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BANKING |
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THRIFT INSTITUTIONS
Savings and loan associations and savings banks fall into the category of thrift institutions. Thrifts were originally established to promote personal savings through savings accounts and home ownership through mortgage lending, but now provide a range of services similar to many commercial banks. Savings banks tend to be small and are located mostly in the northeastern states.
Like other banking institutions with a significant portion of mortgages on their books, thrifts may belong to the Federal Home Loan (FHL) Bank System. In exchange for holding a certain percentage of their assets in mortgage-backed securities and residential mortgages, these financial institutions may borrow funds from the FHL Bank System at favorable rates.
Thrifts are declining in number. At their peak in the late 1960s, there were more than 4,800. But a combination of factors has reduced their ranks significantly. These include sharp increases in interest rates in the late 1970s, which immediately raised the cost of funds without a similar rise in earnings from thrifts’ principal assets, long-term fixed-rate mortgages. In addition, the recession of the early 1980s increased loan defaults. By year-end 2006, due mostly to acquisitions by, or conversions to, commercial banks or other savings banks, the number of thrifts had fallen to 1,299. (See page __).
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SELECTED INDICATORS, FDIC-INSURED SAVINGS INSTITUTIONS, 2003-2007
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2003 |
2004 |
2005 |
2006 |
2007 |
| Return on assets (%) | 1.40 | 1.30 | 1.31 | 1.33 | 0.95 |
| Return on equity (%) | 15.33 | 13.72 | 12.88 | 13.02 | 9.29 |
| Core capital (leverage) ratio (%) | 7.85 | 7.82 | 7.91 | 7.86 | 7.64 |
| Noncurrent assets plus other real estate owned to assets (%) | 0.77 | 0.55 | 0.48 | 0.52 | 0.85 |
| Net charge-offs to loans (%) | 0.89 | 0.63 | 0.56 | 0.41 | 0.61 |
| Asset growth rate (%) | 7.41 | 10.70 | 7.44 | 11.61 | 10.76 |
| Net interest margin (%) | 3.83 | 3.60 | 3.55 | 3.39 | 3.35 |
| Net operating income growth (%) | 15.49 | 3.43 | 11.89 | 11.16 | -19.75 |
| Number of institutions reporting | 7,770 | 7,631 | 7,526 | 7,401 | 7,282 |
| Percentage of unprofitable institutions (%) | 6.02 | 5.88 | 6.31 | 7.53 | 10.70 |
| Number of problem institutions | 106 | 72 | 44 | 44 | 58 |
| Assets of problem institutions (in billions) | 29 | 27 | 5 | 4 | 21 |
| Number of failed/assisted institutions | 3 | 3 | 0 | 0 | 2 |
| Source: Federal Deposit Insurance Corporation. |
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OTS-REGULATED THRIFT INDUSTRY INCOME STATEMENT DETAIL, 2002-2006
($ millions, end of year)
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2002 |
2003 |
2004 |
2005 |
2006 |
| Interest income | $55,456 | $51,479 | $55,872 | $72,290 | $90,808 |
| Interest expense | 25,468 | 20,659 | 21,301 | 33,473 | 49,870 |
| Net interest income before provisions for losses | 29,988 | 30,820 | 34,572 | 38,817 | 40,938 |
| Provisions for losses for interest bearing assets (1) | 2,854 | 2,190 | 2,601 | 2,954 | 3,758 |
| Net interest income after provisions for losses | 27,134 | 28,629 | 31,970 | 35,863 | 37,180 |
| Noninterest income (2) | 14,132 | 18,516 | 20,106 | 23,922 | 25,685 |
| Noninterest expense | 22,999 | 25,766 | 30,500 | 34,317 | 38,655 |
| Net income before taxes and extraordinary items | 18,266 | 21,379 | 21,576 | 25,469 | 24,210 |
| Taxes | 6,437 | 7,634 | 7,631 | 9,068 | 8,289 |
| Other (3) | 8 | -3 | 19 | -1 | -26 |
| Net income | 11,837 | 13,742 | 13,963 | 16,400 | 15,895 |
| Other items | | | | | |
| Preferred and common stock cash dividends | 6,660 | 10,843 | NA | NA | NA |
| Reinvested earnings (4) | 5,177 | 2,903 | NA | NA | NA |
| Gross profits of profitable thrifts | 12,570 | 14,020 | 14,312 | 16,610 | 16,354 |
| Gross profits of unprofitable thrifts | -733 | -278 | -348 | -209 | -460 |
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(1) Loss provisions for noninterest-bearing assets are included in noninterest expense.
