As the major equity markets are starting to build up to 10-month highs, some have even surpassed them, and certain ETFs are reflecting the success. Billy Fisher for Investopedia noted some of the top ETFs, and we’ve thrown in a few of the ones we’ve noticed, as well.

Sizable gains, a payback to the government and better-than-anticipated earnings are signaling a bottom may have been touched upon within the financial sector. There’s still a need for caution, though: financial ETFs have gained more than 100% off the March 9 market low, but the Federal Deposit Insurance Corporation (FDIC) reported that banks lost $3.7 billion in the second quarter in bad loans made to homebuilders, commercial real estate developers and small- and mid-size businesses,

• PowerShares FTSE RAFI Financials (PRFF): up 60% in the last three months

It’s not just big banks that have been a part of the rally. Regional banks have participated, too. IAT is up 16% for the past four weeks, but tread lightly- Rochadale Securities analyst Richard Bove said that an additional 150-200 banks could go under during the current banking crisis.

• iShares Dow Jones U.S. Regional Banks (IAT): up 12.9% in the last three months

VNQ had fallen 40% last year, but has recovered around 20%. Companies in this space will soon be facing debt payments resetting at higher rates, but it appears that most of the damage has already been taken into account by the market.

• Vanguard REIT Index (VNQ): up 22.5% in the last three months

The insurance sector is showing some signs of recovery. Layoffs within the sector are slowing down. In August, 8,000 layoffs are predicted – the smallest loss within the sector since July 2008, reports Insurance Working News.

• SPDR KBW Insurance ETF (KIE): up 27% in the last three months

Turkey’s market index has been driven up by the help of the banking sector, which make up around 40% of the market. Bank earnings have been bolstered by a series of rate cuts that has reduced interest on customers’ deposits as lending rates remain high. The Turkish economy shrank 13.8% in the first quarter year-over-year, as tax revenue receded because of a 23% fall in industrial production and rising unemployment.

• iShares MSCI Turkey (TUR): up 40% in the last three months

For more stories about banks, REITs and Turkey, visit the financial, Turkey and REITs categories.

The fact is that thousands of banks in the United States are doing fine, and analytic indicators like capital-to-asset ratio or liabilities-to-asset ratio paint a healthier picture for such banks, writes Martha C. White for The Big Money. Banks that held their ground were usually those that stuck to good ol’ fashioned lending.

It is the smaller regional or community banks that are showing good results since they never got entangled with derivatives trading that brought on this whole mortgage debacle.

According to The Big Money, several banks were noted for their survival through the current financial ordeal.

1. BB&T (BBT) profited enough to shell out 47 cents per share. The $3.1 billion TARP money it received may also put it in a position to buy up its weaker and smaller competitor banks.
2. Beal Bank ignored the credit boom and halted loans in the secondary market. As a result, it showed a 8.1% on return to assets ration in 2008.
3. Hudson City Bancorp’s (HCBK) percentage of nonperforming loans only edged up less than 1% as of last month, quite below the industry standard. This bank also steered away from derivatives such as credit-default swaps.
4. Signature Bank (SBNY) raised $148 million in a public offering. Now, it is showing strength and has also given back its $120 million in TARP money.
5. US Bancorp (USB) is known for its conservative lending and was in an area with less speculative real estate bubbles. Back in November, the Office of Thrift Supervision sold the deposits and assets of Downey Savings & Loans to US Bancorp in a show of confidence.

• SPDR KBW Regional Banking (KRE): down 21.1% year-to-date; Signature Bank is 3.9%

• iShares Dow Jones U.S. Regional Banks (IAT): down 23.6% year-to-date; BB&T is 6.7%, Hudson City Bancorp is 4.1%; US Bancorp is 18%

• Regional Bank HOLDRs (RKH): down 19% year-to-date; BB&T is 3.7%, US Bancorp is 18.4%
  

Max Chen contrtibuted to this article.

The recent Public/Private Investment Partnership (PPIP) along with other monetary and fiscal initiatives should allow banks to unload troubled assets and patch up their balance sheets, writes Morgan Keegan for Barron’s.

The program is a boon for regional banks, as it should get rid of troubled loans. Nevertheless, regional banks may record more write-downs on troubled real estate loans or other real estate owned so that they may sell these assets under the PPIP.

These initiatives could also signal the beginning of private capital finding its way into financial institutions, and help banks pay back capital borrowed under Troubled Asset Relief Program (TARP).

