Financial institutions report best quarterly earnings in two years

Although the figures are below historical quarterly profits, more than half of all institutions reported year-over-year improvements in their quarterly net income. Fewer than one in five institutions reported net losses for the quarter, compared with 22.3 percent in 2009.

The average return on assets, a yardstick of profitability, rose to 0.54 percent, up from 0.16 percent a year ago and the highest figure since the first quarter of 2008, when the economy began sinking into the recession. 

While the industry showed steady signs of improvement, Bair cautioned that the system is still working through its issues. 

“There will be more failures, to be sure,” she said. “The banking system still has many problems to work through, and we cannot ignore the possibility of more financial market volatility. But the positive signs I’ve outlined today suggest that the trends continue to move in the right direction.”