U.S. banks posted a 13% jump in profit in the third quarter while the number of “problem banks” fell to the lowest level in eight years.

In its latest Quarterly Banking Profile, the Federal Deposit Insurance said federally-insured commercial banks and savings institutions reported aggregate net income of $45.6 billion in the third quarter, up $5.2 billion from a year earlier.

The increase reflected a $10 billion (9.2%) gain in net interest income and a $1.2 billion (1.9%) gain in noninterest income as trading revenue improved at large banks. More than 60% of all banks reported year-over-year increases in quarterly earnings, while only 4.6% were unprofitable for the quarter, down from 5.2% the previous year.

“The banking industry reported another positive quarter,” FDIC Chairman Martin Gruenberg said in a news release. “Revenue and net income were up from a year ago, loan balances increased, asset quality improved, and the number of unprofitable and ‘problem banks’ continued to fall.”

Gruenberg cautioned, however, that “the industry faces continued challenges. The persistent, low-rate environment remains an issue. And banks must position themselves for rising interest rates going forward.”

“Current oil and gas prices continue to put pressure on borrowers that depend on the energy sector,” he added. “This stress has contributed to modest increases in noncurrent loans and loan charge-offs in energy-dependent regions.”

Community banks had another strong quarter, with net income rising $593 million (11.8%) and net operating revenue increasing $1.8 billion (8.5%). Loan growth was led by commercial real estate, residential mortgages and commercial and industrial loans.

“Community banks … continued to grow their small business loans at a faster pace than the rest of the industry,” Gruenberg noted.

The number of financial institutions on the FDIC’s “problem list” fell to 132 from 147 the year before, the lowest level since the third quarter of 2008. There were 71 mergers of insured institutions, while two insured banks failed.

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