The US savings and loan industry set aside a record $14 billion for bad debt provisions in the second quarter, almost double the amount from the first quarter, the Office of Thrift Supervision (OTS) said on Wednesday. Industrywide, the thrifts posted a net loss of $5.4 billion in the quarter, the second-largest on record after their $8.8 billion loss in the fourth quarter of 2007. US thrifts posted a $627 million loss in the first quarter.
The number of problem thrifts rose to 17 in the second quarter, from 12 institutions at the end of March, the OTS said. It did not identify the troubled institutions. The OTS, which regulates about 830 thrifts, said the industry's capital remained solid, with more than 98 percent of the sector exceeding the standard for being considered well capitalised.
But a key profit measurement dropped: The thrift industry had a negative 1.41 percent return on average assets, compared with a negative 0.17 percent in the first quarter. Troubled assets, which include noncurrent loans and repossessed assets, rose to 2.68 percent of assets in the second quarter from 2.06 percent in the first quarter.
"Solid capital and sizable reserves for potential loan losses show once again that thrift managers are responding appropriately to the challenges they face," said OTS Director John Reich. Total thrift industry mortgage originations were $128.3 billion in the second quarter, down 34 percent from $194.6 billion in the year-ago period, and down 4 percent from $133.8 billion in the first quarter.
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