While the global markets including the domestic ones continue to tank on renewed European debt concerns, banks have outperformed almost every other sector in posting amazingly different results from the last year.

If we go by the Federal Deposit Insurance Corp’s (FDIC’s) latest banking industry report, the hay days of banking are back. The report goes at greater lengths in explaining that 50 percent of the industry players in the US have reported better numbers in the latest quarter compared to the first quarter of 2009. In total, the profits of the banking industry stood at US$18 billion during the quarter.

However, the picture is not so rosy at the lower levels. While top banks have reported excellent results in the first quarter of 2010, tier two banks are still struggling with last year’s financial crisis hangover.

There are also some interesting observations in the report. It helps to know that the current funding cost is at the lowest level since 1984. Apart from some obvious negative things, positive fallout of the financial crisis has been emergence of stronger and healthier banks. At the same time, the problems with smaller banks are forcing them to go sideways. FDIC’s list of problem banks is still increasing even as the economy is showing signs of recovery.

Majority of the big banks including JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) are trading positive amid a choppy market.