Think the worst is over? Think again.

The Federal Deposit Insurance Corp. said its list of "problem" banks rose to 171 in the third quarter, a 40 percent jump over the 117 troubled institutions it counted in the three previous months.

Meanwhile, aggregate profits at all of the commercial banks and savings institutions covered by F.D.I.C. deposit insurance dropped 94 percent in the quarter, to just $1.7 billion from $28.7 billion in the same quarter a year earlier.

Industry-wide, banks earned a mere 0.05 percent return on their assets in the three months through September 30, compared with 0.92 percent in the third quarter of 2007.

Most of that thin margin came at small banks because big ones were busy making tens of billions of dollars in loan-loss provisions to cover the plummeting value of their mortgage-backed assets. Combined, the industry set aside $50.5 billion just in the quarter to cover loan losses; that is three times the amount set aside a year earlier.

Even as it was preparing for a rough future, the banking industry was facing up to more of its grim recent past. Banks wrote off a total of $27.9 billion in dud loans in the quarter—a 156 percent increase over the same three months last year.

Two-thirds of those write-offs were related to real estate, whether mortgages, home-equity loans, and construction loans. And that doesn't include Washington Mutual, the nation's largest mortgage lender; it failed on September 25 and was later taken over by Wells Fargo.

"We've had profound problems in our financial markets that are taking a rising toll on the real economy," F.D.I.C. Chairman Sheila Bair said, in a profound understatement. "Today's report reflects these challenges."