WASHINGTON -- Spurred by the demise of failed thrifts, equity capital at the nation's 2,220 savings institutions jumped 59% in the first 10 months of 1991, the Office of Thrift Supervision said.

The $18 billion increase - to $48.7 billion at the end of October - came about because the number of thrifts in government hands with negative capital is shrinking. The equity capital of thrifts in conservatorship fell to minus $4.4 billion from minus $19.7 billion at the end of last year and peak of $20.7 billion last February.

'Improvement Is Real'

"The improvement is there, and the improvement is real," said Martin Regalia, chief economist with the National Council of Community Bankers, a thrift trade group. "But have they gotten that much better? No.

"The biggest improvement in capital is because you have closed the shops that are not viable," said Mr. Regalia.

Ninety-three thrifts, with $48.6 billion in assets, were in conservatorship as of Oct. 31. Their negative equity of $4.4 billion improved from $4.5 billion at 97 thrifts on Sept. 30 and from $19.3 billion at 203 thrifts in October 1990.

The surviving, private-sector portion of the industry - 2,127 thrifts in October with $889 billion in assets - improved its capital base to $53.1 billion, up 1.3% from $52.4 billion in September, and up 6% from $50.1 billion in October 1990.

$700 Million Gain in October

A spokesman for the OTS said that in October 1991 alone, the industry gained about $700 million in capital: $500 million from retained earnings, $100 million in new capital from mutual thrifts converting to stock ownership, and about $100 million from transferring thrifts to the Resolution Trust Corp.

Meanwhile, assets continued to shrink, falling 16% to $937.8 billion in October from $1.12 trillion a year earlier.

Permanent loans fell 14% over 12 months to $542.7 billion on Oct. 31. Construction loans fell 41% to $18.2 billion, and commercial loans fell 30% to $18.2 billion.

Consumer Loans Rose

Consumer loans were $43 billion in October, up from $42 billion in September but down from $51 billion a year earlier.

Deposits also continued to slide, but at a slower rate. About $30 billion left the industry in the first 10 months of this year, compared with $39.5 billion for the 1990 period. In April alone, the net outflow was $8.2 billion.

James Barth, professor of finance at Auburn University and former chief economist with the OTS, said the runoff is most likely because consumers have been seeking higher interest rates on deposits. He said they are less concerned about the safety of savings and loans.

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.