WASHINGTON—New figures compiled by the Federal Deposit Insurance Corp. show that depositories—savings banks included—originated $133.8 billion of one-to-four family loans using retail outlets in the second quarter, a 10% gain from the first quarter.
It marks the first increase in bank originations since the second quarter of 2009 when retail originations hit $222.4 billion during a refinancing boom.
Roughly 769 commercial banks and savings institutions were active in the residential finance space during the second quarter. Banks are required to report origination figures to the FDIC if they have assets of $1 billion or greater or they originated more than $10 million of home mortgages during the past two quarters.
Lenders regulated by the Office of Thrift Supervision funded $30.8 billion of single-family loans in the second quarter, up 13% from the previous quarter.
The Office of Thrift Supervision said refinancings comprised 42% of the thrift loan production, down from 52% in the prior quarter. The thrift regulator attributes the decline to the rise in home sales due to homebuyer tax credit.
The nation’s 753 federally chartered thrifts sold more than 90% of their originations into the secondary market (Fannie Mae and Freddie Mac) during the first and second quarters of this year. The nation’s 7,552 commercial and savings banks boast $12.9 trillion of assets, compared to $931.2 billion for the thrift industry.
The Federal Deposit Insurance Corp. reported that its banks earned $21.6 billion in the second quarter, the industry’s most profitable quarter since the third quarter of 2007. Thrifts have been profitable for the past four quarters and earned $1.5 billion in the second quarter. Banks have been profitable for the past two quarters.
The Federal Deposit Insurance Corp. surprised many when it revealed that the number of banks on its “problem list” shot up to 829 as of June 30—from 775 three months ago. Only 54 thrifts are on the Federal Deposit Insurance Corp. list with four problem institutions added during the second quarter. Federal Deposit Insurance Corp. officials said the improvement in earnings was mainly due to less provisioning for loan losses and reductions in charge-offs. But delinquency ratios remain high. FDIC-insured institutions charged off $1.45 billion of single-family construction loans in the second quarter, down 43% from a year ago. However, the remaining $70.8 billion of construction loans still on the books have a serious delinquency rate of 20.8%. In other words, $14.7 billion of the loans are 90 days or more past due or in nonaccrual status and considered uncollectible.
Banks and thrifts charged off $5.26 billion of single-family loans in the second quarter, an 11% improvement from a year ago. However, 10.35% of the $1.7 trillion in residential mortgages are seriously delinquent, up from 7.15% in the second quarter of 2009. Charge-offs on commercial real estate loans doubled the past year to $3.5 billion in the second quarter.
Commercial real estate is a chief reason why so many small banks are landing on the problem list and failing.
Banks and thrifts hold $1.01 trillion in commercial real estate loans (not including multifamily loans) on their books and 4.28% are seriously delinquent, up from 2.89% a year ago, according to Federal Deposit Insurance Corp. data.
