Residential originations tumbled at U.S. thrifts, while delinquency rose and troubled assets grew. Still, the sector earned its first profit in seven quarters.
Thrifts originated $62.4 billion in residential mortgages during the second quarter, the Office of Thrift Supervision reported today. Production fell from the first quarter’s $88.1 billion and tumbled from $107.5 billion in the second-quarter 2008.
To put thrift activity in perspective — Wells Fargo & Co. by itself reportedly originated $129 billion in home loans during the second quarter.
Refinances represented 55 percent of the latest quarter’s activity, the same as in the first quarter.
Commercial originations were approximately $8.1 billion, up from $8.0 billion in the prior quarter and less than half the $20.8 billion reported for the prior year.
Residential delinquency of at least 90 days climbed to 5.51 percent from 5.15 percent three months earlier. Late payments were just 3.83 percent as of June 30, 2008.
Multifamily delinquency was 1.97 percent, compared to 0.66 percent a year prior.
Thrifts earned a nominal $4 million during the second quarter. Earnings improved from losses of $1.6 billion in the first quarter and $5.45 billion a year earlier. Higher net-interest margins, lower loan-loss provisions and higher fee income as well as lower impairments contributed to the improvement.
“Net income in the second quarter 2009 was the first quarterly net income reported by the thrift industry since the third quarter 2007,” the report said.
The OTS noted that one thrift restated first-quarter earnings — impacting the sector by $1.6 billion. Earnings were also impacted from an estimated $500 million special assessment by the Federal Deposit Insurance Corporation.
Residential assets accounted for 68 percent of thrifts’ troubled assets, while commercial mortgages accounted for 22 percent. Troubled holdings contrast the period 1990 to 1991 — when one- to four-unit loans accounted for just 23 percent and commercial mortgages made up 68 percent.
The OTS supervised 794 institutions with assets totaling $1.10 trillion as of June 30. OTS also supervised 459 holding companies with $5.5 trillion in U.S. assets.
The number of problem thrifts climbed to 40 from the prior quarter’s 31 and the prior year’s 17.
The OTS said two ‘de novo’ thrifts were chartered during the second quarter, while three institutions converted to commercial banks and three were acquired by banks not regulated by the OTS.
