WASHINGTON — Losses at U.S. thrifts narrowed considerably in the first quarter, but the number of institutions in trouble increased, the Office of Thrift Supervision said Tuesday.
WASHINGTON — Losses at U.S. thrifts narrowed considerably in the first quarter, but the number of institutions in trouble increased, the Office of Thrift Supervision said Tuesday. Thrifts lost $47 million in the quarter ending March 31, their best performance since September 2007. That compared with losses of $5.4 billion in the fourth quarter and $617 million in the year-earlier period. But the number of "problem thrifts" increased to 31 from 26 in the previous quarter and troubled assets made up more of their portfolios. "We are seeing encouraging signs in the performance of the thrift industry … (but) it’s too early to say we’ve hit bottom or that the industry’s troubles are behind us," OTS acting director John Bowman said in a statement. The agency said thrifts reported a smaller loss due to less money being set aside for losses on bad mortgages and other loans. Thrifts set aside $5.8 billion for the quarter, down from $9.3 billion in the final quarter of last year. The number was still large enough to make the first quarter’s loan-loss provisions the fifth-highest on record. Thrifts showed returns on average investments of negative .02 percent for the quarter ending March 31 — far better than the negative 1.82 percent in the fourth quarter of 2008, and negative .17 percent a year ago. Thrifts are crucial to consumer credit because they must have at least 65 percent of their lending in consumer mortgages and other loans. The Federal Deposit Insurance Corp. last week said the number of troubled banks under its supervision jumped to the highest level in 15 years. Higher trading revenues and lower borrowing costs at big banks helped them earn a $7.6 billion profit in the first quarter, compared with a record loss of $36.9 billion in the fourth quarter and a profit of $19.3 billion in the year-earlier period. "We’re now in the cleanup phase for the banking industry," FDIC Chairman Sheila Bair said. ______ Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.