As the banking industry consolidates, fewer banks are reporting losses. The FDIC’s first quarter numbers reveal a strengthening, but shrinking industry.

At the end of the first quarter, there were 3,177 banks in the 14 Upper Midwest states covered by NorthWestern Financial Review. 412 of those banks, or 12.9 percent, reported losses for the first quarter. That’s better than a year ago, when 14.6 percent of the banks reported losses in the first quarter of 2010; and it is better than the previous quarter when 21.9 percent of the banks reported losses in the fourth quarter of 2010.

But the number of banks is declining. At the end of 2009, there were 3,333 banks in the region; at the end of the first quarter of 2010, the number had slipped to 3,292; by the end of the fourth quarter of 2010, there were 3,206.

Colorado had the highest percentage of banks that lost money in the first quarter of 2011, with 25.8 percent or 29 banks out of a total of 112. The next highest states were Illinois, Michigan, and Montana with 16 percent or more losing money in the quarter. Missouri was nearly in that category with 15.9 percent of its 333 banks losing money.

In South Dakota, only two banks lost money, and in Wyoming only four lost money. Iowa, however, seemed to be the state with the broadest industry strength. With 354 banks, only 20 lost money in the first quarter, for 5.6 percent.

The states in the NorthWestern Financial Review coverage area are: Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming.