By any measure, the thrift industry has shrunk by about one-eighth since last year, according to American Banker's midyear survey of the savings business.

As of June 30, deposits had dropped 11.7%, to $883.3 billion, since the comparable same date in 1991. Assets had fallen 12.1%, to $1.1 trillion, while the number of thrifts declined 12.4%, to 2,524.

Failures continued to take their toll, with 358 thrifts disappearing from the ranks during the year. Persistently weak credit quality at survivors was also a factor. These thrifts, battling bad loans already on their books, have been unable to grow.

A Marketing Problem

In addition, low interest rates have dulled the consumer appetite for adjustable-rate mortgages, a major product for thrifts. This, in turn, has caused assets to fall.

On the positive side, the report found that of the 358 thrifts that went out of business last year, 116 were already controlled by the Resolution Trust Corp. This suggests that thrift failures are starting to level off.

Moreover, the report found that only a handful of privately held thrifts would be critically undercapitalized under pending regulations that allow regulators to seize a thrift with tangible equity of 2% of assets or less. These rules take effect at yearend.

The survey found that of the 300 largest thrifts, 29, with $57.5 billion in assets, were critically undercapitalized as of June 30.

Some Thrifts Disappear

But 12 of these institutions had already been placed in RTC control as of June 30. And more, including Howard Savings Bank of New Jersey and First Constitution Bank, Connecticut, were more recently closed and sold.

Dime Savings Bank, with a core capital ratio of 2.47% at June 30, would be in the "significantly undercapitalized" category" the second-worst regulatory grouping, according to the American Banker survey. But like its New York rival, Anchor Savings Bank, Dime is thought to be recovering from asset-quality problems.

The Dime has earned money for three consecutive quarters, and nonperforming loans have dropped for 18 straight months.

While not making the critical list, 18 of the 300 largest thrifts were undercapitalized on June 30 under the standards, according to the survey. This group included Anchor and two large California institutions, fifth-ranked Glendale Federal Bank and sixth-ranked California Federal Bank, with $30 billion in assets between them.

Stock Prices Shrink

Both thrifts said they expect to meet all capital requirements. They have filed capital-building plans with regulators. Investors have driven the share prices of both into the low single digits amid doubt that the thrifts can recover.

"It's a question of whether they're forced into merger, or if things get worse, seized," said Gary Gordon, analyst for PaineWebber Inc.

California Federal met its core capital requirement of 4% on June 30. However, it fell into the undercapitalized category because its June 30 total risk-based capital ratio, as calculated by American Banker, was shy of the 8% requirement needed for the thrift to be considered adequately capitalized.

Earlier this week, a committee of bondholders of the thrift's parent, CalFed Inc., approved a debt-for-equity swap that would raise $150 million of capital.

Thrifts, like banks, have seen their cost of funds benefit from low interest rates. However, they have used the proceeds from wider net interest margins to build loan-loss reserves rather than make new loans, said Jonathan E. Gray of Sanford C. Bernstein & Co.

As a result, half of the 30 largest thrifts were smaller than they were 12 months earlier, and others scored only marginal growth.

Mr. Gordon of PaineWebber said thrifts such as Maryland Federal Savings and Loan Association and South Boston Savings Bank were able to grow because they had relatively clean balance sheets.

Maryland Federal moved up 70 places in the ranking by deposit size, to 239th place. South Boston rose 42 places, to 108th.

Thrifts in the State of Washington and the Midwest also gained ground on the California companies.

Washington Mutual Savings Bank grew to $5.4 billion in deposits from $4.5 billion, jumping six places in the ranking to 20th place.

Standard Federal Bank, Troy, Mich., jumped a notch, to 16th, with $6.1 billion in deposits.

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