--- title: "Thrift Institution: definition, formula, and thresholds" description: "A thrift institution, or thrift, is a savings association or savings bank: a depository institution chartered mainly to take savings deposits and make residential mortgage loans. Thrifts are FDIC-insured and file the same quarterly call report as commercial banks." canonical_url: https://www.bankregreports.com/glossary/thrift-institution/ source: BankRegReports category: "Supervision & Ratings" --- # Thrift Institution > A thrift institution, or thrift, is a savings association or savings bank: a depository institution chartered mainly to take savings deposits and make residential mortgage loans. Thrifts are FDIC-insured and file the same quarterly call report as commercial banks. ## Formula ``` Qualified Thrift Lender Test = Qualified Thrift Investments / Portfolio Assets ≥ 65% ``` The qualified thrift lender (QTL) test in the Home Owners' Loan Act requires a savings association to hold at least 65% of its portfolio assets in qualified thrift investments, mainly residential mortgage loans, mortgage-backed securities and other housing and consumer loans, in at least 9 of every 12 months. A thrift can instead qualify as a domestic building and loan association under the Internal Revenue Code. Portfolio assets are total assets less goodwill and other intangibles, the value of property used to conduct business, and liquid assets up to 20% of total assets. ## Why it matters The charter decides who supervises the institution. Since the Dodd-Frank Act abolished the Office of Thrift Supervision in 2011, the OCC supervises federal savings associations, the FDIC supervises state savings associations, and the Federal Reserve supervises savings and loan holding companies. A thrift that fails the QTL test faces restrictions on its activities and its holding company's, which is why the test shapes a thrift's balance sheet. ## How to read it Expect a thrift's loan book to lean toward residential mortgages and its funding toward retail deposits, which makes interest rate risk the central exposure: long-dated fixed-rate mortgages funded by deposits that reprice faster. When comparing a thrift with commercial banks, read residential real estate concentration and rate sensitivity first. Thrifts have filed the FFIEC call report since March 31, 2012, so their data is comparable line by line with banks. ## Thresholds | Range | Reading | What it means | |---|---|---| | ≥ 65% QTI | Meets QTL | Qualified thrift investments at or above 65% of portfolio assets in 9 of 12 months. | | < 65% QTI | Fails QTL | Activity restrictions apply until the institution requalifies or converts its charter. | ## Worked example An illustrative savings association has $1.0 billion of total assets. Excluding $40 million of goodwill and premises and $100 million of liquid assets leaves $860 million of portfolio assets. It holds $620 million of residential mortgages and mortgage-backed securities that count as qualified thrift investments. $620 million / $860 million = 72%, so it meets the 65% test with room to spare. ## Questions ### What is the difference between a thrift and a bank? A thrift is chartered under savings association law with a mission centered on housing finance, and it must meet the qualified thrift lender test. A commercial bank has no such asset test. Both take insured deposits, both are FDIC-insured and both file the FFIEC call report. ### Who regulates thrifts today? The OCC supervises federal savings associations, the FDIC supervises state-chartered savings associations, and the Federal Reserve supervises savings and loan holding companies. The Office of Thrift Supervision held those roles until the Dodd-Frank Act transferred them in July 2011. ### Can a thrift operate like a national bank? Yes, if it elects to. A federal savings association with $20 billion or less in total assets as of December 31, 2017 can elect to become a covered savings association under 12 CFR Part 101, which gives it the rights and duties of a national bank without converting its charter or meeting the QTL test. ## Sources - 12 USC §1467a(m): Qualified thrift lender test (Home Owners' Loan Act) - [12 CFR Part 101: Covered savings associations (OCC)](https://www.ecfr.gov/current/title-12/chapter-I/part-101) ## Related metrics - [Residential Real Estate Loans](https://www.bankregreports.com/glossary/residential-real-estate-loans/): Residential Real Estate Loans (1-4 family mortgages) are loans secured by owner-occupied or investor-owned residential property with 1-4 dwelling units. Roughly $2.5T of bank-held 1-4 family loans makes this one of the largest single asset classes in US banking. - [Savings Deposits](https://www.bankregreports.com/glossary/savings-deposits/): Savings deposits are interest-bearing accounts without a fixed maturity, including statement savings and money market deposit accounts. They are a core, relatively stable funding source that reprices gradually as rates move. - [Long-Term Assets to Total Assets](https://www.bankregreports.com/glossary/long-term-assets-ratio/): This ratio is the share of a bank's assets that mature or reprice in more than five years (long-dated loans and securities) as a percentage of total assets. It is a primary gauge of interest-rate risk on the asset side of the balance sheet. - [CAMELS Rating](https://www.bankregreports.com/glossary/camels-rating/): CAMELS is the supervisory rating system examiners use to grade a bank's safety and soundness across six components (Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk) on a 1 (best) to 5 (worst) scale. ## About this document This is the markdown twin of the page named in `canonical_url` above. Source filings are public record; the cleaning, normalization, cross-source linkage, and derived metrics are BankRegReports' own. Attribute with a link to the canonical URL. Markdown twins are published for editorial content only. Institution data pages do not have them. For data at scale use the API, which is documented at https://www.bankregreports.com/api/ and specified at https://www.bankregreports.com/openapi.json. It returns typed JSON with explicit units and periods, and one call replaces hundreds of page fetches. ## Sitemap - [Glossary](https://www.bankregreports.com/glossary/): every metric, with formula and thresholds - [Blog](https://www.bankregreports.com/blog/): analysis and explainers - [API documentation](https://www.bankregreports.com/api/): the programmatic way to get this data - [XML sitemap](https://www.bankregreports.com/sitemap.xml): the complete crawlable index