The number of bank and savings institution failures declined in 1990 for the first time in seven years, but the foundering economy may prevent any sustained improvement.

In 1990, 169 commercial and savings banks failed, including one bank that remained open only with an infusion of government cash, the Federal Deposit Insurance Corp. said yesterday.

Additionally, 211 savings and loans went insolvent, the Resolution Trust Corp., the agency created to oversee the rescue of the savings and loan industry, said. That included 207 S&Ls seized by the government and put into conservatorship and four kept open with taxpayer money.

The failure total in 1990 -- 380 -- represents a 29 percent drop from 535 in 1989, a post-Depression high. It marks the first decline since 1983, when 84 institutions failed in all, compared with 105 the previous year.

Analysts, however, are drawing no encouragement from the improvement. The sharp deterioration in real estate values, particularly in New England and New York and New Jersey, have yet to make their full impact on the failure rate of financial institutions, they said. The effects of the economic slowdown since the summer on financial institutions also have yet to be gauged.

Financial institutions analyst Bert Ely of Alexandria said that "1990 in a way was really a lull year. Every indication is that in 1991 we're going to see a significant increase."

The geographic pattern of failures shows they reflect old problems from the mid-1980s in oil-producing states in the Southwest rather than new problems in the Northeastern states where real estate markets are weakest, he said.

Although 1990's failures were spread among 38 states and the District of Columbia and Puerto Rico, more than a third -- 140 -- were in Texas.

Ten other states had 10 or more failures. They were California and Florida, 21 each; Illinois, 18; Louisiana, 17; New Jersey, 14; Oklahoma, 13; New York, 12; Massachusetts and Colorado, 11, and Mississippi, 10.

"What's going to be interesting in 1991 is to see what will happen in New England. That's where the next wave of problems is," Ely said.

According to economist Robert Litan of the Brookings Institution, the most significant difference between bank problems in the 1980s and bank problems of the 1990s is that this time some of the nation's largest financial institutions are under stress.

"Through the 1980s, the problems were largely concentrated in small banks, with a few isolated exceptions," he said. "Today, the weakness is concentrated in large banks."

That is reflected in FDIC Chairman L. William Seidman's forecast that 180 banks will fail in 1991. Although that is only 10 more than in 1990, the agency says assets held by the insolvent institutions will total $70 billion, up from around $16 billion in 1990.

The S&Ls toppling into insolvency in 1990 had $117 billion in assets. Meanwhile, according to the Office of Thrift Supervision, an additional 184 institutions, with around $150 billion in assets, are all but certain to fail in 1991 and 356 S&Ls with $190 billion in assets are in danger of failing.

If all of the endangered S&Ls fold, only about 2,000 privately managed S&Ls would be left operating. If Seidman's bank failure prediction proves accurate, the number of commercial and savings banks operating would be reduced to about 12,700.

The big danger, according to economists, is that regulators will hesitate to seize failing institutions and sell them off to new investors. Seidman said the FDIC has enough money to handle failures this year, but the insurance fund would begin 1992 dangerously diminished, to about $4 billion.