May 31, 2011 (Jeff Alan)

The nation’s thrift and loan industry reported continued improved profitability according to the Office of Thrift Supervision (OTS) as the industry recorded its seventh consecutive quarter of profits.

With posted profits of $1.4 billion in the first quarter of 2011, and with troubled assets continuing to decline and thrifts setting aside less funds for loan losses, OTS sees this as a signal that the housing industry is stabilizing and recovering from the housing market downturn and subsequent economic crisis.

“Although the economic recovery is uneven and housing markets remain fragile in many communities across the country, we are seeing some stability in the thrift industry,” said OTS Acting Director John E. Bowman. “I am increasingly optimistic that the worst is behind us.”

Profitability, as measured by return on average assets, was down from 0.69 percent in the previous quarter to 0.6 percent in the first quarter of 2011, and was down from 0.73 percent in the first quarter a year earlier. By the end of the first quarter, 91.2 percent of the industry was considered “well-capitalized” with 11 thrifts less than adequately capitalized.

Troubled assets (noncurrent loans and repossessed assets) continued to decline to 3.09 percent of assets at the end of the first quarter, down from 3.26 percent at the end of the previous quarter and 3.28 percent one year earlier.

The industry added $1.68 billion to loan loss provisions in the first quarter, or 0.73 percent of average assets, which was down from 1.05 percent from the previous quarter and 1.19 percent from the first quarter in 2010.

At the end of the first quarter, the OTS supervised 724 thrift institutions with assets of $930.2 billion, as well as 440 holding company enterprises with approximately $4.2 trillion in U.S. domiciled consolidated assets.

Tags: thrift and loan, Office of Thrift Supervision, OTS, troubled assets, loan losses, housing market downturn, economic recovery, thrifts, well-capitalized, non-current loans, repossessed assets