Within a matter of weeks, federal regulators will announce the 1990 earnings results for the roughly 2,300 thrift institutions in private hands at year-end.
It should come as no surprise to anyone that the news accounts will tell of red ink, for that is virtually a given.Also a virtual given will be yet another instant analysis in print and broadcast media that the savings institutions business is a goner.
There is no comparable detailed reporting on earnings for the commercial banking sector or for credit unions. If there were, perhaps the troubles of commercial banks and credit unions would be interpreted as signs of their demise as well.
Should that be the case, it would be unfortunate and unfair. Despite today's troubles, those institutions are by and large viable. The same is true of the savings institutions sector.
Had such an analysis been done on the Office of Thrift Supervision's report on third quarter 1990 earnings, the picture would not have been one of an entire industry plunging into insolvency.
Through Sept. 30, 1990, there were 1,959 savings institutions (out of 2,389) that exceeded the 3 percent tangible capital level that is required by federal regulators. They had assets of $642.9 billion and tangible capital of $36.8 billion. On average, the tangible capital of this grouping was 5.7 percent, nearly double the federal requirement. Furthermore, they were profitable.
The strength and promise of this healthy majority of savings institutions is perhaps best demonstrated by looking back to where they were in earlier years.
There is no better year, for illustrative purposes, than 1982. Thrifts were then plagued by a distressed economy that saw double-digit interest rates and raging inflation. Compounding matters was a ill-timed and disorderly federal deregulation process that saw interest rate ceilings lifted from deposit accounts. It was, perhaps, the worst year in the history of the thrift sector.
In that year, there were 1,871 institutions that met the 3 percent tangible standard. They had assets of $227.8 billion and tangible capital of $11.4 billion (5 percent).
But the healthy core rebounded smartly from their problems of the early 1980s. To Sept. 30, 1990, the healthy core had nearly tripled its assets and more than tripled its tangible capital. There have been blips in the process but not significant blips. This grouping's assets and capital growth have been steady since '82, and its tangible capital level has not dipped below 5 percent.
Yes, there are a number of thrifts - 218 on Sept. 30, 1990 - that will be taken over by federal regulators and either be sold or liquidated. Survival for another grouping of 212 institutions is in question.
But there remain 1,959 institutions with tangible capital exceeding 3 percent of assets.
There is every reason to believe that they, the overwhelming majority of today's thrift institutions, will be open for business, fulfilling their housing finance mission, and contributing to their national and local economies for many more years to come.