Weak demand for home loans continues to crimp earnings at the nation's thrifts.
Though federally insured thrifts are making money again after bearing the brunt of the housing bust, their profits have now fallen in four of the last five quarters, according to a quarterly report released Thursday by the Office of Thrift Supervision.
In the quarter that ended March 31, federally supervised thrifts reported earnings of $1.4 billion, down 13% from three months earlier and 19% from the same period last year. Their return on assets for the quarter was 0.6%, down nine basis points from the fourth quarter and 13 basis points from last year's first quarter.
Much of the decline can be attributed to shrinking loan portfolios. Thrifts reported a total of $556 billion of loans on their books at March 31, down 2.6% from the fourth quarter and 3.8% from last year's first quarter. Thrifts originated just $26 billion of home loans in the first quarter, compared to $42 billion in the fourth quarter.
In all, the thrift industry's assets have declined by 2.1% in the last year, to $930 billion.
The good news for thrifts is that asset quality continues to improve. Net chargeoffs declined in nearly every major loan category and troubled assets - defined as noncurrent loans plus repossessed assets - fell to $28.8 billion, or 3.09% of total assets, at March 31, from $31.2 billion, or 3.28% of assets, a year earlier.
However, the number of problem thrifts inched up slightly, from 58 on Dec. 31 to 60 three months later.
