Continued housing market weakness costs thrifts $4 billion in 3Q.

Forced to set aside large reserves for loan losses due to persistent housing market weakness, the U.S. thrift industry suffered a $4 billion loss during the third quarter of 2008, according to an Office of Thrift Supervision (OTS) report.

The OTS Third Quarter 2008 Thrift Industry Report said that thrift institutions set aside $7.9 billion in loan-loss provisions, prompted by a continuing downturn in the housing market that drove a further increase in troubled assets--mainly single family mortgages.

In the most recent four quarters from the November report, the industry has added $23.4 billion to loan--loss reserves, according to OTS Director John Reich.

"The housing sector is at the eye of the nation's economic storm, and the thrift industry, which focuses on home mortgages and other consumer retail lending, is feeling a strong impact," Reich said. "This storm will pass, but we've already seen some damaging effects."

Other highlights of the OTS report include:

* At the end of the third quarter, there were 23 problem thrifts--an increase from 17 thrifts in the previous quarter and 12 thrifts one year ago.

* At the end of the third quarter of 2008, the OTS supervised 818 thrifts with assets of $1.18 trillion, as well as 469 holding company enterprises with approximately $8.1 trillion in U.S.-domiciled consolidated assets.

* Profitability, as measured by return on average assets (ROA), was -1.35 percent in the third quarter, compared with -0.57 in the second quarter. One year ago, the industry ROA was 0.20 percent.