A Strong Performance by District Community Banks in 1998

C banks in Tenth District states had another good year in 1998. They continued to benefit from solid growth in the district economy. And in contrast to some large banks in other parts of the country, they were largely unaffected by the turmoil in financial markets in the latter part of the year. To be sure, average profitability would have edged down in 1998 were it not for the decision by a substantial number of banks to change their tax status. Even accounting for this effect, however, district community banks remained highly profitable. Furthermore, overall loan quality showed no sign of deterioration, and loan growth and deposit growth were both healthy. Community banks in the district also compared favorably with their peers in the rest of the nation in all performance measures.