While credit card charge-offs have gone up in the thrift industry, the increase is nowhere near the rate of increase from other types of loans, says a new Office of Thrift Supervision (OTS) document.
OTS reports that the thrift industry — which includes federal savings banks and savings and loan (S&L) associations — wrote off approximately 0.18 percent more bad credit card debt in 2008 than was written off in 2007.
This pales in comparison to the increase in the number of bad mortgage loans thrifts wrote off their books. S&Ls and federal savings banks wrote off more than four bad mortgage loans in 2008 for every one written off in 2007. Of all thrift industry mortgage loan assets, 58.3 percent were charged off in 2008, compared with 3 percent of thrift credit card assets. S&Ls have historically seen their mission as mortgage lending, and do relatively little credit card lending.
Loans extended by S&Ls and federal savings banks for land showed the biggest increase in charge-off rates, increasing by a factor of 119 over the past five years, and construction loans for single-family residences defaulted at a rate five times higher than the default rate in 2007, and 61 times higher than the default rate in 2004, the earliest year included in the OTS data.
Repossessions are also on the rise, says the OTS. Nearly 20 percent of thrift industry assets were repossessed in 2008, almost double the 10.5 percent repossessed in 2007.
Despite the relative stasis in credit card charge-offs, the Southeast region of the United States was hit the hardest in 2008 by thrift-issued credit card assets. Thrifts charged off over 7 percent of credit card debt in the southeast region from October 2007 to October 2008, 2 percent more than the average of OTS’s five regions (see map).
Credit card charge-offs among these institutions across the country were only 0.35 percent higher in 2008 than the four-year average — rising to 5.381 percent from 5.029 percent — which, when compared with total loan charge-offs almost doubling their four-year average, is a relatively minor increase.
See related: Credit card charge-offs rise 48 percent in August ’08