Federal Thrift Profits Fall

The downturn in the housing market took its toll on federally chartered thrifts in the fourth quarter as originations declined, profits dropped and provisions for loan losses doubled.Thrift originations of single-family loans totaled $112.1 billion in the fourth quarter, down 25% from the third quarter, according to the Office of Thrift Supervision. Mainly due to rising delinquencies on single-family and construction loans, thrifts increased their loss provisions by 23 basis points 0.46% in the fourth quarter as charge-offs jumped 17 basis points to 0.39%. Thrift loan loss allowances stood at 50 bps at the end of the fourth quarter and OTS director John Reich told reporters he would be more comfortable if the allowance was higher. Meanwhile, thrift earnings totaled $3.2 billion in the fourth quarter, down nearly 20% from the same period in 2005. The OTS director expects to see higher profits in the first quarter, but he remains cautious. "Thrifts are well positioned to weather any storm or clouds on the horizon," Mr. Reich said.