This year has been a boon so far for Massachusetts’ banks, with increased profitability, improved capital ratios and growing deposits. But, according to FDIC statistics released today, loan delinquencies continue to be a challenge.

At end of the third quarter 2009, nearly 17 percent of Massachusetts’ banks were unprofitable. As it stood in Q3 2010, that number shrank to less than 10 percent. In addition, 80 percent of institutions had earnings gains that quarter, compared to only 65 percent the year before. Return on assets – a measure of profitability – increased to 0.66 percent in 2010 compared to 0.4 percent in 2009.

The banks’ combined risk-based capital ratio, an indication of safety and soundness, crept up to 16 percent, compared to 15.6 percent the prior year. Deposits increased to $79 billion compared to $74.5 billion.

Yet loan difficulties remain. Loans in "nonaccrual status" – those well over 90 days delinquent and with little hope of full recovery – grew to $1.1 billion in the third quarter 2010, compared to $950.7 million last year. While the banks have been working through their troubled construction and land development loans, mortgage delinquencies in this category grew to $433 million, compared to $373 million in the previous year.

Commercial and industrial loans in nonaccural status also grew to $98.5 million, up from $72.7 million in 2009.

At the same time, Massachusetts’ lending portfolios have increased to $65.6 billion, compared to $65.1 billion the year before. The FDIC tracks banks’ current portfolios, not including loans made but then re-sold elsewhere:

As of Sept. 30, banks were either making fewer mortgage loans or keeping fewer of them on the books. Residential loans were at $33.8 billion compared to $34.1 billion the prior year. Construction loans shrank, and commercial and industrial loans remained about the same. Commercial real estate proved to be one of the few areas of significant growth, jumping to $17 billion, compared to $15.8 billion the year before.