The thrift industry earned $1.3 billion in the third quarter, its first quarterly profit in two years, the Office of Thrift Supervision said Tuesday.
Despite essentially breaking even during the quarter, there was little to cheer about for savings and loans. The OTS noted high troubled assets, a jump in problem thrifts and a record of noncurrent residential loans.
"For the thrift industry, the third quarter was much like the previous quarter presenting a decidedly mixed picture," OTS Acting Director John Bowman said at a briefing on the third-quarter earnings. "We continue to see encouraging signs, but we also see signs that give us pause."
Although thrifts reported a 0.49% return on average assets in the third quarter, some of that was because of one thrift, the agency said. Without that thrift, the industry's ROA would have equaled 0.07%, the OTS said.
The OTS also revised second-quarter figures Tuesday. It had previously said that thrifts had earned a small profit, but said that after it figured in a $325 million after-tax assessment from the Federal Deposit Insurance Corp., thrifts lost $94 million in the second quarter.
The overall makeup of thrift loans continued to decline in the third quarter. Troubled assets rose to 3.63% of total assets, up from 3.5% in the second quarter, and 2.4% a year earlier. Troubled assets totaled $38.9 billion.
Noncurrent loans for one to four family mortgages hit a new record, totaling 5.76% of assets, surpassing the previous record in the second quarter of 5.48%. Noncurrent loans for construction and land loans also hit a record with 13.07% of assets. Commercial noncurrent loans rose to 3.18% of assets, from 2.82% the previous quarter.
Mortgage originations continued to decline to $54.4 billion in the third quarter, down from $70.5 billion in the prior quarter. The number of problem thrifts rose to 43 institutions, from 40 in the previous quarter.
