BANKING
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THRIFT INSTITUTIONS

Savings and loan associations and savings banks fall into the category of thrift institutions. Thrifts were originally established to promote personal savings through savings accounts and homeownership through mortgage lending, but now provide a range of services similar to many commercial banks. Savings banks tend to be small and are located mostly in the northeastern states.

Like other banking institutions with a significant portion of mortgages on their books, thrifts may belong to the Federal Home Loan (FHL) Bank System. In exchange for holding a certain percentage of their assets in mortgage-backed securities and residential mortgages, these financial institutions may borrow funds from the FHL Bank System at favorable rates.

Thrifts are declining in number. At their peak in the late 1960s, there were more than 4,800. But a combination of factors has reduced their ranks significantly. These include sharp increases in interest rates in the late 1970s, which immediately raised the cost of funds without a similar rise in earnings from thrifts’ principal assets, long-term fixed rate mortgages. In addition, the recession of the early 1980s increased loan defaults. By year-end 2004, due mostly to acquisitions by or conversions to commercial banks or other savings banks, the number of thrifts had fallen to 1,345.
SELECTED INDICATORS, FDIC-INSURED SAVINGS INSTITUTIONS, 2000-2004


 

2000

2001

2002

2003

2004
Return on assets (%)0.92%1.07%1.16%1.28%1.17%
Return on equity (%)11.1412.3312.3613.6610.87
Core capital (leverage) ratio (%)7.807.778.068.059.53
Noncurrent assets plus other real estate owned to assets (%)0.560.650.690.620.46
Net charge-offs to loans (%)0.200.280.290.300.27
Asset growth rate (%)5.998.173.208.4714.77
Net interest margin (%)2.963.203.353.273.16
Net operating income growth (%)3.056.635.6123.038.10
Number of institutions reporting1,5891,5341,4661,4111,345
Percentage of unprofitable institutions (%)8.56%8.80%6.82%5.74%6.17%
Number of problem institutions181917108
Assets of problem institutions ($ billions)$7 $4 $3 $1 $1
Number of failed/assisted institutions11101

Source: Federal Deposit Insurance Corporation.

OTS-REGULATED THRIFT INDUSTRY INCOME STATEMENT DETAIL, 2000-2004

($ millions, end of year)


 

2000

2001

2002

2003

2004
Interest income$64,199$65,233$55,456$51,481$55,871
Interest expense40,92537,61825,46820,66021,299
Net interest income before provisions for losses23,27527,61529,98830,82234,572
Provision for losses for interest bearing assets (1)1,6592,5322,8542,1792,592
Net interest income after provisions for losses21,61625,08327,13428,64231,981
Non-interest income (2)10,02313,13714,13218,51220,115
Non-interest expense19,23822,59122,99925,76630,531
Net income before taxes and extraordinary items12,40015,62918,26621,38921,565
Taxes4,3825,6966,4377,6367,623
Other (3)-42698-719
Net income8,01410,20211,83713,74613,960
Other items:     
Preferred and common stock cash dividends4,1314,8236,66010,843NA
Reinvested earnings (4)3,8835,3795,1772,903NA
Gross profits of profitable thrifts8,56010,83012,57014,02014,313
Gross profits of unprofitable thrifts-546-628-733-278-353

(1) Loss provisions for non-interest-bearing assets are included in noninterest expense.
(2) Net gain (loss) on sale of assets is reported in non-interest income.
(3) Defined as extraordinary items, net of tax effect, and cumulative effect of changes in accounting principles. Extraordinary items are material events and transactions that are unusual and infrequent.
(4) Reinvested earnings is the portion of a corporation’s earnings distributed back into the business. It is calculated by subtracting preferred and common stock cash dividends from net income.

NA=Not available.

Source: U.S. Department of the Treasury, Office of Thrift Supervision.

