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Thrift Earnings Expanded 19% in 1998

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Reuters

A healthy economy and booming housing sales boosted U.S. thrift industry earnings to a record $7.6 billion last year, up 19% from the $6.4 billion of 1997, the previous record, the Office of Thrift Supervision said. Fourth-quarter earnings, however, declined to $1.4 billion from the third quarter’s record $2.2 billion and the 1997 fourth quarter’s $1.7 billion, because of one-time restructuring charges related to industry mergers and acquisitions. Troubled assets fell to 0.77% of total assets in the fourth quarter, down from 0.99% from the year-ago quarter and the lowest level since the measure was first used in 1990. OTS Director Ellen Seidman said the thrift industry showed continued financial strength but that the agency’s examiners are concerned by three issues: Thrifts’ entering higher-risk lending without adequately managing risks; some lowering of lending standards; and more construction lending being done on a speculative basis. Although there are some signs that thrifts are beginning to overreach for high yields, the thrift industry’s asset quality continued to improve.

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