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Factors influencing community bank performance in California


  • Gary C. Zimmerman


Community bank performance in California lagged well behind the industry and larger banks in the state during the first half of the 1990s. This paper identifies several factors that influenced the performance of these banks, which have less than $300 million in assets and typically operate in only one region of California, during the period from 1990 to 1994. The results suggest that regional conditions within California were an important factor in community bank performance. Management decisions, especially regarding loan portfolio concentration, also were a contributing factor. Community banks' increased reliance on real estate loans, and especially higher-risk commercial real estate and construction loans over the 1984 to 1994 period, played a significant role in lowering asset quality over the period studied.

Suggested Citation

  • Gary C. Zimmerman, 1996. "Factors influencing community bank performance in California," Economic Review, Federal Reserve Bank of San Francisco, pages 26-40.
  • Handle: RePEc:fip:fedfer:y:1996:p:26-40:n:1

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    References listed on IDEAS

    1. Carolyn Sherwood-Call, 1993. "Whither California?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue aug8.
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    Cited by:

    1. Magdalena Petrovska & Elena Mucheva Mihajlovska, 2013. "Measures of Financial Stability in Macedonia," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 2(3), pages 85-110.
    2. Dwyer, Sean & Richard, Orlando C. & Chadwick, Ken, 2003. "Gender diversity in management and firm performance: the influence of growth orientation and organizational culture," Journal of Business Research, Elsevier, vol. 56(12), pages 1009-1019, December.
    3. Stoyu I. Ivanov, 2014. "Performance Analysis Of Banks Headquartered In Hollywood Versus Silicon Valley," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 8(2), pages 33-43.
    4. Kathy Estes, 2014. "Diversification and Community Bank Performanceduringa Financial Crisis," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 3(4), pages 01-40, October.
    5. Yeager, Timothy J., 2004. "The demise of community banks? Local economic shocks are not to blame," Journal of Banking & Finance, Elsevier, vol. 28(9), pages 2135-2153, September.
    6. Gregory McKee & Albert Kagan, 2018. "Community bank structure an x-efficiency approach," Review of Quantitative Finance and Accounting, Springer, vol. 51(1), pages 19-41, July.
    7. Kevin Stiroh, 2004. "Do Community Banks Benefit from Diversification?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(2), pages 135-160, April.
    8. María Isabel Delgado-Piña & Óscar Rodríguez-Ruiz & Antonio Rodríguez-Duarte & Miguel Ángel Sastre-Castillo, 2020. "Gender Diversity in Spanish Banks: Trickle-Down and Productivity Effects," Sustainability, MDPI, Open Access Journal, vol. 12(5), pages 1-18, March.
    9. Andrew P. Meyer & Timothy J. Yeager, 2001. "Are small rural banks vulnerable to local economic downturns?," Review, Federal Reserve Bank of St. Louis, vol. 83(Mar), pages 25-38.
    10. Dean F. Amel & Robin A. Prager, 2016. "Community Bank Performance: How Important are Managers?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(2), pages 149-180, March.
    11. Mary C. Daly & John Krainer & Jose A. Lopez, 2003. "Does regional economic performance affect bank health? New analysis of an old question," Working Paper Series 2004-01, Federal Reserve Bank of San Francisco, revised 2003.
    12. Md.Thasinul Abedin & Md. Muzammel Dawan, 2016. "A Panel Data Analysis for Evaluating the Profitability of the Banking Sector in Bangladesh," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(2), pages 163-171.
    13. Bostic, Raphael W. & Robinson, Breck L., 2004. "The impact of CRA agreements on community banks," Journal of Banking & Finance, Elsevier, vol. 28(12), pages 3069-3095, December.
    14. Albert DePrince & William Ford & Pamela Morris, 2011. "Some causes of interstate differences in community bank performance," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 35(1), pages 22-40, January.
    15. Dean F. Amel & Robin A. Prager, 2014. "Community Bank Performance: How Important are Managers?," Finance and Economics Discussion Series 2014-26, Board of Governors of the Federal Reserve System (U.S.).
    16. Hussein A. Hassan Al-Tamimi & Husni Charif, 2011. "Multiple approaches in performance assessment of UAE commercial banks," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 4(1), pages 74-82, April.

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