(2) Net gain (loss) on sale of assets is reported in noninterest income.
(3) Defined as extraordinary items, net of tax effect and of cumulative effect of changes in accounting principles. Extraordinary items are material events and transactions that are unusual and infrequent.
(4) Reinvested earnings is the portion of a corporation’s earnings distributed back into the business. It is calculated by subtracting preferred and common stock cash dividends from net income.
NA=Data not available.
Source: U.S. Department of the Treasury, Office of Thrift Supervision (OTS). |
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BALANCE SHEET OF THE FEDERALLY INSURED THRIFT INDUSTRY, 2002-2006
($ millions, end of year)
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2002 |
2003 |
2004 |
2005 |
2006 |
| Number of thrifts | 1,466 | 1,411 | 1,345 | 1,307 | 1,279 |
| Assets | | | | | |
| Cash and invested securities | $156,662 | $167,839 | $129,432 | $133,882 | $159,242 |
| Mortgage-backed securities | 209,660 | 206,454 | 234,309 | 242,692 | 223,439 |
| 1 to 4 family loans | 608,993 | 678,486 | 845,363 | 919,208 | 828,613 |
| Multifamily development | 63,065 | 71,991 | 81,041 | 90,175 | 86,708 |
| Construction and land loans | 37,437 | 40,695 | 46,887 | 57,252 | 66,390 |
| Nonresidential loans | 71,884 | 79,711 | 85,121 | 87,340 | 93,852 |
| Consumer loans | 68,704 | 77,850 | 91,279 | 111,054 | 97,383 |
| Commercial loans | 42,228 | 52,087 | 60,035 | 66,197 | 75,376 |
| Real estate owned | 1,516 | 1,500 | 1,285 | 1,137 | 1,680 |
| Other assets | 98,812 | 97,495 | 117,011 | 128,991 | 136,919 |
| Total assets | $1,358,961 | $1,474,109 | $1,691,764 | $1,837,927 | $1,769,602 |
| Liabilities and equity | | | | | |
| Deposits | 878,655 | 925,294 | 991,387 | 1,067,845 | 1,093,738 |
| FHLB advances | 216,445 | 234,329 | 291,938 | 325,647 | 268,325 |
| Other borrowings | 107,542 | 153,646 | 190,712 | 205,921 | 152,052 |
| Other liabilities | 27,707 | 22,110 | 28,668 | 31,622 | 37,663 |
| Total liabilities | 1,230,349 | 1,335,379 | 1,502,706 | 1,631,034 | 1,551,777 |
| Equity capital | 128,612 | 138,730 | 189,058 | 206,367 | 217,825 |
| Total liabilities and equity | $1,358,961 | $1,474,109 | $1,691,764 | $1,837,401 | $1,769,602 |
| Source: U.S. Department of the Treasury, Office of Thrift Supervision (OTS). |
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INVESTMENT SECURITIES OF FDIC-INSURED SAVINGS INSTITUTIONS, 1998-2007
($ millions, end of year)
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U.S. Treasury, agencies and corporations |
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Year |
U.S. Treasury |
U.S. agencies and corporations |
Total (1) |
States and political subdivisions |
Other debt securities |
| 1998 | $4,264.0 | $217,847.7 | $222,111.7 | $3,171.0 | $35,217.8 |
| 1999 | 2,997.8 | 232,787.7 | 235,785.5 | 3,599.2 | 42,954.2 |
| 2000 | 2,136.5 | 223,581.8 | 225,718.3 | 3,831.6 | 42,697.3 |
| 2001 | 3,260.0 | 231,187.8 | 234,447.8 | 4,486.6 | 45,500.3 |
| 2002 | 2,791.5 | 240,475.5 | 243,267.0 | 5,716.0 | 39,778.8 |
| 2003 | 2,827.6 | 258,132.2 | 260,959.8 | 6,534.7 | 37,603.6 |