Mark-to-market accounting and the reinstatement of the uptick rule may keep the rally going in the banking sector. Bank stocks have seen their stocks go up and it is beginning to cool down with investors going through the time-honored tradition of profit-taking. But mortgage “cram downs” and stress tests are still an overhang on bank stock valuations.

• KBW Regional Bank (KRE): down 29.9% year-to-date

• iShares Dow Jones U.S. Regional Banks (IAT): down 29.2% year-to-date

Max Chen contributed to this article.

The recession has provided a forum for companies playing out a Darwinistic-styled scenario of the most fit. Companies have the chance to obtain greater efficiency and to take away market share from the incompetent, reports Jim Jubak for MSN Money.

Investors can see the early indications of efficiencies that some companies have implemented so as to come out of this recession better of than competitors.

• Dividends. While most companies are cutting dividends, a few are ignoring the trend. The board of directors at Monsanto (MON) have voted to increase its company’s dividends by 10%. It has also reported earnings higher than forecasts and has raised its forecast for the rest of the year. The ETF Market Vectors Agribusiness (MOO) is up 3.1% in the last month with holdings of 9.4% in MON.
• Hiring. As more companys are laying off workers, Teva Pharmaceuticals (TEVA) has been hiring an additional 100 workers for its Jerusalem facility. The ETF iShares MSCI Israel Index (EIS) is up 4.4% in the last month with holdings of 24.4% in TEVA.
• Stable capital investments. Savvy companies are looking at the long-term by investing during a recession. Intel (INTC) is investing in personal computers for every slowdown and now is no different. The ETF Technology Select Sector SPDR (XLK) is up 0.9% in the last month with holdings of 4.8% in INTC. BNSF Railway (BNI) has announced that it would spend $2.7 billion to upgrade tracks, signal systems and freight cars, and to buy 350 more locomotives. The ETF iShares Dow Jones Transportation Index (IYT) is down 12.1% in the last month with holdings of 12.1% in BNI.
• Acquiring. US Bancorp (USB) was busy buying up Downey Savings and Loans, and PFF Bank and Trust back in November. The ETF iShares Dow Jones U.S. Regional Banks (IAT) is down 29.5% in the last month with holdings of 20.1% in USB.
• Fewer future competitors. Ericsson (ERICY) CEO Carl-Henric Svanberg plans on picking up share from Nortel and Motorola. Because its competitors would be weakened, Ericsson could add to its 40% share in the sector. The ETF iShares MSCI Sweden (EWD) down 7.3% with holdings of 14.3% in ERICY.

Despite having injected billions into them, the Treasury Department has been so far unable to make banks lend, leaving most U.S. citizens with a frozen credit market that is being held up with taxpayer money. James Sterngold for Bloomberg says that while most of the inter-bank lending rates have dropped, lending remains tough to come by and rates are still unfavorably high.

Many are pondering whether banks should have their access to taxpayer money taken away if they do not increase their lending risk. It is up to the government to force this regulation because the public’s well-being is the only road to private good.

There’s also a question of how much demand is currently in the market for loans – consumers just aren’t buying or asking for loans for anything. In some ways, this is a good thing, because we should have been saving and limiting our exposure to debt. But in other ways, consumer spending is two-thirds of the economy, and until that comes back, we may remain stuck.

TARP has since allocated $250 billion toward non- voting preferred shares of banks paying a 5% annual dividend, as well as warrants convertible into equity. The investments range from $25 billion each in J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C), Saigon National Bank, and American International Group Inc. (AIG).

• Financial Select Sector SPDR (XLF): down 1.4% for the last month; JP Morgan 11.12%; Citigroup 4.30%

• iShares Dow Jones U.S. Regional Banks Index Fund (IAT): down 8% for the last month

Shares for a number of the banks rose about 4% midday, the Associated Press reports. However, the it wasn’t enough to boost the sector’s ETFs today.

The government’s bailout package aims to give financial institutions transparency into the full extend of bad credit banks are holding.

That would, in turn, give lenders confidence to do business with the sector and thus unthaw the frozen credit markets.

The regional banking sector hasn’t been as hard-hit by the financial crisis until earlier this week. Some experts say that these banks could need a merger partner in order to survive the meltdown of our system. Many of these banks are so small, they don’t pose a true threat to our economy. If trouble were to strike, the Federal Deposit Insurance Corp. (FDIC) could seize and sell them off.

