Newspaper article THE JOURNAL RECORD

Savings Inflow Down 80% in State / Lack of Opportunities to Make Home Mortgage Loans Blamed

Newspaper article THE JOURNAL RECORD

Savings Inflow Down 80% in State / Lack of Opportunities to Make Home Mortgage Loans Blamed

Article excerpt

The lack of opportunities for savings institutions to make home mortgage loans may be responsible for an 80 percent drop in Oklahoma savings inflow for the first six months of 1985, officials say.

Oklahoma institutions saw a $63.3 million net savings inflow from January 1985 to June 1985, according to the latest report from the Federal Home Loan Bank in Topeka. Savings inflow totaled $309.4million for the same period in 1984.

June 1985 alone saw a savings outflow of $58.9 million from state institutions - the greatest amount since October 1982, when outflow was $31.7 million, and only the second outflow figure recordedsince then.

In comparison, savings increased by $29.9 million during June 1984, and increased by $6.7 million in May 1985.

Oklahoma City institutions had a $25.3 million savings inflow during the first half of 1985. The figure represented a drop of 57 percent from the $59.4 million total savings inflow for the first half of 1984.

And Oklahoma City savings inflow was $2.7 million in June 1985, an 83 percent decline from the $16.3 million inflow during June 1984.

Tulsa figures changes most sharply, where institutions registered a $17.7 million savings outflow during the first half of 1985. The figure was a dramatic contrast from the $56.8 million savings inflow that Tulsa saw in the first half of 1984.

Tulsa's June 1985 outflow was $13.2 million, compared to a $54.4 million outflow in May 1985 and a $14.2 million outflow in June 1984.

Savings officials blame the lack of loan demand for the sluggish savings activity.

"A lot of institutions are not paying a high interest rate for deposit dollars because the opportunity to loan that money out at a profit is not as good as it has been in the past," said James E. Woods, president and chief executive of Local Federal Savings and Loan.

Housing is the primary market for state savings and loans, noted Michael L. Toalson, president of the Oklahoma League of Savings Institutions, and mortgage loan demand is down.

Toalson was quick to point out that some Oklahoma institutions have a good market and are working to meet loan demand.

"But in general, we don't have the mortgage demand," he said, "and you don't try to attract new savings if you don't have the market for it.

"I think you'll find a number of bankers running off savings, too," he added. "Like a car dealer, we don't ship in a lot of product that we can't sell."

Savings institutions make money when interest income from loans exceeds the interest paid to depositors.

"In order to not lose money on the income side," said Mark McClelland, chief economist for the home loan bank, "some institutions have made the choice of not taking as many deposits.

"If they don't need the money, they don't want it," he said.

Deregulation has caused institutions to fit their interest rates to current market conditions, McClelland said, rather than to automatically offer the "ceiling rate."

Savings inflow and outflow figures indicate the percentage growth in savings funds, rather than income, of institutions, stressed both McClelland and Toalson.

"This is really a "non-event,'"Toalson said. "The decline is in growth factor, not actual savings. Savings are the same, or higher, than last year - just not growing as rapidly."

Overbuilding of office buildings, apartments and homes in Oklahoma City has contributed to the current mortgage market, said Robert D. Garrett, president of Mutual Federal Savings and Loan.

A period of time must be allotted to use up the excess, he said, before the current trend will change.

"We've been very pleased with our (savings) volume," Garrett said. "It's been much better than we'd guessed, but it's not really what it was."

Woods, of Local Federal, has noticed an increase in consumer lending. …

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