Thrifts Profit Despite Asset Woes

Thrift institutions originated $173.3 billion in single-family loans in the second quarter, up 17% from the same period a year ago, and posted strong profits despite an increase in troubled assets.Noncurrent loans and foreclosures stood at 0.95% of total assets as of June 30 -- the highest level since 1997, according to the Office of Thrift Supervision. Single-family loans 90-days or more past due have risen from 76 basis points at the start of the year to 1.16%. OTS officials expect delinquencies to increase but they noted thrifts are increasing their reserves faster than charge-offs are rising. Meanwhile, refinancings comprised 48% of thrift originations as adjustable-rate mortgage holders continued to convert into fixed-rate loans. Thrifts generally like to sell fixed-rate loans and OTS officials noted there is a "chance" they might have problems selling loans due to current problems in the credit markets. However, OTS senior deputy director Scott Polakoff noted that thrift institutions are well capitalized and they originate high quality mortgages. "Our institutions are well positioned to weather this stressed economic time and come out very successful," Mr. Polakoff told reporters.