Commercial banks and savings institutions insured by the Federal Deposit Insurance Corp. reported an aggregate profit of $35.3 billion in the first quarter, up $6.6 billion from the same period a year earlier.

Earnings have increased year-over-year for 11 consecutive quarters.

Loan balances decreased by $56.3 billion, a 0.8 percent decline, after three consecutive quarterly increases.

"The overall decline in loan balances is disappointing after we saw three quarters of growth last year," said Acting FDIC Chairman Martin Gruenberg said. "But we should be cautious in drawing conclusions from just one quarter."

Lower provisions for loan losses and higher non-interest income were responsible for most of the year-over-year improvement in earnings. First-quarter loss provisions totaled $14.3 billion, almost 30 percent less than the $20.9 billion set aside for losses in the first quarter of 2011.

The number of banks on the FDIC's "problem" list decreased from 813 to 772, the smallest number since year-end 2009. Sixteen insured institutions failed in the first quarter, the smallest number of failures in a quarter since the fourth quarter of 2008, when 12 institutions failed.