National News

Second quarter earnings much stronger than a year ago.Banks and thrifts reported combined income of $21.6 billion in the second quarter, compared to a $4.4 billion loss in the second quarter of 2009, the FDIC reported. Average return on assets of all banks was 0.65 percent compared to negative 0.13 percent a year ago. Earnings improved primarily because of reduction in provisioning for loan losses. While quarterly provisions remained high at $40.3 billion, they were $27.1 billion lower than a year earlier. The FDIC noted signs of improvement in asset-quality trends as the amount of loans and leases that were noncurrent fell for the first time since the first quarter of 2006. Insured banks and thrifts charged off $49 billion in uncollectible loans during the quarter, down $214 million from a year earlier. Total loans and leases declined by $107.5 billion (1.4 percent) during the quarter. The number of institutions on the FDIC's problem list rose to 829 from 775. .FFIEC confirms decline in business lending.Small business lending was down significantly in 2009 compared with 2008, according to information from 941 lenders collected through the Community Reinvestment Act. The Federal Financial Institutions Examinations Council reported that 6.2 million small business loans worth $206 billion were made, and about 150,000 small farm loans worth $11.7 billion were originated or purchased in 2009. The number of small business loans reported in 2009 decreased by 42 percent from the number in 2008, while the dollar amount declined by 30 percent. About 92 percent of the small business loans and about 77 percent of the small farm loans were for amounts of less than $100,000. .About half opt into overdraft protection programs.Results from a survey sponsored by the American Bankers Association show that 46 percent of bank customers say they have opted, or plan to opt, into their bank's overdraft protection program. The telephone survey involved 1,000 adults, contacted in mid-August just as new federal regulations went into effect requiring banks to get permission from customers before paying debit card overdrafts and charging a fee. Survey respondents were informed that banks can no longer charge a fee for covering overdrafts when they use a debit card unless the customer tells the bank in advance that they want overdraft protection and are willing to pay a fee for the service. Forty-nine percent of bank customers said they are not opting in for overdraft coverage and 5 percent of bank customers did not know or were unsure of their decision. .Bankers cautious about economic outlook.Bankers in the Midwest are uncertain about an economic recovery, as 43 percent responded in the latest Main Street Rural Index survey that they expect the economy to dip back into recession in 2011. Only 26 percent indicated that a 2011 recession was unlikely or very unlikely. The monthly survey of rural bankers in 10 Midwest states is conducted by Creighton University, Omaha, Neb. For a sixth straight month, all bank indicators in the survey were above growth neutral. The loan-volumes index increased to 54.2 from 53.1 in July. (Anything above 50 is positive.) For August, the checking-deposit index improved to 59.1 from July's 54.6. The August hiring index increased to a still weak 45.9 from 45.4 in July. The economic confidence index, which reflects expectations for the economy six months out, however, slipped to 46.0 from 52.4 in July and 56.1 in June.