WASHINGTON - The rising tide of bank earnings has been lifting almost all boats, as regional differences in profitability have shrunk considerably in the past five years.

In the first half, midwestern banks had the highest annualized average return on assets, at 1.41%, according to earnings data released this week by the Federal Deposit Insurance Corp.

While that's higher than the 0.99% return on assets of the least profitable region for banks, the Northeast, the difference between most and least profitable is much smaller than it was in the first half of 1990. Then, banks in the West led the pack with a return on assets of 1.10%, almost three times the last-place Northeast's 0.40%.

"Looking at the patterns (today), it's a fairly uniform type of profile across various types of regions and across asset size groups," said Ross Waldrop, a senior financial analyst with the FDIC.

The Northeast often trails the rest of the country in return on assets because its statistics are dominated by New York's money-center banks, which because of their high-volume business tend to have a lower ROA than smaller banks.

In another measure of profitability, the percentage of unprofitable institutions in the first half, the West was worst with 8.2%, the Midwest best with 1.8%, and the Northeast in the middle at 5.4%.

The bank earnings report also includes indicators of asset quality, and they too show regional differences narrowing.

At the end of June, the Northeast had the highest ratio of troubled real estate assets, at 3.73%. That's 61% above the national average of 2.31%.

Those numbers contrast sharply with the figures at the end of 1987, when the Southwest led the nation with a troubled real estate asset ratio of 15.96% - 259% higher than the national average of 4.45%.

Noncurrent commercial and industrial loan rates show a similar convergence since the late 1980s, when the Southwest had far more noncurrent loans than the rest of the country, and the early 1990s, when northeastern banks' commercial loan portfolios were significantly more troubled than those of banks elsewhere.

Mr. Waldrop said the increasing uniformity in bank earnings "is partly just the absence of what we had seen in the past as far as rolling recessions and bursting of speculative lending bubbles."

But he said the increasing geographical diversification of banks - thanks to the end of antibranching rules in many states and national banks' use of the 30-mile rule to cross state lines - may help them weather local and regional economic downturns.

The 30-mile rule is having another effect as well - it's making the FDIC's state and regional data less meaningful.

By using the rule to consolidate its Maryland and District of Columbia operations into its Virginia bank, for example, NationsBank moved all the statistics about those operations into the call report filed by its Virginia bank - thus shifting the numbers to the FDIC's Southeast region from the Northeast.

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