Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 15, 1991 TAG: 9103150155
SECTION: BUSINESS PAGE: A/7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The 2,342 thrifts still outside government control at the end of the year lost $965 million in the final three months of 1990 and $2.41 billion for the entire year, the Office of Thrift Supervision said.
The 1990 loss was down from $6.23 billion in 1989, largely because of the removal of 213 failed institutions by the government bailout agency, the Resolution Trust Corp.
However, a 25 percent increase in losses from the third to fourth quarters occurred even though 39 insolvent S&Ls were seized.
Also, bad loans at the private S&Ls, as a percentage of all loans, rose steadily through the year, despite the removal of the worst thrifts. The percentage was 2.34 at the end of the year compared with 2.03 at the end of the first quarter.
Thrift Office Director Timothy Ryan said lower interest rates and the continuing government cleanup should help the S&L industry this year, but he was unwilling to predict immediate improvement.
"We are uncertain at this time what to expect in the first quarter of 1991, especially in view of the economic slowdown and weak real estate market," he said.
Private analysts attributed the industry's continuing problems to the national recession, to the deterioration of real estate markets, particularly in the Northeast, and to the housing industry's slowdown.
"Thrifts have seen a very steep drop in their bread-and-butter business, home lending," said economist Paul Getman of Regional Financial Associates Inc.
"And we've seen a lot of big real estate writeoffs, even at the healthiest and best-managed S&Ls. You can imagine how the poorly managed have fared," he said.
Construction of new homes and new-home sales slumped in 1990 to the lowest point since the last recession in 1982. Existing-home sales dropped to a five-year low.
Economist Martin Regalia of the National Council of Savings Institutions said the industry may start improving this year but only if the government resumes shutting down and selling bankrupt S&Ls. The program was slowed by Congress' five-month delay in providing more money.
Open but insolvent institutions hurt competing healthy thrifts by paying high interest rates for deposits.
"The quicker the RTC closes these institutions down . . . the better will be the environment for all institutions," Regalia said. "We can't let these guys continue to corrupt the market."
The thrift office's report did not include data from the 179 S&Ls that had failed but were still operating under RTC management. The thrift office listed 194 more S&Ls as likely to fail and 369 as troubled by losses and low capital levels.
That leaves only 1,779 relatively healthy institutions, and even their earnings have fallen progressively through 1990.
Florida had the most institutions among the bottom 194 targeted for seizure, 21, followed by California, 20; New Jersey, 15; Texas, 13, and Illinois, 10.
Meanwhile, the Federal Deposit Insurance Corp. said late Wednesday that profits at the nation's 12,338 commercial banks rose 6.5 percent to $16.6 billion in 1990 from $15.6 billion in 1989. That masked a sharp deterioration in banks' real estate loans.
The FDIC issued a separate report for 473 savings banks, which are hybrid institutions, half commercial bank and half savings institution. They lost $2.4 billion in 1990, more than three times the $773 million lost in 1989.
by CNB