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Today, Wells Fargo reported  record quarterly earnings of US$3.8bn, up nearly 50% on the same quarter last year. JPMorgan kicked off the reporting season last week with quarterly net profit growth of 67%. The country’s other banking giants—Bank of America, Citigroup and Goldman Sachs—shared less encouraging news, with first-quarter profits down on last year.

What all of these banks have in common, however, is falling revenues. From racy investment banks to retail-focused lenders, America’s largest banks are still shrinking. Releasing provisions and cutting costs can only go so far; a true recovery will begin when top lines start to grow again.

For America’s biggest banks, the latest customer satisfaction survey from the University of Michigan makes for unpleasant reading. Although the overall level of satisfaction with banks has remained steady over the past 12 months, this is largely down to smaller banks and credit unions improving their scores. Individually, the country’s three largest banks—Bank of America, JPMorgan and Citigroup—have all seen their satisfaction scores fall. Wells Fargo is the only top-tier lender to record a higher score in the latest survey, which the poll’s administrators put down to its takeover of Wachovia, traditionally a strong performer when it came to customer service.

As regulators devise new rules to discourage financial institutions from holding risky assets and trading in exotic securities, large universal banks are scrambling to shore up the core consumer deposit, savings and loan services that are the focus of the University of Michigan’s survey. On this front, there is much work left to do.

When will the write-downs end? Analysts are feverishly at work on loan-loss models in hopes of finding out. Accrued Interest came up with a nifty shorthand for gauging loss reserves—plugging the details of loan exposures from big American banks’ latest quarterly results into the losses forecast by category by the Federal Reserve in its spring “stress test”. These forecasted losses are then compared with the write-downs and provisions already taken. “The Fed’s guess is as good as any, and the exercise should be illustrative of how close we are to the end of loan loss provisioning” the blog notes.

The chart compares the loan-loss coverage of Wells Fargo (green bars, representing write-downs and provisions) versus the upper and lower bounds for loss estimates for the Fed’s “baseline” (blue bars) and “adverse” scenarios (red bars). Under all but the most sanguine scenarios, more capital must be set aside to cushion against future losses. The same holds true for Bank of America and JPMorgan, with details in the full post.

WFC

In theory, charging someone a fee for running out of money doesn’t make much sense. In practice, overdraft fees are a lucrative business for banks.

Overdraft fees

In the US, consumers will spend more than US$26bn on overdraft fees this year, according to a new report by the Center for Responsible Lending, a research group. Bank customers spent around US$10bn five years ago. The worsening economy only partly explains the rise. The increased use of debit cards raises the risk of becoming overdrawn, while banks are also contributing by increasing the fee per overdraft, introducing fees for remaining overdrawn over a certain number of days, and charging a fee for each transaction.

Last month, senator Christopher Dodd introduced legislation to rein in overdraft fees. In response, Bank of America, JPMorgan and Wells Fargo voluntarily reduced fees and altered certain conditions—mainly waiving fees for going overdrawn by only a few dollars and capping the number of times a fee can be charged per day. Although it hurts them financially, for maligned banks it may help restore the balance of consumer goodwill that long ago fell into deficit.

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