
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, March 10, 1995                   TAG: 9503100050
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Short

FUTURE STILL CLOUDY FOR S&L INDUSTRY

The savings and loan industry posted a profit for the fourth straight year in 1994, but the total was less than the previous year and there were some clouds on the horizon.

The Office of Thrift Supervision said Thursday that S&Ls had $4.3 billion in earnings last year compared with $4.9 billion in 1993 and $5.1 billion the year before. Profits declined slightly in the final quarter of 1994, to $1.1 billion from $1.2 billion in the previous three months.

The overall picture is bright, said Jonathan Fiechter, acting director of the regulatory agency. But he said a shrinking spread between short-term and medium-term interest rates and the threat of continued high deposit insurance premiums for thrifts are worrisome. ``Every week the pressure on this industry is growing as the number of institutions shrink and the remaining ones face higher insurance premiums.''

Still, he said, ``the industry is much improved'' from where it was five years ago - the last time thrifts posted losses.

Falling interest rates turned things around for S&Ls in this decade. But, Fiechter said, they are facing a profit squeeze as short-term rates they pay for deposits rise and narrow the gap with longer-term rates on lending. Long-term rates averaged about 3 percentage points more than short-term rates at the end of last year, compared to a spread of more than 41/2 points a year earlier.

There were 53 problem thrifts with $30 billion in assets at the close of last year, compared to 101 troubled S&Ls with $77 billion in assets a year earlier.

by CNB