Washington, DC, United States (AHN) – The Federal Deposit Insurance Corp. released its third quarter report on Tuesday that showed some fruitful signs of life for the troubled banking industry.

According to the report, U.S. bank profits rose collectively over the summer to their highest level since mid-2007, but banks still continued to struggle to generate more revenue in a stagnant and cautious economy.

In the quarter ending Sept. 30, the industry showed a group net profit of $35 billion, an increase of nearly 50 percent from a year earlier.

Another bright spot in the report was that the agency’s list of troubled institutions shrank in the third quarter for the first time since the same period in 2006.

The report revealed 844 institutions on the agency’s “problem” list at the end of September, down from 865 at the end of June.

During the June-September period, 26 banks failed, four more than in the second quarter, but 15 fewer than in the same quarter a year ago.

The current risk for U.S. and global banks remains the potential contagion, or ripple effect, should a serious financial crisis develop across Europe.

Regulators will ask the six largest U.S. banks–Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley and Wells Fargo–to gauge losses from a “hypothetical global market shock” related to the eurozone turmoil, and may be required to keep more cash in reserves as a result.

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