By Stephen Gandel
July 17, 2013

FORTUNE — Bank of America’s second-quarter net income rose 63% to just over $4 billion, helped by a strong environment for Wall Street deals. Fees from arranging stock and bond offerings, and advising on corporate deals at BofA (BAC) jumped 36% from a year ago.

Those earnings translated into a per-share gain of 32 cents. That was better than the 25 cents that analysts had been predicting. However, revenues of $22.7 billion were only up slightly from a year ago and down from the first three months of the year.

The biggest drag appeared to be in the bank’s consumer operations, which could be a signal of not just bigger problems at the bank but in the economy in general. While commercial loans are growing, consumers have been still reluctant to borrow despite the improvements in the economy. Indeed, consumer lending, which appeared to be growing again last year, shrunk at most banks in the second three months of the year. That could signal that consumers still lack confidence in the recovery, or are still worried about the strength of the job market.

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The disappointing results come as CEO Brian Moynihan has focused on expanding BofA’s consumer banking unit. Earlier this year, Moynihan said BofA was working on a new rewards program to attract more customers and more business from existing customers. Nonetheless, sales in BofA’s consumer and business banking unit slumped 1% in the latest quarter. Its volume of non-real estate consumer and commercial loans outstanding dropped $2.3 billion in the quarter to $164 billion. Profits in the unit rose, but nearly all of the gains came from fewer loan losses.

That was true throughout the bank. Aside from BofA’s Wall Street businesses, much of the bank’s bottom line boost came from falling expenses. In particular, legal costs fell, as well as expenses from bad loans, which was another sign that the bank was putting its financial crisis issues behind it. But the bank also continued its plan to lower operating expenses as well. The number of employees at the bank dropped 5,600 in the second quarter to 257,200.

Some investors have worried that high interest rates would curtail lending at the big banks, particularly in their mortgage units. Despite the jump in borrowing rates, mortgage lending at BofA rose 7% from the first three months of the year and up 40% from a year ago. But the jump was partially due to the fact that BofA had lagged other competitors in getting back into the mortgage market after the financial crisis.

Overall, Bank of America said it had $21 billion in non-performing loans, down from $25 billion a year earlier. As a percentage of its total loans, debts that were not being paid fell to 2.3%, from 2.8% a year ago. That was the lowest since the financial crisis.

In another sign of financial improvement for the bank, BofA said it had enough capital to cover a drop of 9.6% of its risk-weighted assets, as measured by regulators. That ratio of capital to risky assets is closely watched by regulators and is up from 7.9% a year ago. BofA CFO Bruce Thompson in a call with reporters also said he believed the bank either was close or already had enough capital to comply with a recently proposed regulation that would set a minimum for bank capital not based on risky assets but on all of the bank’s loans and investments. That proposed rule, which came out in early July and has met resistance from the banks, has been a focus of analysts.

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Shares of BofA, which are up nearly 80% in past year, rose just 28 cents on the earnings. Nonetheless, that was enough to push BofA’s stock to a new 52-week high of just over $14.

BofA is the latest financial firm to say its bottom line surged in the second quarter. Proponents of increased banking regulation have seized on that fact to make the case that rules put in place since the financial crisis have made the industry safer without hurting it. But many of the regulations that were instituted by the Dodd-Frank financial reform law have yet to be fully implemented. JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and Goldman Sachs (GS) have all reported earnings that beat analyst expectations. Morgan Stanley (MS) is expected to report its results on Thursday.

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