Lynn M. Barry examines the health and recent performance of banks in the Eighth District. An assessment of District bank performance with their national counterparts provides some useful information on the financial condition, compliance with regulations, and operating soundness of the banking industry. Barry concludes that, in general, Eighth District banks outperformed their peers across the nation in 1987; however, bank performance varied greatly according to asset size. The financial performance of banks in the Eighth District, like that in the nation, was poor for the largest banks but improved for the smaller banks. Asset quality was once again the driving force behind earnings performance. Profits at the largest District banks were adversely affected by above-normal loan loss provisions related to Latin debt and problem loan levels that, while moderating, remained high by historical standards. Some positive gains were made in 1987 by the smaller District banks, who posted higher earnings as loan loss provisions and loan charge offs declined. Asset quality improved considerably at small, agricultural banks as nonperforming loans decreased, loan losses fell substantially, and capital increased.