The financial condition of banks, both nonmetro and metro, generally deteriorated in 1986. Based on weighted statistics (which treat banks as an aggregate and may be dominated by a few large banks), aggregate profits for all U.S. banks fell 9 percent, expenditures to protect against upcoming loan losses rose 14 percent, and levels of problem loans rose 3 percent. Banks in the West and South had the lowest profits, the most problem loans, and the most loan losses in 1986, partly stemming from the troubled energy sector. Metro and nonmetro banks did not equally share these conditions. Differences in both the level and dynamics of change for metro and nonmetro operations appear when comparing all banks and when comparing narrow classifications such as bank size, loan and capital problems, local economic base (agricultural or energy), market extension, and regions. This report presents weighted and unweighted operating statistics for nonmetro, metro, and all u.s. banks for 1986, and comparisons with 1985.