Investors spooked by recent market gyrations will turn to community banks as a safe haven, an analyst predicted.

Burned by speculation in hedge funds and fearful of a slumping economy, Wall Street is coming back to retail banking, a stronghold of community banks, said Kevin T. Timmons, an analyst at First Albany Corp., Albany, N.Y.

"Ultimately, I believe this trend will reflect positively in community bank stocks," Mr. Timmons told a crowd gathered here for the New York Bankers Association's annual retail conference.

Though criticized for "nondramatic growth" compared with credit cards or speculative lending, the retail side of the business tends not to dry up or sour as quickly in a downturn, he said.

"Finally analysts and investment managers are seeing that retail banking has its place," Mr. Timmons said.

Bankers here were generally pleased with Mr. Timmons' prediction. However, a few snickered at the thought of analysts clamoring for stocks of conservative-minded companies.

"It will be interesting to see these same people who came into my office a few years ago telling me to spread out, coming back to me because I didn't," said one Upstate New York banker who asked not to be identified.

Collyn Bement, an analyst at Ferris, Baker, Watts in Baltimore, agreed that recent events will make everyone more cautious. But that does not mean investors will let earnings growth come to a halt.

"The dynamics have changed so dramatically in this industry, I don't think people are going to accept slow-growth numbers," she said.

And Mr. Timmons said he still has long-term concerns about retail banking. He said the question of whether there is value in adding branches has still not been answered. And it remains to be seen whether the industry's spending on technology will pay off down the road.

For the time being, though, retail is a good place to be.

"Customers aren't going to run away from the local bank because of some global crisis," he said. "There will still be business out there."

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