Perhaps the best news about the savings and loan industry's future is that there appears to be one.
But there's no guarantee.
At the end of 1979, there were 4,684 savings associations nationwide; by the end of last year, there were 3,391, according to the Federal Home Loan Bank Board, which supervises savings and loans. And although the profit picture of the remaining institutions has improved markedly this year, many remain perilously low in net worth.
The principal factor behind the thrifts' improved earnings -- the second quarter was the industry's best since 1979 -- has been the moderation of interest rates. And if, as many economists foresee, these rates remain close to current levels, the industry will be able to devote itself to the repositioning and restructuring most analysts agree it needs, rather than to crisis management.
"At least from a strict financial point of view, circumstances now appear better than at any other time in the last five years for the savings institution industry as a whole," Eric I. Hemel, director of the bank board's Office of Policy and Economic Research, told the House Banking Committee last week.
"Interest rates are down dramatically," he said, and the difference between the average return on thrifts' assets and the cost of their liabilities "is probably in the process of reaching an all-time high in the third quarter of 1985."
The industry has been in desperate need of some respite from the combined pressures of deregulation and high interest rates. Long a highly specialized industry insulated by government regulation from marketplace forces, the S&Ls in the past five years have been thrown off the pier and told they had better learn to swim.
"There is no question," Bill Sinclair, president of Washington Federal Savings & Loan, noted recently, " . . . that the game has changed. Thrift executives can no longer sit back in tufted burgundy leather chairs and yea or nay loans. With the competition coming from financial giants, the game is more like pool hall hustle rather than country club golf."
Some of these newly minted pool-hall hustlers, however, have been hustling with the federal government's money, in the form of the federal insurance behind deposits. And both Congress and industry regulators are now studying ways to protect the insurance system without so restricting the S&Ls that they are unable to compete.
Thus, despite the improved financial picture, the coming year shapes up as one of continuing, though less spectacular, change in the industry. Further restrictions -- though not "reregulation" -- through the Federal Savings and Loan Insurance Corp. seem likely, while the S&L executives grope for a path to stability.
Sinclair, in a recent article in Mortgage Banking magazine, described a strategy of "niche banking" -- in Washington Federal's case, specializing in real estate. Rather than getting into other lines of business, "management wanted to rely on what it knew best," he said.
At the other end of the spectrum, G. Thomas Willis, an industry specialist with Price Waterhouse accounting firm, sees consolidation as the best approach. Only large institutions will be able to attract the management talent necessary to operate in the deregulated environment.
But both outside observers and those inside the industry agree that unless thrifts make use of the window that interest rates have opened to revise their loan portfolios and find profitable business lines, it is only a matter of time before they find themselves back on the slippery slope to insolvency.