Consolidation continues to be the watchword in the thrift industry.

At midyear there were 1,852 thrifts-down 6.5% from June 30, 1996. But their assets were up 0.7%, to $1.03 trillion, according to data compiled by American Banker and Sheshunoff Information Services Inc., Austin, Tex. (See tables starting on p. 18.)

The asset growth was concentrated among the largest thrifts. The top 100 increased their holdings 11.5%, to $652.7 billion, while the 300 largest saw an asset gain of 11.9%, to $820.3 billion.

At midyear deposits at the 100 largest thrifts totaled $426.2 billion- almost 8% higher than a year earlier. At the 300 largest, deposits were up 8.7%, to $552.4 billion. But for the industry as a whole, deposits fell 1%, to $720 billion.

Thrift branches fell almost 7%, to 12,299 on June 30. The number of employees was 248,017-2.5% lower than a year ago.

Analysts said the industry has no choice but to consolidate. "The margins are too thin and the technological challenges too high for the smaller companies to exist in other than very isolated niches," said Charlotte A. Chamberlain of Jefferies & Co., Los Angeles.

There were almost twice as many thrifts a decade ago-3,622 at the end of 1987. But profits in the industry's core mortgage business have steadily eroded for several years, as Wall Street investors, aided by Fannie Mae and Freddie Mac, funnel money into mortgages. Mortgage bankers-who have gained market share from thrifts in the past decade-are also rapidly consolidating.

Buying each other up is "a far, far better thing than anything else" thrifts could do, said analyst Jonathan Gray of Sanford C. Bernstein & Co.

A typical company that is purchased can boost its return on equity to 25% from 15% through the deal, because fixed costs-of branches, employees, and back offices-are cut, Mr. Gray said.

The industry's prime example of growth through acquisition-Washington Mutual Inc.'s July purchase of Great Western Financial - is not reflected in these data. On Sept. 30 Washington Mutual had assets of $90.8 billion, making it the biggest thrift by far.

Nor do the data reflect the other big thrift deal of recent days-H.F. Ahmanson's planned purchase of Coast Savings Financial Inc., Los Angeles.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.