The battered savings and loan industry may be slimming down to its healthy core. The government said Wednesday the industry posted its first quarterly profit in four years in the first quarter of 1991.
"Clearly, there is a segment of this industry that will survive," said T. Timothy Ryan Jr., director of the Office of Thrift Supervision, which regulates savings associations that are not in government hands. "These have been some of the toughest years that anyone has encountered, and some of these institutions have been able to do quite well."
The nation's 2,283 thrifts, excluding 204 institutions under government control, earned $626.8-million in the first quarter, the OTS said.
That compares with a loss of $373-million for 2,505 privately run thrifts in the same period a year ago and a loss of $1.49-billion at 2,342 private S&Ls in the last three months of 1990.
The $626.8-million profit does not include the huge losses at hundreds of savings associations already seized by the Resolution Trust Corp.
But officials said that figure, expected to be released today, will be lower than the $904-million lost in the last quarter of 1990.
Ryan attributed the improvement primarily to the seizure of the worst thrifts by the RTC. It has taken over 612 since early 1989.
Also, since late last year, the interest rates thrifts pay on deposits have dropped sharply while the rates they charge on mortgages and other loans have fallen modestly.
Earlier this week, the government's senior auditor, Charles A. Bowsher, said the rescue of failed institutions is in such disarray that the General Accounting Office is unable to calculate its ultimate cost to taxpayers but that the total will be far more than the $130-billion projected by the Bush administration last year.
Since the bailout began in 1989, the regulators have spent almost $80-billion; Treasury Secretary Nicholas F. Brady is expected in two weeks to ask Congress for $50-billion more to continue the process into next year.
Congress delayed for months on voting more money the last time the Treasury asked for it, and Bowsher's assessment has heightened the administration's political difficulties now.
The chairman of the House Budget Committee, Rep. Leon Panetta, D-Calif., said Wednesday that he would oppose any additional funds until the GAO is able to complete an audit of the bailout.
"It is increasingly clear that the federal effort to resolve the savings and loan debacle is a debacle in itself," said Panetta. "Dreadful mismanagement by the federal government has been the hallmark of this entire scandal."
The encouraging news about the profits in the savings and loans in private hands was tempered by a significant increase in the amount of delinquent loans over the first three months of this year and by the continuing slump in many commercial real estate markets.
_ Information from Associated Press was used in this report.