Deeply buried in the Home Mortgage Disclosure Act data lies one answer to the question of who needs thrifts.

The data have mostly been used to make the case that mortgage lenders discriminate against certain racial minorities, whose applicants have relatively high denial rates.

But the numbers provide even more revealing insights about mortgage markets.

One is that thrifts lend mostly to low-income communities, while commercial bank tend to focus on high-income communities. At least that is the case in Los Angeles County, the nation's largest mortgage market.

(Business and other consumer lending by commercial banks in low-income areas might compensate for such disparities. Unfortunately, nonmortgage lending is not reported publicly.)

Sharp Contrasts

In 1990, Los Angeles County accounted for $34 billion of mortgages, one-third of the $102 billion in California. A detailed analysis reveals that:

* Thrifts made 70% of all L.A. County mortgage loans that year, compared with 19% for commercial banks and 11% for all other lenders, primarily mortgage banking companies.

* The denial rate for thrifts, 14.6%, was significantly below the banks' 22.4%.

* Thrifts made 83% of the loans to low-income communities in Los Angeles County -- census tracts where incomes average less than 80% of the county median.

* All the 10 top lenders in the low-income areas were thrifts.

* Six thrifts in particular -- Great Western, Home Savings, American Savings, First Federal Saving Bank of California, Glendale Federal, and Fidelity Federal Bank -- have made it their business to lend in the lower-income areas. Together, they accounted for half of all mortgage lending to low-income communities in the county.

The contrast between two major institutions -- Great Western Bank and Bank of America -- is striking.

Great Western, the state's second-largest thrift, made $2.8 billion in mortgage loans in Los Angeles in 1990, compared with $2.2 billion for Bank of America.

Giant Differences

Great Western was the largest lender to low-income communities ($729 million), but ranked fifth in high-income communities ($887 million).

Bank of America ranked 12th in lending to the low-income communities ($120 million) but was first in the high-income communities ($1.5 billion).

For every dollar Great Western to high-income communities, it lent 82 cents to low-income communities. Bank of America lent 8 cents to low-income communities for every dollar to high-income communities.

Another way to measure the discrepancies in areas with different income levels is to look at the proportion of lending to low-income and hign-income communities as a percentage of total lending in Los Angeles County.

Here, two midsize thrifts -- Fidelity Federal Bank and First Federal Savings Bank of California -- made more than 40% of their loans in low-income communities. In sharp contrast, both Bank of America and Wells Fargo Bank lent less than 5% of Los Angeles mortgage funds in the low-income areas.

Encouragement Warranted

The policy implications of these date should be obvious:

The thrifts that survived the 1980s are vital participants in the effort to rebuild America's lower-income communities.

Those that have made it their business to play that role should be given every possible encouragement to continue.

Mr. Smith is president of Smith Banking Consultants Inc., Glendale, Calif.

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