NEW YORK ( TheStreet) -- U.S. banks continued their upward path during the second quarter, setting another industry record with earnings of $42.2 billion, the Federal Deposit Insurance Corp. reported Thursday. Industry earnings increased from $40.3 billion in the first quarter and $34.4 billion during the second quarter of 2012. The second quarter was the 16th straight quarter of year-over-year earnings growth for the banking industry. "The trends we have seen in recent quarters continued in the second quarter," said FDIC chairman Martin Gruenberg in the regulator's press release. "Asset quality continues to recover, loan balances are trending up, fewer institutions are unprofitable, the number of problem banks is down, and the number of failures is significantly below levels of a year ago." But Gruenberg added that "industry revenue growth remains weak, reflecting narrow margins and modest loan growth. And the current interest rate environment creates an incentive for institutions to reach for yield, which is a matter of ongoing supervisory attention." The regulator reported that year-over-year earnings improved for nearly 54% of reporting institutions and that the proportion of unprofitable banks and thrifts declined to 8.2%, from 8.4% the previous quarter and 11.3% a year earlier. The combined U.S. banking industry's second-quarter return on average assets (ROA) was 1.17%, increasing from 1.08% in the first quarter and 0.99% during the second quarter of 2012.