Thrifts had their best first quarter ever this year, earning $1.87 billion, the government said Wednesday.
The total-the second-highest quarterly figure ever for the industry-was 8% more than a year earlier and 12.7% more than in the fourth quarter.
"Earnings were extremely strong," said Ellen Seidman, director of the Office of Thrift Supervision, which prepared the report. "This is the best first quarter the industry has had."
Return on assets rose 10 basis points from the fourth quarter, to 0.97%, the OTS said. It credited improved asset quality and increased mortgage activity.
Single-family mortgage originations totaled $59.1 billion, up 33% from the fourth quarter and 111% from first quarter 1997.
Demand for home loans-particularly refinancings-was fed by strong economic growth and relatively low interest rates, the OTS said.
Sales of single-family mortgages on the secondary market totaled $43 billion, up 6% from the fourth quarter and more than double the year- earlier figure.
Capital levels reached an all-time high. Equity capital as a percentage of assets rose to 8.40%, versus 8.32% at the end of the previous quarter and 7.94% one year earlier. Of the 1,195 OTS-supervised thrifts, 98% were considered "well-capitalized" at the end of March.
The number of "problem" thrifts-those with Camels ratings of 4 or 5-fell to 14 in the first quarter, the lowest since Congress revamped thrift and bank regulation in 1989, the OTS said.
Paul A. Schosberg, president of America's Community Bankers, said the earnings report underscores the vitality of the thrift charter.
"As Congress debates the future of our financial system, today's report should serve as a strong reminder that promoting competitiveness, diversity, and consumer choice make good legislative and economic sense," he said.
The OTS also released preliminary results from a survey on loan underwriting standards. After examining 412 thrifts during the latter half of 1997, the agency concluded that "there is no widespread movement by thrifts toward higher-risk lending activities, relaxed underwriting standards, or expansion into nontraditional lending."
However, the OTS added, "the economic environment for the past five years has been very favorable for thrifts."
In the earnings report, the OTS said delinquency rates for consumer loans, single-family mortgages, and commercial loans declined moderately in the first quarter, continuing a 1990s trend. The exception was delinquencies on multifamily and nonresidential mortgages, which grew slightly, OTS said.