US banks earned more in the three months from July to September than in any other quarter over the past six years.
The increase is further evidence that the industry is strengthening four years after the 2008 financial crisis.
The Federal Deposit Insurance Corporation said the banking industry earned $37.6 billion in the third quarter, up 6.6% from $35.3 billion in the third quarter of 2011.
About 57% of the banks reported improved earnings, which allowed them to set aside less for losses on loans.
The number of troubled banks also fell to the lowest level in three years.
For the second quarter in a row, loans to consumers increased in most categories, including home mortgages and car loans. That suggests banks are becoming less cautious, which could help the broader economy.
US home prices rise in October by over 6%
A measure of US home prices rose 6.3% in October compared with a year ago, the largest yearly gain since July 2006.
The jump adds to signs of a comeback in the once-battered housing market.
Core Logic also said prices declined 0.2% in October from September, the second drop after six monthly increases in a row. The monthly figures are not seasonally adjusted and the property data provider said the decline reflects the end of the summer home-buying season.
Prices rose compared with the previous year in all but five states, CoreLogic says.
Steady price increases are fueling the US housing recovery as they encourage more homeowners to sell their homes. They also entice would-be buyers to purchase homes before prices rise further.
