NEW YORK ( TheStreet) -- The best way to understand how the banking system is performing is to slice and dice the wealth of data found in the FDIC Quarterly Banking Profile. The FDIC released its QBP for Q3 on Tuesday to limited fanfare on Wall Street.While the FDIC's headlines touted the positive developments, I dug deeper into the data to gauge whether or not the banking system has emerged from the great credit crunch which began at the end of 2007. My analysis of what I believe are key metrics found in the QBP indicates while progress has been made to unwind the great credit crunch, problem assets remain on the books of our nation's banks. According to the report, FDIC-insured financial institutions generated $37.6 billion in net income in the third quarter, a sequential increase of 6.6% to the highest level since the third quarter of 2006. However, improved income continues to be buoyed by the reduction of loan loss provisions and rising noninterest income, not by a significant increase in interest income from new loan issuance, as tight credit standards continue. Below the surface, noncurrent loans continued to decline but the pace slowed to a decline of just $100 million (0.03%), the smallest in the past 10 quarters. Bank failures fell to the lowest levels since the end of 2008 with only 12 banks shuttered in the quarter. Mergers absorbed another 49 insured institutions. As a result the FDIC's list of problem banks fell from 732 to 694, still quite elevated. In my judgment the FDIC is allowing banks that should be closed to stay open as zombie banks.