Banks in Massachusetts and nationwide continued to slowly put the housing bust and recession behind them during the second quarter.
Banks reported stronger profits as they set aside less money for bad loans and slightly increased their lending, according to Federal Deposit Insurance Corp.
But revenue growth remained modest, a sign that the economic recovery remains weak.
“The industry continues to recover at a gradual, but steady pace,” FDIC acting chairman Martin J. Gruenberg said Tuesday.
US banks earned $34.5 billion in the quarter that ended June 30, up from $28.5 billion in the same quarter last year, and marking the 12th consecutive quarter banks have reported year-over-year improvements.
The FDIC, which insures deposits for banks, reported that the number of “problem” institutions fell from 772 to 732, the lowest figure since the end of 2009.
Nationally, 40 banks have failed so far this year, compared to 68 during the same time last year.
While the FDIC doesn’t publicly identify problem institutions, all but a handful of Massachusetts banks are profitable and well capitalized.
Just one bank has failed in New England in recent years — Butler Bank in Lowell — and several other ailing community banks have agreed to merge with stronger partners to solve their financial problems.
Most recently, Community Bank of Brockton, which has struggled with delinquent real estate development loans made during the housing boom, agreed to merge with Eastern Bank of Boston.
Profits at Massachusetts banks dipped slightly over the past year, but more of them were in the black.
The FDIC reported that just 3.8 percent of banks in Massachusetts lost money in the second quarter, compared with 9.3 percent a year ago.
Nationwide, 11 percent of banks lost money, down from 16 percent during the same period in 2011 as housing prices stabilized and banks finished writing off existing bad loans.
US banks also increased their lending by 1 percent, reflecting more loans granted to commercial borrowers, as well as to consumers for credit cards and residential mortgages.
However, borrowing tied to home equity lines and real estate construction continued to decline.
James Chessen, chief economist for the American Bankers Association, noted in a commentary Tuesday that business loans grew for the eighth straight quarter.
But he warned that such lending could be hampered going forward by economic problems in Europe and political questions in Washington, D.C.
“Our business customers are telling us that they are hesitant to expand or take on more debt in today’s uncertain environment,” Chessen wrote.