SAN FRANCISO - Credit quality concerns and a weakening economy will continue to dog the banking sector, according to a forward looking research report on the financial services industry from San Francisco-based First Security Van Kasper.

However, banking companies that are in good growth markets, and can service clients through expanding their menu of profitable products while maintaining costs and credit controls, should prosper, according to Eric Rothmann, an equity research analyst with Van Kasper.

Regional banks, driven by increased expansion of fee income and stock buyback programs, should show particular growth, Mr. Rothmann wrote. However, he added, "There is lower expectation for community banks, as their revenue streams are less fee-oriented than their larger counterparts."

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