The FDIC reports that the top 25 banking companies grew their earnings significantly in the first quarter amid a significant resurgence in U.S. economic activity. Leading credit card issuers, Capital One and MBNA, also posted very strong earnings. Return on assets of the 25 largest banking companies increased by 43 basis points in the quarter to 1.39%, with net income reaching a record $16.2 billion. The group’s previous net income high was $15.8 billion, attained in the first quarter of 2000. The FDIC notes that the federal funds rate, which now stands at 1.75% has been a major factor. Since the 25 largest companies typically derive much of their funding from short-term liabilities, most were able to enjoy a lower cost of money while their earning asset yields remained fairly stable. This effect contributed to a 7% increase in net interest income in the last quarter of 2001. Meanwhile, Capital One reported first quarter profits of $188 million, a 31% increase over the first quarter of 2001. MBNA said its profits grew 19% to $370 million. Other publicly-traded credit card firms did not do so well. American Express card profits were off 11%, logging in at $467 million, due to the continuing travel slump. Metris/Direct Merchants Bank was off 7% at $52 million, and Providian posted a tiny $10 million profit, both impacted by the fallout in sub-prime lending problems. ROAs among credit card issuers during the first quarter averaged 1.83% according to CardData (www.carddata.com).