second quarter but up from $521 million in the third quarter of 1990.

* A Group 2 of 688 thrifts with low capital or inconsistent profits, and assets of $286 billion, earned $346 million in the September quarter, down from $458 million in the second period but up from $254 million in the quarter that ended Sept. 30, 1990.

* A Group 3 of 385 undercapitalized thrifts, with assets of $247 billion, lost $73 million in the third quarter, an improvement from $220 million of red ink in the second quarter and $262 million in last year's third quarter.

* A Group 4 of 79 thrifts earmarked for transfer to the RTC, with assets of $63 billion, saw losses swell to $603 million in the third quarter from $479 million in the second quarter and $193 million in the third quarter of 1990.

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