Additional Observations from the FDIC Quarterly Banking Profiles: One measure of the health of the banking system is employment, which peaked at 2,214,621 employees at the end of 2007. At the end of 2010 employment was 2,042,030, down 7.8%. At mid-year 2012 employment was up to 2,108,200 but still down 4.8% from the end of 2007. Total Real Estate Loans are still down 16.2% since the end of 2007 with Residential Mortgages down 16.5% and Construction & Development loans down 65.4%. These are signs that tight credit conditions remain for home buyers and that banks are reluctant to lend to home builders and community developers. Declining Reserves for Losses have boosted bank earnings over the past several quarters, but reserves remain 72.4% higher than at the end of 2007 at $176.5 billion. In addition the write-off of Noncurrent Loans has contributed to earnings and this problem is still 165.6% above 2007 levels at $292.2 billion. This is a warning that the banking system still has significant additional de-leveraging to do. Finally, the banking system still has $41.8 billion in Other Real Estate Owned, up 244.2% since 2007. This represents only part of the hidden inventory of unsold existing homes. I will be updating my thoughts and profiles for the home builders tomorrow. The above table shows data from www.ValuEngine.com covering eleven stocks in the BKX.