22 S&Ls; Post 1st-Quarter Profit Jump : Thrifts: The institutions’ combined earnings total $85 million, up from $82 million the previous year.

Still savoring low interest rates and a boom in the home refinancing market, Orange County’s 22 savings and loans reported combined profits of $85 million for the first three months this year.

The results are up slightly from $82 million in earnings posted by the same thrifts in last year’s first quarter, according to figures released this week by the federal Office of Thrift Supervision.

“Clearly, home refinancing activity was still on the high side,” said Thomas E. Prince, chief financial officer of Downey Savings & Loan in Newport Beach. “It amounted to 80% of our own single-family loan originations.”

Prince said that lower rates for the past year not only spurred the refinancing market, it also drove down the interest rates on deposits faster than loan rates fell. That lower cost to financial institutions has given them bigger profit margins for a while, he said.

The quarterly earnings come on the heels of the first annual profit that the local industry had been able to post in a decade, mostly because the biggest money-losing and failed thrifts were finally shut down by regulators.

For the first quarter, the county’s three biggest thrifts led the way. American Savings Bank in Irvine, with $17 billion in assets, earned $29 million, down from $47 million for last year’s first quarter. Household Bank in Newport Beach earned $25 million and Downey Savings followed with $22 million.

Union Federal Savings Bank, owned by UnionFed Financial Corp. in Brea, continued its heavy losses, which totaled nearly $9 million for the first quarter. United California Savings Bank in Anaheim lost more than $2 million, and the failed Guardian Savings & Loan in Huntington Beach and Delta Savings Bank in Westminster--both of which continue to be run by federal regulators--lost $1.9 million and $1.5 million, respectively.

As a group, the county thrifts saw their assets shrink slightly, mainly as a strategy to improve their financial condition. Many needed to reduce their loans and other assets as a way of raising their ratios of capital to assets, a key measure of health.

But for Independence One Bank in Mission Viejo, the 22% drop in assets from a $1.1-billion thrift to an $856.2-million institution meant it was finally rid of the troublesome old loans of its failed predecessor, Beverly Hills Savings & Loan. Michigan National Corp. bought the failed thrift at the end of 1988 with government guarantees to cover losses on bad loans it was taking over. The name was changed several times; it finally became Independence One last fall.

“When we bought the bank, we created in-house good bank-bad bank operations,” President Edward H. Sondker said. “The good bank had next to nothing in it, and the bad bank had more than $1 billion in bad loans.”

The last of those loans were paid off, sold or written off last year and during the first quarter this year, he said. At the same time, Independence One continued to increase its business in commercial and mortgage lending on the “good bank” side.