The U.S. thrift industry essentially broke even in the second quarter of this year, reporting a slight profit of $4 million – the first positive earnings for the industry since the third quarter of 2007, the Office of Thrift Supervision (OTS) reports.
‘Although significant challenges lie ahead, thrift managers are making progress toward positioning their institutions for a positive future,’ says OTS' acting director, John E. Bowman.
Capital ratios improved during the quarter, and higher net interest margins and increased fee income contributed to the improved profitability. However, earnings were dampened by loan loss provisions, as well as by a special deposit insurance assessment from the Federal Deposit Insurance Corp., which reduced after-tax net income by an estimated $325 million, the OTS notes.
Loan loss provisions declined to $4.7 billion but were still the sixth-highest on record, exceeded only by the provisions during the previous five quarters.
Troubled assets as a percentage of all industry assets continued to creep upward, reflecting the nation's weak job market, and the number of problem thrifts continued to rise, as well.
Capital remained solid, with 96.2% of all thrifts holding 95.9% of industry assets, exceeding "well-capitalized" regulatory standards.
Profitability, as measured by return on average assets, was 0%in the second quarter – an improvement from the -0.53% in the previous quarter and the -1.43% in the second quarter of 2008.
At the end of the second quarter of 2009, the OTS supervised 794 thrifts with assets of $1.098 trillion, as well as 459 holding company enterprises with approximately $5.5 trillion in U.S. domiciled consolidated assets. The number of problem thrifts – those with composite examination ratings of four or five – was 40, up from 31 in the previous quarter.