Community banks in Richmond, Va., hope the new year improves upon the disappointments of 1993.

Layoffs and business closures in Richmond, a city that boasts 12 Fortune 500 companies, have hurt the economy and crimped earnings at small banks.

Of the five small, independent banks within Richmond's city limits, not one had a return on average assets higher than 0.70% for the first six months of 1993, And the average return on assets for the group was a mere 0.42%. well below the national average of 1.22% for banks with assets of less than $1 billion.

Nevertheless, bankers and economic analysts say they are seeing signs that Richmond's economy is rebounding.

"Things are definitely improving," said Herbert E. Marth Jr., president and chief executive of Regency Bank, which caters to professionals and had $56 million of assets as of Sept. 30. "The help-wanted index is increasing, loan demand seems to be increasing, and people [businessmen] are willing to make plans for the future again."

"It is sort of like we have gone over the hump," added Tony Hall, director of research with the Metropolitan Economic Development Council, a nonprofit group funded by the city and surrounding counties.

|It's Still a Little Dicey'

Mr. Hall said more companies are inquiring about building in the area or opening new operations. But he added that it's too early to say the economy has worked out all of its kinks.

"It's still a little dicey," he said.

Some bankers agree.

"I'm not convinced the [Richmond] economy is on the rise yet," said William H. McFaddin, president and chief executive of First Virginia Bank-Colonial, the $378 million-asset community bank owned by First Virginia Banks Inc., a super community bank near Washington.

"You don't want to get too excited."

Some institutions have been able to thrive despite the economy. Mr. McFaddin's bank had a 1.69% ROA for the first six months of the year. And $442.9 million-asset Franklin Federal Savings and Loan Association earned $7.45 million after taxes for its fiscal year ended Sept. 30.

President and chief executive J.B. Bourne Jr. says the thrift has avoided commercial real estate lending and relied on its bread and butter - home loans.

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