Thrifts Lose $3.68 Billion in 1st Quarter

Savings and loan associations in the United States lost $3.68 billion during the first quarter of 1988, and troubled Texas thrifts accounted for $3.5 billion of the largest quarterly loss in the industry’s history, an analyst said Thursday.

Alex Sheshunoff, an Austin-based savings and loan analyst, said that even though two-thirds of the nation’s 3,126 thrifts made money during the first quarter, the 958 unprofitable institutions chalked up combined losses of $5.1 billion between January and March, swamping the $1.4 billion in earnings by the industry’s profitable thrifts.

Sheshunoff said it was the largest quarterly loss in savings and loan history.

Texas was the leading loser, but Sheshunoff said 21 other states also recorded losses, indicating that savings and loan woes in the Southwest may be spreading nationwide.

Of the 29 profitable states, only three--Nevada, South Dakota and West Virginia--improved during the first quarter from the last quarter of 1987. South Dakota’s thrifts reported a 62.7% increase in net income while West Virginia thrifts were up 16.9% and Nevada thrifts rose 15.9%.

“Loan quality problems, rising interest rates and negative public perception are the three major challenges facing the thrift industry,” Sheshunoff said.

“Major loan quality problems have been primarily confined to institutions in the Southwest, plus a small number of exceptionally aggressive institutions outside the Southwest.

“As residential real estate activity winds down in strong regions such as the Northeast, a major question arises as to whether the slowdown is merely pause or a prelude to more serious problems.”

Savings and loans nationwide had $1.3 trillion in assets as of March 31, an increase of 0.8% over December, 1987, figures of $1.29 trillion.

Thrifts nationwide reported a loss of $5.3 billion--$6.4 billion of that in Texas--for all of 1987.

California leads the nation in savings and loan assets at $351.2 billion, followed by Texas at $98.1 billion and New York at $93 billion. New York thrifts led the nation in net income during the first quarter of 1988 at $130.3 million.