WASHINGTON — A sharp rise in noninterest income — including gains on asset sales — helped banks and thrifts record their best quarterly earnings total in six years, the Federal Deposit Insurance Corp said Tuesday.

Institutions earned $37.6 billion in the third quarter, a 6.6% increase from a year earlier and their highest quarterly net income since the third quarter of 2006, the FDIC said in its Quarterly Banking Profile.

While banks continued to benefit from reduced expenses on bad loans, they also enjoyed their biggest year-over-year revenue growth in nearly three years. Net operating revenue of $169.6 billion was 3% higher than a year earlier, driven by a 7% rise in noninterest income to $63.7 billion. Revenue totals received a boost from asset-sale gains, which rose by $5 billion from a year earlier.

Over 57% of all institutions had higher earnings in the quarter than a year earlier, while just over 10% reported a net loss. The percentage of unprofitable institutions was the lowest in over five years.

"There continue to be signs that the recovery is encompassing more institutions," FDIC Chairman Martin Gruenberg said in remarks prepared for the QBP's release. "It is particularly encouraging to see smaller banks improving their earnings. The impact of the financial crisis and recession affected their performance later than that of larger banks, and their recovery began later as well."

The industry's total assets rose by 1.4% from the second quarter to $14.2 trillion, as institutions' loan balances grew for the fifth time in the last six quarters. Loans rose by 0.9% to $7.58 trillion. Commercial and industrial loans grew by 2.2% to $1.45 trillion. Increased volume of interest-earning assets helped institutions overcome a decline in net interest margins. Net interest income rose by 0.7% from a year earlier, while the average net interest margin fell 13 basis points to 3.43%.

Despite the revenue performance, institutions still were able to derive income simply by provisioning less for losses. Loan-loss provisions declined for the 12th straight quarter, falling by 20.6% from a year earlier to $14.8 billion.

Meanwhile, the FDIC reported continued progress in rebuilding the Deposit Insurance Fund. The fund's ratio of reserves to insured deposits increased by 3 basis points to 0.35%. Institutions on the agency's "Problem List" declined by 38 to a total of 694, and assets of problem institutions fell by 7% to $262.2 billion.

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