Problems in the farmbelt andoilpatch regions contributed to the first decline in overall
income for U.S. banks in a quarter century, the Federal Deposit
Insurance Corp (FDIC) said.
    The nation's 14,181 commercial banks had net income of 17.8
billion dlrs in 1986, down slightly from 1985's record 18.1
billion dlrs.
    The total was still the second highest ever reported, but
it was the first time income had not grown since 1961.
    The figures reflected a radical split in the health of
banks in the two halves of the country, the FDIC said.
    In the East, one in 12 banks had losses last year, while
one in four banks west of the Mississippi River had losses.
    Nationwide, one out of five banks reported losses, the FDIC
said in the first of a new series of quarterly banking profiles
it planned to issue.
    "I don't remember a time when there was such a clear
distinction by geographic area," FDIC Chairman William Seidman
told reporters.
    He said that while the figures were not good, they showed
the problem did not lie with the banking system as a whole but
with regional differences in economic performance.
    Some 44 banks have failed so far this year, twice as many
as failed by this time a year ago, but Seidman said he doubted
the pace would continue. 
    On a positive note, banks increased capital to a record 208
billion dlrs last year, and there has been a slowing in the
number of new problem banks in all regions except the
Southwest, Seidman said.
    Banks' provision for losses from bad loans in the fourth
quarter increased to 21.7 billion dlrs, a 23 pct rise from a
year ago.
    Large banks -- those with assets of one billion dlrs or
more -- reporting fourth-quarter losses totaled 22, the FDIC
said.
    Seidman said it was too early to say what effect Brazil's
moratorium on debt interest payments would have on U.S. banks.
    He said bank deregulation had given managers more freedom
to run their banks and that an increase in failures was to be
expected.
    But this freedom from regulatory restraints also has meant
other banks that were better managed have gotten stronger,
Seidman said.
 Reuter
