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Thrifts Set Aside Record High Loan Loss Provisions


The Office of Thrift Supervision said today that thrifts nationwide posted a collective $617 million dollar loss in the first quarter of 2007 as mortgage woes continued to rattle the industry.

The loss was a marked improvement from the fourth quarter loss of $8.75 billion, but far off net earnings of $3.61 million realized in the same period a year earlier.

A record $7.6 billion in loan loss provisions were set aside during the first quarter, up from $5.5 billion in the fourth quarter and $1.2 billion in the same period a year ago.

Over the last three quarters, thrifts have set aside $16.6 billion in loan loss provisions, including $3.5 billion in the third quarter of 2007.

Non-current loans (89+ days behind) and repossessed assets, known as troubled assets, made up 2.06 percent of total assets during the first quarter, up from 1.66 percent in the fourth quarter and 0.80 percent a year ago.

Unsurprisingly, the largest increases in delinquency rates occurred with 1-4 family mortgages and construction loans.

Mortgage originations by thrifts totaled $133.7 billion during the first quarter, off 21 percent from the $169.2 billion a year ago and 20 percent from the $166.6 billion in the fourth quarter.

Roughly 10 percent of those originations were adjustable-rate mortgages, compared to 12 percent in the first quarter of 2007 (meaning lots of fixed mortgages).

accounted for 50 percent of all loan originations in the first quarter, up from 48 percent in the fourth quarter, but down from 52 percent a year ago.

As of the end of the first quarter, the OTS supervised 831 thrifts with combined assets of $1.52 trillion.

(photo: johnharwood)

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