A surge in earnings by the biggest banks at the end of last year made 2011 the most profitable time for the industry in five years. More earnings and fewer troubled banks suggest the industry has healed since the 2008 financial crisis. The Federal Deposit Insurance Corp. said Tuesday that bank earnings rose in the October-December quarter to $26.3 billion.

That’s 23 percent higher than earnings in the final quarter of 2010. About 63 percent of banks reported improved earnings. Only 19 percent were unprofitable.

For the year, earnings hit $119.5 billion – the most since 2006.

Banks with assets exceeding $10 billion accounted for almost all of the earnings growth in the fourth quarter. While they make up just 1.4 percent of U.S. banks, they accounted for more than 81 percent of the earnings.

Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of them have recovered with help from federal bailout money and record-low borrowing rates.

Many of these same banks complained last year that new regulations mandated by Congress have hurt their ability to make money and moved to charge new fees to make up the difference.

The effort sparked a backlash among consumers and fueled anti-Wall Street protests. Ultimately, the big banks dropped plans to charge customers for using their debit cards. But other fees have remained.

The number of banks on the FDIC’s confidential “problem” list fell in the fourth quarter to 813, or around 11 percent of all federally insured banks. That compares with 844 troubled banks in the previous quarter.

So far this year, 11 U.S. banks have failed. That’s far below the 92 banks that shuttered last year the157 that closed in 2010 – the most for one year since the height of the savings and loan crisis in 1992.

Most of the banks that have struggled or failed have been small or regional institutions. They depend heavily on loans for commercial property and development. As companies shut down during the recession, they vacated shopping malls and office buildings financed by those loans.

The FDIC is backed by the government, and its deposits are guaranteed up to $250,000 per account. Apart from its deposit insurance fund, the agency also has tens of billions in loss reserves.

Associated Press