The headlines about Chase Manhattan and Citi-corp make it easy to believe that most of America's banks are in serious trouble. But they aren't. In fact, small banks are thriving, reports Changing Times, the Kiplinger magazine.

According to the Federal Deposit Insurance Corp., the great majority of the 9,400 banks with assets of less than $100 million are profitable. Small banks have the lowest ratio of bad loans. They possess the most capital as a percentage of assets. They focus on basic services and well-screened personal and small-business loans, while big banks take more chances because so many large businesses can obtain cheaper financing by issuing commercial paper.The small-is-tall profile doesn't apply everywhere, says FDIC research analyst Ross Waldrop. The Oil Patch woes of the mid-1980s drowned many small banks in Texas. Grain Belt banks that lent to overextended farmers got harvested, too.

Yet, contends Waldrop, "You wouldn't expect smalls to be as badly off as the larger banks, all things being equal, because they tend not to be as exposed to the main problem areas, like commercial real estate."

Small bankers fear that too much tinkering with current bank laws could upset their comfortable life. But it appears they will have enough clout with governors and members of Congress to block nationwide branching and keep deposit insurance at $100,000.