BALANCE SHEET OF THE FEDERALLY-INSURED THRIFT INDUSTRY, 2000-2004

($ millions, end of year)


 

2000

2001

2002

2003

2004
Number of thrifts1,5901,5321,4671,4131,345
Assets
     Cash and invested securities$97,724$123,721$156,662$167,839$129,436
     Mortgage-backed securities213,826196,512209,660206,454234,329
     1-4 family loans574,341597,867608,993678,486845,344
     Multifamily development56,79758,99063,06571,99181,043
     Construction and land loans34,83238,39737,43740,69546,862
     Nonresidential loans59,76563,14071,88479,71185,142
     Consumer loans65,28669,42168,70477,85091,264
     Commercial loans34,42036,75442,22852,08760,045
     Real estate owned1,0031,0501,5161,5001,285
     Other assets84,641113,15798,81297,495117,029
Total assets1,222,6351,299,0091,358,9611,474,1091,691,779
Liabilities and equity     
     Deposits738,234797,822878,655925,294991,376
     FHLB advances261,495254,271216,445234,329291,968
     Other borrowings98,250111,140107,542153,646190,716
     Other liabilities21,09826,15827,70722,11028,633
     Total liabilities1,119,0771,189,3911,230,3491,335,3791,502,694
     Equity capital103,558109,618128,612138,730189,085
Total liabilities and equity1,222,6351,299,0091,358,9611,474,1091,691,779
Source: U.S. Department of the Treasury, Office of Thrift Supervision.
INVESTMENT SECURITIES OF FDIC-INSURED SAVINGS INSTITUTIONS, 1995-2004

($ millions, end of year)


 

U.S. Treasury, agencies and corporations

 

 

Year

U.S. Treasury

U.S. agencies and corporations

Total (1)

States and political subdivisions

Other debt securities
1995$18,409.4$213,365.2$231,774.6$1,947.1$47,418.3
199610,236.4202,507.5212,744.02,066.639,410.1
199732,506.9174,199.3206,706.22,095.931,430.9
199824,199.7197,912.0222,111.73,171.035,217.8
199927,035.2208,750.3235,785.53,599.242,954.2
200024,368.5201,349.8225,718.33,831.642,697.3
200145,077.4189,370.4234,447.84,486.645,500.3
200235,411.0207,856.0243,267.05,716.039,778.8
200352,090.5208,869.3260,959.86,534.737,603.6
200434,399.8201,036.6235,436.47,159.264,485.5
      
YearEquity securitiesLess: contra accounts (2)Less: trading accountsTotal investment securities (3)Memo: mortgage-backed securities
1995$7,469.9-$537.2$607.6$288,539.6$215,661.4
19968,647.9-357.3946.6262,279.3193,021.1
19979,380.727.1914.6248,672.0180,645.4
199810,974.223.01,956.5269,495.3207,287.4
199910,077.81.21,028.1291,387.4221,713.2
200010,484.81.4758.6281,972.1212,652.7
200110,166.31.71,816.7292,782.6203,372.0
200211,427.60.91,581.0298,607.5209,660.5
200310,678.10.41,276.5314,499.3206,453.8
200410,372.10.08,772.1308,681.1234,309.2

(1) Components may not add to total.
(2) Balance in account that offsets another account. Reserves for loan losses, for example, offset the loan account.
(3) Book value.

Source: Federal Deposit Insurance Corporation.

THRIFT INDUSTRY MORTGAGE LENDING ACTIVITY, 1995-2004

($ millions, end of year)


Year

Mortgage refinancing (1)

Mortgage loans outstanding

Mortgage-backed securities outstanding

Total mortgage portfolio

Mortgage portfolio as a percent of  total assets
1995$12,808$446,930$125,457$572,38874.24%
199619,020486,640110,977597,61777.68
199719,512483,288103,815587,10375.60
199851,665491,96893,322585,29071.62
199941,983506,96394,759601,72269.69
200024,622556,95893,106650,06470.03
2001125,889578,97492,360671,33368.66
2002218,585599,74790,232689,97968.69
2003368,546787,73491,891879,62580.51
2004240,793997,65797,5191,095,17683.81

(1) Full year.

