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U.S. Thrifts Lost $5.4B in Second Quarter

The loss is the second largest on record, after the fourth quarter last year, the Office of Thrift Supervision said.

A report from the top regulator of U.S. thrifts on Wednesday offered the latest indication that banks' struggles with the housing downturn are far from over, and that several more financial institutions will likely collapse before the economy improves.

Thrifts lost $5.4 billion last quarter, according to the Office of Thrift Supervision. The loss -- the second-largest amount on record, behind the fourth quarter of last year -- compares with a profit of $3.8 billion in the year-ago period.

The banks overseen by OTS, which have most of their operations in mortgages, consumer loans and savings, also set aside a record $14 billion to cover future loan losses as troubled assets and delinquent loans grew.

The number of so-called "problem thrifts," those that are struggling to keep afloat under the tidal wave of bad debt -- grew to 17 from 10 a year ago. Of the 829 thrifts across the country, seven are considered to not have adequate capital by government standards, and two are "critically" undercapitalized.

BankUnited Financial

(BKUNA)

earlier this week

TheStreet Recommends

disclosed in a regulatory filing

that it is under a regulatory agreement with OTS. Earlier this year, OTS

seized IndyMac Bancorp

after the California thrift's capital levels fell to "unsafe and unsound" conditions.

The OTS report follows a

similarly themed release

from the Federal Deposit Insurance Corp. on Tuesday, which said that there are now 117 banks at risk of failure, up from 90 a year earlier. But whereas thrift director John Reich says he is looking for "glimmers of hope" amid deteriorating industry statistics, FDIC Chairman Sheila Bair warned that the agency may have to borrow Treasury funds to cover the deposits of failed institutions.

Reich asserted that the U.S. is about halfway through the downturn in the housing and credit markets.