Further evidence that losses from failed loans may have peaked in the first half of 2010 was revealed as the nation’s largest banks issued their second-quarter report cards.

Bank of America, Citigroup Inc., JP Morgan Chase and Wells Fargo all reported improvements in their consumer loan business in the April-to-June quarter as loan losses fell, indicating that consumers are finally finding their footing. The results could also lead to a pick up in activity among finance sources.

Here’s a breakdown of second-quarter results:

Bank of America

Improvements in the bank’s consumer loan business led to a 15 percent increase in second-quarter net income, which rose $2.78 billion.

Driven by a 17 percent reduction in reserves and a $1.2 billion decrease in net charge-offs in its commercial business, dealer-related portfolios, provisions for credit losses decreased $1.5 billion, reflecting improved borrower credit portfolios and higher resale values.

Average loan balances decreased $28.2 billion compared to the same period a year ago due to lower demand. The bank extended approximately $174 billion in credit during the quarter, $8 billion of which was used for consumer credit.

Citigroup

Despite a drop in loan losses, Citigroup reported a second-quarter drop in net income of $2.7 billion. Officials said the decrease reflects the bank’s year-ago sale of Smith Barney brokerage, which had inflated earnings.

The bank was one of the hardest hit by the financial crisis, as its customers fell seriously behind on loan payment. In the second quarter, however, the bank reported a 31 percent drop in losses from failed loans from the year-ago period. Consumer net credit losses declined $530 million, or 7 percent, from the year-ago period.

The company’s net reserve release for loan losses and unfunded lending commitments was $1.5 billion, compared to $53 million in the first quarter. The release consisted of $827 million in consumer loans and $683 million in corporate loans and unfunded lending commitments.

JPMorgan Chase

Driven by a turnaround in its Delaware-based credit card operations, mortgage lending and retail banking, JPMorgan Chase reported that second-quarter income increased 77 percent to $4.8 billion. Net revenue for Chase, however, fell nearly 8 percent from a year ago to $25.6 billion

Chase, one of the strongest banks coming out of the economic downturn, reported that consumer lending revenue jumped $131 million to $850 million during the period, which it attributed to higher auto loan and lease balances.

Provisions for credit losses, predominantly related to the student loan and auto loan portfolios, dropped from $366 million a year ago to $175 million. Auto loan net charge-offs decreased from $146 million a year ago to $58 million in the recent quarter.

Average auto loans came in at $47.5 billion, up 10 percent. Originations increased by 9 percent to $5.8 billion, but were down 8 percent from the prior quarter.

Wells Fargo & Co.

Better rates for mortgages, auto loans and credit cards led to a 12 percent increase in second-quarter profit for Wells Fargo. Net income increased from $2.58 billion a year ago to $2.88 billion in the recent quarter.

Losses from auto dealer services, home equity, mortgages, credit cards, consumer lines and loans also improved despite Wells Fargo writing off 2 percent more loans than it did during the same period last year. However, charge-offs dropped by 16 percent from the first quarter of this year.

Despite declining loan demand since early last year and lower mortgage hedging results during the quarter, total revenue and pre-tax profit remained strong at $21.4 billion and $8.6 billion, respectively. Officials said many of the bank’s business units reflected double-digit growth from the first quarter, including its auto dealer services group.

Company officials also noted that in the six quarters since the bank’s merger with Wachovia, Wells Fargo has earned cumulative profits of $17.9 billion.

Additionally, average total loans dropped to $772.5 billion from $797.4 billion in the first quarter and $833.9 billion a year ago, reflecting continued lower demand for credit from consumer customers. Auto dealer services, however, wasn’t part of that decline.

“Several consumer portfolios increased during the quarter, including auto dealer services, private student lending and wealth, brokerage and retirement,” said Howard Atkins, the company’s chief financial officer. “We saw other consumer portfolios declining at a lower rate, including Wells Fargo Home Mortgage, credit card and consumers lines and loans."