| 2004 | 2,754.4 | 232,682.0 | 235,436.4 | 7,159.2 | 64,485.5 |
| 2005 | 5,779.1 | 224,232.4 | 230,011.5 | 8,871.7 | 85,874.4 |
| 2006 | 5,638.6 | 193,338.9 | 198,977.5 | 11,782.3 | 100,762.9 |
| 2007 | 903.3 | 197,791.0 | 198,694.3 | 11,959.7 | 152,677.7 |
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| Year | Equity securities | Less: contra accounts (2) | Less: trading accounts | Total investment securities (3) | Memo (4) mortgage-backed securities |
| 1998 | $10,974.2 | $23.0 | $1,956.5 | $269,495.3 | $207,287.4 |
| 1999 | 10,077.8 | 1.2 | 1,028.1 | 291,387.4 | 221,713.2 |
| 2000 | 10,484.8 | 1.4 | 758.6 | 281,972.1 | 212,652.7 |
| 2001 | 10,166.3 | 1.7 | 1,816.7 | 292,782.6 | 203,372.0 |
| 2002 | 11,427.6 | 0.9 | 1,581.0 | 298,607.5 | 209,660.5 |
| 2003 | 10,677.8 | 0.4 | 1,276.5 | 314,499.1 | 206,453.8 |
| 2004 | 10,372.1 | 0.0 | 8,772.1 | 308,681.1 | 234,309.2 |
| 2005 | 9,439.3 | 0.1 | 13,293.0 | 320,903.7 | 242,690.8 |
| 2006 | 8,738.4 | 0.0 | 5,545.4 | 314,715.8 | 223,421.4 |
| 2007 | 8,041.7 | 0.0 | 7,991.1 | 363,382.2 | 264,623.4 |
(1) Components may not add to total.
(2) Balance in account that offsets another account. Reserves for loan losses, for example, offset the loan account.
(3) Book value.
(4) Represents mortgage-backed securities, inlcuded in other columns, on a consolidated basis.
Source: Federal Deposit Insurance Corporation. |
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THRIFT INDUSTRY MORTGAGE LENDING ACTIVITY, 2002-2006
($ millions, end of year)
Year |
Mortgage refinancing (1) |
Mortgage loans outstanding |
Mortgage-backed securities outstanding |
Total mortgage portfolio |
Mortgage portfolio as a percent of total assets |
| 2002 | $218,585 | $599,747 | $90,232 | $689,979 | 68.69% |
| 2003 | 368,546 | 787,734 | 91,891 | 879,625 | 80.51 |
| 2004 | 240,807 | 878,715 | 157,125 | 1,035,841 | 79.27 |
| 2005 | 250,181 | 980,207 | 172,595 | 1,152,802 | 78.74 |
| 2006 | 210,790 | 909,522 | 167,346 | 1,076,868 | 76.35 |
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(1) Full year.
Source: U.S. Department of the Treasury, Office of Thrift Supervision (OTS). |
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TOP TEN U.S. THRIFT COMPANIES BY ASSETS, 2006
($ millions)
Rank |
Company |
Assets |
| 1 | Washington Mutual, Inc. | $346,288.0 |
| 2 | Countrywide Financial Corporation | 199,946.2 |
| 3 | Sovereign Bancorp, Inc. | 89,641.8 |
| 4 | ING Bank, FSB | 62,692.9 |
| 5 | E*TRADE Bank | 41,577.4 |
| 6 | Hudson City Bancorp, Inc. | 35,506.6 |
| 7 | IndyMac Bancorp, Inc. | 29,495.3 |
| 8 | New York Community Bancorp, Inc. | 28,482.4 |
| 9 | USAA Federal Savings Bank | 26,048.4 |
| 10 | Astoria Financial Corporation | 21,554.5 |
| Source: SNL Financial LC. |
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TOP FIVE U.S. SAVINGS INSTITUTIONS BY REVENUES, 2007 (1)
($ millions)
Rank |
Company |
Revenues |
| 1 | Washington Mutual | $25,531 |
| 2 | Sovereign Bancorp | 5,011 |
| 3 | Hudson City Bancorp | 2,135 |
| 4 | IndyMac Bancorp | 2,020 |
| 5 | New York Community Bancorp | 1,678 |
(1) Based on an analysis of companies in the Fortune 500.
Source: Fortune. |
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