An uptick in revenue and lower loss provisions helped to drive banks third quarter profits to a six year high of $37.6 billion dollars, the highest total for quarterly profits since the third quarter of 2006.
Behind the improved results, a welcome increase in operating revenue. In its Quarterly Banking Profile, the FDIC said net operating revenue or net interest income plus total non-interest income, rose by $4.9 billion dollars.
The three percent increase is the largest year-over-year increase in quarterly revenue in almost three years. It is also a marked a change from previous quarters when the FDIC noted revenue growth was "sluggish".
Still, the FDIC cautioned against reading too much into the increase in revenue.
In a statement it said, "..the largest contribution to the increase in revenue came from gains in asset sales, particularly loan sales. This underscores the continuing weakness in other revenue sources."
The third quarter report is the latest to show the banking industry continues to gradually recover from the financial crisis. (Read More: Inside America's Economic Crisis)
In the third quarter loan growth improved for the fifth time in the last six quarters, though the increase of $65 billion was below the second quarter's increase of $102 billion. The FDIC also said a majority of banks reported an improvement in earnings from last year's third quarter, while those reporting negative net income fell to the lowest level since the second quarter of 2007.
Underscoring the industry's improved health, only twelve insured banks failed in the third quarter, the smallest quarterly number since the fourth quarter of 2007. The FDIC said asset quality also continued to improve among the nation's banks.
The FDIC points out there are still some big risks facing the banking industry, most notably the U.S fiscal problems and economic woes overseas. (Read More: Fiscal Cliff, Complete Coverage)
—By CNBC's Mary Thompson; Follow her on Twitter: MThompsonCNBC