Source: U.S. Department of the Treasury, Office of Thrift Supervision.

TOP FOUR U.S. THRIFT COMPANIES, RANKED BY REVENUES, 2004

($ millions)


Rank

Company

Revenues
1Washington Mutual$15,962
2Golden West Financial4,473
3Sovereign Bancorp2,706
4Westcorp1,387

Source: Fortune.

TOP TEN U.S. THRIFT COMPANIES RANKED BY ASSETS, 2005 (1)

($ millions, as of March 31, 2005)


Rank

Company

Assets
1Washington Mutual, Inc. (2)$333,743
2Golden West Financial Corporation112,588
3Sovereign Bancorp, Inc. 58,926
4ING Bank, FSB (3) (4)36,024
5E*TRADE Bank (3) (5)25,549
6New York Community Bancorp, Inc.24,612
7Astoria Financial Corporation23,250
8Hudson City Bancorp, Inc. (MHC)21,131
9Lehman Brothers Bank, FSB (3) (6)19,457
10IndyMac Bancorp Inc.17,966

(1) Rankings account for all bank and thrift acquisitions that were announced or completed subsequent to the buyer's most recent financial reports and were valued in excess of $200 million at announcment and as explicitly noted. Combined asset values are summations of the most recent figures reported by each merging company and assume no divestitures or accounting adjustments.
(2) Reflects Washington Mutual, Inc.'s pending acquisition of Providian Financial Corp., announced on June 6, 2005.
(3) Assets as of December 31, 2004.
(4) Subsidiary of ING Direct, NV.
(5) Subsidiary of E*TRADE Financial Corp.
(6) Subsidiary of Lehman Brothers Holdings Inc.

Source: SNL Financial LC.

REMITTANCES

The flow of money from immigrants to their families back home usually takes the form of money transfers, commonly referred to as remittances. They include money orders, hand
delivered cash, wire transfers and unlicensed informal means. While in the past few years banks and credit unions have launched major initiatives in remittance services, they only hold a small fraction of the market, which is currently dominated by wire transfer firms.
TOP TEN STATES IN REMITTANCES TO LATIN AMERICA, 2004


Rank

State

Remittances sent to Latin America ($ millions)

Number of Latin American immigrant adults

Percent that send remittances

Times sent per year

Average amount
1California$9,610 5,378,55564%11.9$235
2New York3,5621,428,6148113.7225
3Texas3,1802,547,2034312.9225
4Florida2,4501,796,9594712.6230
5Illinois1,528830,0206612.4225
6New Jersey1,371606,4796814.2235
7Georgia947345,2538113.3255
8North Carolina833290,8778414.2240
9Arizona606535,1194211.2240
10Virginia586219,4178413.2240

Source: Inter-American Development Bank.

LATIN AMERICAN REMITTANCES, 2003-2004

($ millions)


Country

2003

2004

Percent change from prior year
Mexico$13,266$16,61325.2%
Brazil5,2005,6248.2
Colombia3,0673,85725.8
Guatemala2,1062,68127.3
El Salvador2,3162,54810.0
Domican Republic2,2172,43810.0
Ecuador1,6561,7405.1
Jamaica1,4251,4975.1
Peru1,2951,3605.0
Honduras8621,13431.6
Other4,3316,30845.6
Total (1)37,74145,80021.4

(1) Total may not equal sum because of rounding.

Source: Inter-American Development Bank/MIF.

  • In 2004, Latin American immigrants sent $46 billion to their families overseas.

  • The largest amount in 2004—$16.6 billion went to Mexico.

GLOBAL U.S. REMITTANCE TRANSFER MECHANISMS, 2004



Source: Inter-American Development/MIF.