The number of community banks losing money continues to rise even as the banking industry reports record profits.

Veribanc Inc., a Wakefield, Mass., bank research and rating agency, said in a report this week that 6.3% of the nation's more than 9,000 commercial banks suffered losses in the first quarter, up from 5.8% in the same period of 1999 and 4.3% in 1998. And nearly all of these 571 institutions are community banks, with less than $500 million of assets, said Warren Heller, research director at Veribanc. Mr. Heller said that about one-third of these banks are start-ups, which often take several years to become profitable. Indeed, the state with the most money-losing banks, Florida, has many new banks.

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