Savings and loans that remain in private hands earned $627 million in the first quarter, showing the industry's first profit in four years, the Office of Thrift Supervision reports.
The first-quarter earnings of thrifts that the government has not seized compared with a revised loss of $1.5 billion in the fourth quarter of 1990, the OTS said.The last time the nation's savings and loans were in the black was in the first quarter of 1987, but OTS Director Timothy Ryan voiced caution over the latest figures.
"We are not here to declare a victory . . . We need to see a succession of quarters before we draw conclusions," he said.
The industry still faces serious problems, said Ryan, noting that the number of problem loans on their books is still rising.
He attributed the positive earnings to "the continuing profitability of the healthier thrifts and the fact that interest rates that thrifts paid for deposits have fallen faster than the interest they earned on their mortgage portfolios."
Along with the drop in short-term interest rates, another key factor influencing first-quarter results was the ongoing cleanup of insolvent institutions, Ryan said.
During the quarter, 47 thrifts were taken over by federal regulators. This left 2,283 thrifts still operating in the private sector at the end of March.
The OTS's grouping of the nation's weakest thrifts - which amounted to 164 institutions at the end of March - reported a loss of $172 million.
That was a far smaller loss than the $679 million they lost in the fourth quarter of last year.
The OTS expects to close most of the weakest thrifts by the end of the year, Ryan said at a news conference.