Bank of America Corp (NYSE:BAC) and U.S. Bancorp (NYSE:USB) both released the results from the second quarter before opening bell this morning. Bank of America posted earnings of 41 cents per share, excluding items, on revenue of $21.96 billion. Analysts had been expecting earnings per share of 27 cents on $21.69 billion in revenue. Bank of America also announced a settlement in the litigation with AIG.

Bank Of America BAC

U.S. Bancorp reported earnings of 78 cents per share, excluding items on revenue. Analysts had been expecting earnings per share of 77 cents on $4.93 billion in revenue.

Breaking down Bank of America’s earnings

Net income including items was 19 cents per diluted share or $2.3 billion. That includes a pretax litigation expense of $4 billion or about 22 cents per share after tax.

At the end of the second quarter, Bank of America had a record $1.13 trillion in deposit balances, an increase of 5% or $54 billion. The bank funded $13.7 billion in residential home loans and home equity loans during the quarter, assisting almost 43,000 homeowners with buying a home or refinancing a mortgage. The bank issued more than 1.1 million new credit cards, 65% of those going to existing customers.

Bank of America posted a record $4.6 billion in revenue for its Global Wealth and Investment Management division, along with $2.47 trillion in total client balances, also a new record. The bank saw its global banking average loan balances rise 6% year over year to $271 billion. Bank of America Merrill Lynch posted $1.6 billion in fees and record equity issuance fees during the quarter. The bank’s tangible book value per share rose 7% to $14.24 per share.

The bank’s credit quality also improved, with a 49% decline in net charge-offs year over year to $1.1 billion and a net charge-off ratio of .48%. That’s the lowest rate in ten years. Bank of America posted a Basel III standardized Common Equity Tier 1 ratio of 9.5% and advanced ratio of 9.9%.

Bank of America settles with AIG

Today Bank of America also announced that it settled with American International Group Inc (NYSE:AIG) in connection with the litigation related to residential mortgage-backed securities. AIG will dismiss its lawsuits against Bank of America and its affiliates and withdraw its objection to The Bank of New York Mellon Corporation (NYSE:BK)’s private-label securities settlement.

In return, Bank of America will pay $650 million. The two banks also will settle three actions Bank of America brought, including trying to collect mortgage insurance proceeds from AIG’ subsidiaries on legacy loans originated from and serviced by Bank of America. The bank says it has now resolved about 95% of the unpaid principal balance of all residential mortgage-backed securities connected to litigation.

Breaking down U.S. Bancorp’s earnings

U.S. Bancorp posted record net income of $1.495 billion or 78 cents per share for the second quarter. In the same quarter a year ago, earnings per diluted share were 76 cents. The bank paid $200 million to the Department of Justice in connection with mortgages under the Federal Housing Administration’s insurance program. The other item included the sale of 3 million Class B shares, resulting in a $214 million net pretax gain.  When the two items were combined, they had no impact on the bank’s earnings results.

The bank saw its average total loans grow 6.8% year over year and 2% sequentially. New lending activity was $55.5 billion during the quarter, while average total deposits grew 6%. U.S. Bancorp saw a 1.6% return on average assets, 15.1% return on average common equity, and an efficiency ratio of 53.1%.

Net charge-offs fell 11% year over year, while nonperforming assets declined as well. The bank’s Basel III standardized Common Equity Tier 1 Capital Ratio was 9.6%, while its Tier 1 Capital Ratio was 11.3%.

The bank also returned 75% of its second quarter earnings to shareholders through dividends and a 15 million share buyback.