following, the financial crisis. community banks that thrived varied in asset size – from below $ 50 million, to as large as $ 10 billion in assets. geography, though, did matter to a degree. by definition, community banks are not geographically diversified, so those located in states that were most severely affected by the financial crisis and the recession faced the largest challenges. however, there are examples of banks that performed well in michigan despite the severe economic problems that michigan experienced ; and there are examples of banks that floundered in texas despite the solid economic performance that texas experienced. here in the second district, while we had relatively modest declines in real estate values on average, some local areas saw house price declines as serious as in the worst hit states such as arizona, california, florida and nevada. recent research has identified several characteristics common to community banks that prospered during and following the financial crisis. 4 first, thriving banks exercised a comparatively conservative growth strategy during good times, with a management culture that focused on long - term franchise value and not short - term profitability. successful banks had lower concentrations in commercial real estate lending generally ; and much lower concentrations in construction and land development loans specifically. while profitable during the boom, these loan categories suffered the greatest losses as real estate values declined and the recession set in. as the boom progressed, the more conservative underwriting standards of successful banks led to declines in their market shares as other banks competed for business by relaxing their standards. however, successful banks were able to gain back this market share and then some after the bust due to the relative strength of their balance sheets. the successful community banks were patient and conservative regarding investments – desiring reasonable, sustainable returns, not necessarily “ spectacular ” returns. it seems that their managers devised their business plans heeding friar lawrence ’ s advice to romeo as he devised his courtship plan for juliet : “ wisely and slow ; they stumble that run fast. ” other noteworthy characteristics also identified in this research were an engaged board of directors, talented staff who were familiar with the community, sound senior management oversight and thorough due diligence before offering a new product or service. the studies further cited successful community banks as having a strong and localized customer service focus – that is, avoiding the temptation to expand into new, less familiar areas and markets – and high community visibility, with staff members heavily involved in community activities, which in turn, created customer relationships built on trust. 5 so what did we learn from the experience of

york city in the 1970s, the fiscal adjustment will be 2 / 3 bis central bankers'speeches painful, and many important decisions will undoubtedly be unpopular. while the pain has been — and will continue to be — widely shared, it is also critical to seek ways to ensure that the benefits from the restoration of growth are shared broadly. how exactly to make this work is an open question that i am certain the oversight board and its stakeholders will consider carefully over the coming months. the new york fed will continue to help in the best ways we can — by providing independent research and analysis, and by leveraging our convening authority to bring together stakeholders to share expertise, explore opportunities, and provide information to those who need it most. we recently held two events on the island — one for small business owners impacted by the storm and another for credit unions. we plan to do more in the months and years ahead, and i look forward to gaining a better understanding of conditions on the ground and how we can help when i travel to puerto rico and the u. s. virgin islands next month. now, i ’ d like to turn it over to jason bram, who will talk more about what we are starting to see in terms of the economic impact of the storms. 1 jaison abel, jason bram, gerard dages, richard deitz, suzanne elio, jack gutt, and andrew haughwout assisted in preparing these remarks. 2 see, for example, our report on the competitiveness of puerto rico ’ s economy, june 2012, and an update on the competitiveness of puerto rico ’ s economy, july 2014. 3 / 3 bis central bankers'speeches