Four thousand U.S. dollars are counted out by a banker counting currency at a bank in Westminster, Colorado November 3, 2009. REUTERS/Rick Wilking/File Photo

WASHINGTON (Reuters) - The U.S. banking sector reported a record $60.2 billion in profits in the second quarter, up 25.1 percent from the same period one year ago.

The Federal Deposit Insurance Corporation reported on Thursday that a little more than half of those gains resulted from a lower effective tax rate. The other half of the gains came from higher net interest income, it said.

Only 3.8 percent of banks reported net losses, while more than 70 percent reported year-over-year growth.

Banks had reported a record $56 billion in profits in the first quarter, as they took advantage of the lower tax rates passed by Congress at the end of 2017.

Profits would have increased just 11.7 percent in the second quarter without the boost from the new tax law, the FDIC said.

FDIC Chairman Jelena McWilliams said the new numbers show banks continue to grow, but she warned that competition for business could drive some institutions to take on more risk.

“The competition to attract loan customers will be intense, and it will remain important for banks to maintain their underwriting discipline and credit standards,” she said in a statement.

Banks are also preparing for a reduced regulatory burden, after President Donald Trump signed a law in May easing rules for most institutions. Many of those law’s provisions have yet to take full effect.

The number of problem banks monitored by regulators fell to 82 in the second quarter, from 92 in the first quarter, the FDIC said. That is the lowest number since the fourth quarter of 2007.