The US savings and loan industry reported record loan loss provisions totalling $7.6 billion for the first quarter of 2008 due to the deteriorating American housing market, up from $5.5 billion for the fourth quarter of 2007, the Office of Thrift Supervision (OTS) said on Tuesday.
Industrywide loan loss provisions totalled $1.2 billion for the first quarter of 2007, the OTS said. The OTS, which regulates more than 830 thrifts, said it is urging institutions to set aside more loan loss provisions going forward.
"I have been urging managers of OTS-regulated thrift institutions to be aggressive in setting aside provisions for expected loan losses," OTS Director John Reich told reporters at a briefing to release the quarterly industry data.
"This forceful response to the housing market crisis continues to depress industry earnings, but it also strengthens institutions to withstand future challenges," Reich said. Troubled assets, which include non-current loans and repossessed assets, were 2.06 percent of assets in the first three months of the year, up from 1.66 percent in fourth quarter, the OTS said. In a sign of the continued housing slump, total mortgage origination volume dipped 20 percent in the first quarter from last three months of 2007, according to regulators.
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