Fifty U.S. banks failed in the third quarter, the largest number of nearly 20 years, reported the Federal Deposit Insurance Corp. (FDIC) on Tuesday.

The FDIC, a U.S. regulator who provides insurance fund to the banking sector, said that banks made 2.8 billion U.S. dollars of profit in the third quarter after a 4.3-billion-dollar loss in the previous quarter, but the number of failed banks reached the record since the second quarter of 1990.

Economists said that despite the overall economy is on recovery, the banking system, especially medium and small sized banks are still in water.

The number of banks on the FDIC's "problem list" rose to 552 from 416 on June 30, the highest level in 16 years.

About 13 percent of banks on the list generally end up failing, according to the FDIC.

The FDIC's fund that insures bank deposits fell by 18.6 billion dollars in the third quarter, mostly because 21.7 billion dollars was set aside for expected losses on future bank failures.

Bank failures this year through 2013 are expected to cost the fund 100 billion dollars.

"While bank and thrift earnings have improved, the effects of the recession continue to be reflected in their financial performance," FDIC Chairman Sheila Bair said.

"There is no question that credit availability is an important issue for the economic recovery," Bair said, however, "there are no quick fixes" for the banking industry's troubles - "only careful, hard work" to oversee banks as they continue writing off bad loans and attempt to ride out the downturn.

According to a report released Tuesday by the Federal Reserve, the central bank officials said that the overall financial condition "in short-term funding markets eased a bit further," but it could take "five or six years" for the economy to get back on a path of full health.