Bank sign © John Foxx, Stockbyte, Getty Images

These days, the banking world is full of news, good and bad. But that news is better in some states than in others.

Nationally, the good news is that the banking system is more stable now than it has been in recent years. According to the Federal Deposit Insurance Corp., 51 banks failed in 2012. That's less than 1% of all FDIC-insured institutions, and those 51 failures represent a significant improvement from 92 failures in 2011 and 157 in 2010.

The bad news is that savings account rates remain low, and cost-cutting has caused customer service to suffer at some banks. But how acutely you feel these problems may depend on where you live.

Mapping the banking landscape

For better or worse, banking conditions are largely a function of where you look. For example, 33 states had no banks fail in 2012, while Georgia had 10 -- nearly one-fifth of the national total.

To see how banking conditions stack up from state to state, has rated the 10 best and 10 worst states for banking based on the following factors:

  • Customer satisfaction. This is based on Toluna survey data exclusive to
  • Stability. MoneyRates compared the number of 2012 bank failures in each state with the total banks based in that state.
  • Availability of high interest rates. Bonus points were awarded to states that are home to branches of top-finishing institutions in the America's Best Rates survey.
  • Size of the banking community. Though this was used only as a tie-breaker, the premise is that a larger banking community means more choices for consumers.

The 10 best states for banking

Based on the criteria above, here are the 10 best states for banking:

  1. Ohio. Ohio residents gave their banks the fifth-highest average score for customer satisfaction. In addition, no Ohio-based banks failed in 2012, so Ohio also scored well for stability. As a bonus, Nationwide Bank, which made the top 10 for money-market rates in the most recent America's Best Rates survey, is based in the state.
  2. Kentucky. Kentucky's average satisfaction score ranked just behind Ohio's, and it also had no bank failures in 2012.
  3. Louisiana. Louisiana finished with the same overall score as Kentucky; the tie-breaker in their rankings was the number of banks based in the state.
  4. Montana. Montana scored very high on customer satisfaction, and it also experienced no bank failures. But with relatively few banks based in the state, the latter did not weigh as heavily in the final score.
  5. West Virginia. A very similar story to Montana, with high customer satisfaction and no bank failures, albeit with a relatively small banking community.
  6. New York. Banks in New York received an above-average score in satisfaction, and the state saw no bank failures in 2012 out of the 175 institutions based there. New York is also home to more than 250 offices of Capital One Bank, which made the top 10 for savings-account rates in the latest America's Best Rates survey.
  7. Virginia. In addition to scoring well for customer satisfaction and having no failures in 2012, Virginia is also home to two of the top banks in the America's Best Rates Survey: Capital One and Acacia Federal Savings Bank.
  8. North Dakota. North Dakota finished in a virtual tie with Virginia, with Virginia winning the tie-breaker due to its larger banking community.
  9. Colorado. In addition to having no bank failures in 2012 and earning an above-average score for customer satisfaction, Colorado is home to Mile High Banks, a regular on the America's Best Rates top-10 lists.
  10. Texas. Texas scored slightly below-average on the satisfaction survey, but gets top marks for stability because it had no failures in 2012, despite being home to more than 500 banks. Texas residents also benefit from having access to branches of Capital One, whose rates often place it in the America's Best Rates top 10.