U.S. thrifts posted a small profit last year after two years of losses, evidence the industry may be stabilizing amid the economic recovery.
The Office of Thrift Supervision said Wednesday that savings and loans earned $29 million last year, after reporting net losses of $15.9 billion in 2008 and $649 million in 2007.
That is the industry's first annual profit since 2006.
Thrifts earned $505 million in the fourth quarter, the second profitable quarter in a row.
The number of troubled thrifts — those with low capital reserves and other problems — was unchanged at 43 in the October-December period, compared to the third quarter.
Still, that is up from 26 a year earlier.
John Bowman, acting director of the OTS, said the industry is still not out of the woods. The industry set aside $3.9 billion in reserves in the fourth quarter to offset expected losses. While that's lower than it set aside earlier in 2009, it's still the eighth highest on record.
"Too many people continue to struggle to pay their mortgages ... and financial institutions continue to deal with high levels of loan delinquencies and foreclosures," Bowman said.
The thrift industry's troubled assets — loans that are overdue and repossessed property — as a percentage of total assets dropped to 3.25 percent in the fourth quarter from 3.65 percent in the July-September period. That's higher than the 2.54 percent recorded a year earlier.
Twenty thrifts failed last year, and Bowman said more failures are likely.
The news comes a day after the Federal Deposit Insurance Corp. said the number of troubled U.S. banks jumped to more than 700 as the industry recorded a small profit.
Thrifts, also known as savings and loans, differ from banks in that they are required by law to have at least 65 percent of their lending in mortgages and other consumer loans. That makes them particularly vulnerable to the housing slump and high unemployment.
They also could play a key role in the recovery by providing credit.
© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.