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17 Banks Fail in January, Compared to 6 a Year Earlier

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Associated Press

Seventeen banks collapsed during January--six on Thursday alone--producing a monthly failure rate nearly three times worse than during January, 1986.

The six banks that closed their doors Thursday marked the same number that failed during all of January, 1986. The latest casualties included three banks in Texas and one each in Oklahoma, Missouri and Indiana.

The six also continued a pattern among problem banks--a concentration in troubled oil and farm states. State and federal regulators said that in most of the cases, the stress of shaky local economies was aggravated by poor management.

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L. William Seidman, chairman of the Federal Deposit Insurance Corp., already has predicted that bank collapses this year will surpass last year’s record-setting pace.

“We expect a sizable increase in the number of failures in 1987,” Seidman told the Senate Banking Committee last week. “Weaknesses are likely to persist through next year or longer in energy, agriculture and real estate. Parts of the banking system will continue to be hurt by these strains.”

Role of Management

“To a large extent, these failures are a result of the continued economic stress from the local economy,” FDIC spokesman Alan Whitney said Friday. “We will also find in some (bank) failures that management simply wasn’t up to the task.”

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For the month of January, the 17 closings include five in Oklahoma, four in Texas, two in Colorado and one each in Missouri, Indiana, Iowa, Illinois, California and Massachusetts.

The banks closed Thursday were the Farmers National Bank of Remington, Remington, Ind.; First State Bank of Pattonsburg, Pattonsburg, Mo.; Peoples Bank & Trust Co., Holdenville, Okla.; La Pryor State Bank, La Pryor, Tex.; Montgomery County Bank N.A., Woodlands, Tex.; and Bear Creek National Bank, Bear Creek, Tex. The last two are near Houston.

The number of closings was unusually high, but not unique, for a single day. In 1985, seven banks closed on a single day, a post-Depression record. And bank regulators said the six closings on a single day was largely coincidental.

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