Though regulators have seized two banks just this month, the overall rate of bank failures this year is tracking 1995's, which was the lowest in two decades.

Regulators have seized three banks so far this year. In all of last year they seized six. Not since 1974 had so few banks bit the dust, according to the Federal Deposit Insurance Corp.; the total that year was three.

"The overall condition of the banking industry is much improved and that's why you're seeing this very low level of bank failures," said James Harvey, a senior bank examiner at the Federal Reserve Bank of Kansas City. Mr. Harvey recently examined bank failure data while analyzing industry trends.

"We've had considerable improvement in asset quality and considerable improvement in the interest income that banks are generating," he said. "Both of those have led to improved earnings and capitalization."

In the most recent failure, First National Bank of Panhandle, Texas, was closed last week by the Office of the Comptroller of the Currency. That failure had been preceded this year by those of two other community banks: Peoples Bank and Trust, Borger, Tex., earlier this month, and Philadelphia's Metrobank in March.

Since 1974 the number of bank failures has fluctuated, dropping to seven in 1978 and 1981, peaking at 206 in 1989.

More than 100 banks failed each year from 1985 through 1992. Forty-one failed in 1993 and 13 in 1994.

No thrifts have failed this year, according to the FDIC, which now would handle such demises. Only two failed last year, but the Resolution Trust Corp. took over more than 300 in 1988 and 144 in 1991. The agency itself shut down last year.

"With the economy so much better now, I think it's a lot easier for ... thrifts to perform well in this environment," said Marilyn Kapp, a financial analyst with the Kansas City Fed.

Mr. Harvey said it's unlikely that the convergence of negatives in the 1980s - including economic, agricultural, energy, and real estate problems - will happen again soon.

In fact, FDIC Chairman Ricki Helfer recently said the prognosis for banks over the next two years is "excellent."

"Whenever you've seen a major number of bank failures, it's always because of asset quality in the banks - and we certainly don't see that right now," Mr. Harvey said. "Up until the failures of the 1980s, most bank failures involved at least some level of fraud or corruption in the bank."

But FDIC spokesman David Barr cautioned that even with the number of thrift failures at such low levels, the Saving Association Insurance Fund still can take hits from failed commercial banks with funds it insures.

He noted that in the Panhandle failure, $500,000 of the $12.4 million insurance hit was to the thrift fund.

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