The perfomance of community banks in the Boston area reflects the asset problems the region is still suffering.

According to data from Sheshunoff Information Services Inc., only one of the region's top 30 small banks is returning more than 1% on assets.

"They still have not come back to their peak performace levels due to the lingering effects of problem assets," says Gerard Cassidy, senior vice president of equity research at Tucker Anthony, Portland, Maine.

"The small banks are working through their problems, and doing a good job, but they're just not as fast as Fleet or Shawmut because they don't have the resources."

Vanishing Act

Many of them disappeared in consolidations and were not replaced by new banks. "We had a de novo boom in the mid-1980s, and many that survived are struggling," Mr. Cassidy said. One de novo that is doing well is Lowell's Enterprise Bank and Trust. Its chief executive, George Duncan, says net earnings have grown 70% over the last four years.

He also believes there are many opportunities available to small banks because of the consolidations.

"The traditional business of small commercial loans is very flat, but we're not standing still. We started a trust department last year, and it's already up to $90 million. It's very gratifying."

Jim Dwinell, chief executive of Cambridge Bank and Trust, says about 30% of the area's small banks and thrifts have disappeared over the last four years.

But he says his feeling is that "there'll always be a niche for small banks in Boston."

One particularly notable succes story is $326 million-asset East Boston Savings Bank, which actually managed to drive away Bank of Boston.

"They said in the paper that they couldn't match our tradition," said chief executive Robert F. Verdonck.

His institution, seeing an influx of Hispanics and, to a lesser extent, Vietnamese into his largely Italian service area "is still reaching out to the community, because we've hired staff who are fluent in Spanish and Portuguese and Vietnamese as well as Italian. We're holding seminars for first-time homebuyers in those languages."

"We've done $23 million in loans the first six months of the year, and that's $3 million ahead of last year's pace. We're also opening a new branch in August, and I think that's unusual for small banks up here."

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