WASHINGTON - The nation's 1,719 thrifts earned $763 million in the third quarter of 1993, compared with $1.25 billion in the year-earlier period, the Office of Thrift Supervision reported Monday.
Regulatons said two thrifts depressed the numbers by taking $500 million in writeoffs for goodwill. Industry sources said the thrifts were Long Island Savings Bank and Crossland Federal Savings Bank in New York State. Otherwise, industry earnings would have reached $1.26 billion, more in line with quarterly earnings all year.
The profits "were exactly what we had been predicting," said Jonathan L. Fiechter, acting OTS director. Net operating income was $1.5 billion at the end of September, down from $1.7 billion the quarter before and $1.8 billion the year before.
Earnings Peak Seen as Past
Mr. Fiechter said he thought the industry's earnings had peaked in the first quarter, at $1.8 billion, and would continue to drop as interest rate spreads narrow. Even so, he said, "I would think 1993 profits would be as good as, if not better than, 1992 profits," when thrifts earned $5.1 billion.
Joseph B. Blalock, an economist at Savings and Community Bankers of America, said declining spreads are being tempered by thrifts' writeoffs of nonperforming assets.
"We got two things going on: We do have narrowing margins, because mortgage rates and long-term rates are going down," Mr. Blalock said. But with fewer nonperformers, "although institutions are earning less on the assets that they've,got, they've got more earning assets."
Crossland's estimated $80 million writeoff of goodwill occurred in August when the Federal Deposit Insurance Corp. sold it to institutional investors. Long Island Savings wrote off roughly $420 million in goodwill.
The OTS' third-quarter earnings report showed that the industry's capital continued to grow. At Sept. 30, the nation's thrifts had an average tangible capital ratio of 6.76%, up from 5.82% at the same point last year.
The total of thrifts has declined from 2,667 in September 1989 to 1,719 this fall, and the industry's assets and deposits have also steadily shrunk.
In the third quarter of 1992, the industry had $827.6 billion each in assets and liabilities, with $655.7 billion of deposits. By the third quarter of this year, thrifts had $785.4 billion each in assets and liabilities, including $589.4 billion of deposits.
"Deposits are still shrinking, but it has slowed down," Mr. Blalock said. "More of the growth in capital is coming from outside sources and retained earnings."
Problem List Shrinks
The number of troubled thrifts also declined in the quarter. The OTS tallied 119 problem thrifts with $85 billion of assets at Sept. 30, down from 153 ailing thrifts with $104 billion of assets at June 30.
The OTS said about 30 thrifts with $7.2 billion of assets remained on the agency's internal list of thrifts that possibly or probably could fail soon but that none of those had less than 2% capital ratios.
In this interest rate environment, the OTS is closely monitoring any thrift that is not earning a return on assets of at least 25 basis points, even if it meets capital requirements, Mr. Fiechter said. In the third quarter, 5.5% of thrifts did not turn a profit.