Minn. community banks' health improves slightly

The financial performance of Minnesota's 349 community banks improved slightly in the third quarter of this year.

The banks reduced problem loans and saw improved loan growth, but profits remain historically low, the Federal Reserve Bank of Minneapolis reported Monday.

"Profitability has yet to return to its historical norms," said Ron Feldman, the top bank regulator at the Minneapolis Fed.

"For the Twin Cities in particular but for the state as a whole, it's kind of flat-lining where it is now," he said. "It is not on an upward trajectory, where it looks like it's going to cross the historically norm level, even get to it right away."

Profits from lending are down because of depressed interest rates and relatively low levels of lending, Feldman added.

Fewer banks are drawing extra scrutiny from the Fed because of concerns about their financial health, he noted. About a fifth of the state's community banks are now getting more intense looks from regulators, down from about one third three years ago.

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