• KBW Regional Banking (KRE), down 4.7% year-to-date
• iShares Dow Jones U.S. Regional Banks (IAT), down 10.2% year-to-date

Until recently, regional bank exchange traded funds (ETFs) were the stalwarts of this whole crisis, resisting the downward motion of the general markets.

But now investors fear that these banks are going to get steamrolled right along with the general global credit crisis, report Jonathan Spicer and Juan Lagorio for Reuters. Many wondered which banks were going to need a merger partner in order to survive the meltdown of our financial system.

These smaller banks don’t pose a risk to the entire financial system. Many of them are small enough that the Federal Deposit Insurance Corp (FDIC) could seize them and sell them off.

While the big banks were indeed hit today, including Bank of America (BAC) and JPMorgan Chase (JPM), regional banks also felt the effects.

As a reminder, the Federal Deposit Insurance Corporation (FDIC) insures up to $100,000 per depositor (not per account, but per individual). The $100,000 amount applies to all depositors of an insured bank, except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

Since these funds are still just near or above their 200-day moving averages, we believe that when the market begins to turn around, they’ll show a quick, strong recovery thanks to the nimbleness of their underlying holdings.

The ETFs affected include:

• KBW Regional Bank (KRE): down 5.1% year-to-date; down 10.1% in the last week; up 31.4% in the last three months
• iShares Dow Jones U.S. Regional Banks (IAT): down 31.3% year-to-date; down 12.7% in the last week; up 16.5% in the last three months

It was his second day of testimony about the state of the ailing U.S. economy. It was less downbeat than yesterday’s testimony. Bernanke said the two mortgage giants, which hold or guarantee more than $5 trillion in mortgages, were adequately capitalized, reports Jeannine Aversa for the Associated Press.

The rescue plan seemed to rattle nerves, but the intent was to signal to investors around the world that the government is prepared to do whatever it takes to keep the credit crisis from engulfing the financial markets.

Shares for Wells Fargo (WFC) delivered a shot of good news today, reporting a profit drop that was not as big as had been expected. Its quarterly dividend was up by 10%, as well, reports Madlen Read for the Associated Press. Many other financial institutions are slashing their dividends in order to preserve capital.

The San Francisco-based bank has weathered the storm better than its rivals, partially because it didn’t have as much exposure to subprime mortgages.

Bernanke’s assurances and Wells Fargo’s numbers combined to make unleveraged financial ETFs the superstars in today’s markets, including:

• Regional Bank HOLDRs (RKH): down 42.3% year-to-date; Wells Fargo is 13.7%
• KBW Bank (KBE): down 43.7% year-to-date; Wells Fargo is 9.3%
• iShares Dow Jones U.S. Regional Banks (IAT): down 39.3% year-to-date
• KBW Regional Bank (KRE): down 38.1% year-to-date
• Rydex S&P Equal Weight Financial (RYF): down 37.7% year-to-date; Wells Fargo is 13.7%

The plan, in short, is meant to show that the government is ready to take any steps necessary to prevent the credit crisis from taking over the financial markets. The Federal Reserve said it would lend money to Fannie and Freddie if needed, reports Jeannine Aversa for the Associated Press. Last week, Treasury Secretary Henry Paulson said no to plans of a bailout, but the market’s reaction might have changed that thinking.

Markets around the world reacted in differing ways to the plan. Most Asian markets gained, then lost those gains. European markets were up, and major indexes in China and the Philippines were higher, too. One analyst says the government’s commitment to Fannie and Freddie is a confidence boost for global markets, says Louise Watt for the Associated Press.

Even with renewed commitment from the government, though, analysts are still predicting that more banks are going to fail. While the nation’s banks are in less danger than they were in the late 1980s and early 1990s after the savings and loan crisis, it’s still not pretty.

Our current troubles are growing so rapidly that 150 out of 7,500 small and mid-size banks around the country could fail over the next 12 to 18 months, reports Louise Story for the New York Times.

Brett Steenbarger for Seeking Alpha wonders how many other failures are out there, too. He took a look at the year-to-date performance of every publicly traded bank and savings and loan institution and found that those doing the best in their sector appear to have conservative lending practices, no subprime residential loans and no major problem loans to over extended real estate developers. Granted, none of these banks were really in “hot” real estate markets.

Among the financial ETFs trading lower today:

• iShares Dow Jones U.S. Regional Banks (IAT), down 31.2% year-to-date
• KBW Regional Banking (KRE), down 30.9% year-to-date
• KBW Bank (KBE), down 36.5% year-to-date
• PowerShares Dynamic Banking (PJB), down 14% year-to-date