S&L Lending Dropped 14% in June
WASHINGTON - Outstanding mortgage and construction lending by the savings and loan industry fell nearly 14% in June from a year earlier, according to data released Tuesday by the Office of Thrift Supervision.
"Everybody has talked about the credit crunch; well, there is a credit crunch in the commercial construction business," said James Barth, finance professor with Auburn University, in reaction to the data.
Analysts said the lending pullback was caused by the continuing shrinkage of the troubled industry, as well as the recession.
Fewer Thrifts in the Market
During the first six months of the year, the total number of operating S&Ls declined to 2,409 from 2,506. That includes 193 that are in the process of being sold or liquidated by the Resolution Trust Corp.
Industry assets fell to $1 trillion in June, down from $1.2 trillion a year earlier. In the same interval, total deposits dropped 11% to $792.9 billion, down from $890.5 billion.
Michael Wilson, deputy director of research with the U.S. League of Savings Institutions, predicted that the industry will continue to contract for at least a year-and-a-half more.
He said the shrinkage should stop when a core of about 1,700 institutions is left. Those thrifts will hold about $600 billion in assets, he said.
"It is just a matter of getting all of the weak institutions out," Mr. Wilson said.
The OTS data also showed the following, when comparing figures for June 1991 with figures for the previous June:
* Nonresidential construction loans fell 48.8% to $4.3 billion.
* Residential construction loans were down 36%, to $17 billion.
* Land loans also fell 36%, to $10.8 billion.
* Permanent nonresidential loans fell 18.4% to $64.4 billion.
* Permanent residential loans - the industry's bread and butter - were down nearly 11% to $499.4 billion.
Meantime, mortgage foreclosures fell to $7.6 billion in the first half of 1991, down from $10.3 billion in the corresponding period of 1990.
The industry's borrowing from the Federal Home Loan Banks fell to $79 billion in June, compared with $109.7 billion the previous June. Those loans are traditionally used to fund mortgages.
"Thrifts ... just don't have the need for the advances," said Philip Weintraub, president and chief executive of National Capital Group, a Washington-based merchant banking advisory firm that specializes in crisis management. "They are simply not growing."
PHOTO : A Steady Decline