The state’s 340 banks showed improvements in deposits, lending and profitability in the third quarter, according to a report from the Federal Deposit Insurance Corp.

Return on assets, a key measure of profitability and performance, improved to 1.2 percent, up from 0.8 percent a year ago. Iowa banks also beat the national average of 1.02 percent. Deposits grew to nearly $57.7 million from $52 million in October 2011. Loans and leases increased slightly to nearly $42.4 million from about $42.3 million in September, but down from nearly $43 million a year ago.

Iowa banks also outperformed the nation on key asset quality indicators. Net charge-offs in Iowa were 0.34 percent of loans in the third quarter, compared with the national average of 1.15 percent. Noncurrent loans and leases were at 1.35 percent, compared with the national average of 3.85 percent. Iowa’s nonperforming loans were at 1.25 percent, compared with the nation’s 2.36 percent.

“Iowa banks are a reflection of their local economies, so the positive results are an encouraging indicator that business and consumer confidence is returning,” John Sorensen, president and CEO of the Iowa Bankers Association, said in a news release.

Nationwide, total loan balances increased to $7.5 trillion, from $7.3 trillion in third-quarter 2011, and deposits increased to $10.5 trillion, up from $10.0 trillion in third-quarter 2011.