WASHINGTON - November 22, 2011 - Bank earnings rose over the summer to their highest level in more than four years, while the number of troubled banks fell for the second straight quarter, federal regulators reported Tuesday.

The Federal Deposit Insurance Corp. said the banking industry earned $35.3 billion in the third quarter. That's up from $23.8 billion in the same period last year. More than 60% of banks reported improved earnings.

The FDIC also said there were 844 banks on its confidential "problem" list in the quarter, or roughly 11.5% of all federally insured banks. That was down from 865 in the April-June period, which was the first quarter in five years to show a decline.

Banks with assets exceeding $10 billion drove the bulk of the earnings growth. They made up 1.4% of all banks but accounted for about $29.8 billion of the industry's earnings in the third quarter.

Those are the largest banks, such as Bank of America Corp., Citigroup, Inc., JPMorgan Chase & Co., and Wells Fargo & Co. Most of these banks have recovered with help from federal bailout money and record low borrowing rates.

FDIC officials say the bulk of the gains were because banks, especially credit card companies, set aside less money for potential losses. In the July-September period, banks put aside $18.6 billion for that purpose. That's the lowest amount in four years.