According to the FDIC, the banking industry earned $21.6 billion in the second quarter of 2010, a vast improvement from the $4.4 billion loss in the same quarter of 2009 and the highest level since 2007. However, with the good news comes the bad. The FDIC said there are now 829 troubled banks on the confidential watch list, an increase of 54 banks since the first quarter of 2010. Also troubling is the 1.4% drop in lending activity quarter over quarter, a sign that banks are still unwilling to lend money in this economy.
Despite the discouraging lending news, bank stocks and bank ETFs are rallying today. The SPDR KBW Bank ETF (AMEX:KBE) is higher by 1.2% on Tuesday, while the iShares Dow Jones US Regional Bank Index Fund (AMEX:IAT) is higher by 1.3%. Components of these ETFs faring well today include Citigroup (NYSE:C), US Bancorp (NYSE:USB) and JP Morgan (NYSE:JPM).
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