CHARLOTTE, N.C. ( TheStreet) -- Bank of America's ( BAC) second-quarter results drove home the fact that big banks are going to have a very difficult time growing their business in the coming years. Broadly speaking, the Charlotte, N.C.-based titan earned less money and brought in less revenue than it did the previous quarter -- a rough patch that may only get worse.
Profits in four of its six business lines declined, while the home loans division continued to lose money. Management commented extensively on how much the business of banking has changed and how difficult the current operating environment is. "The economy and the consumer at the present time are still deleverring so core revenue growth is difficult," CFO Charles Noski said on a conference call. Even more worrisome was the impact of regulatory reform on future results, with particular concern over the Durbin interchange amendment, which will limit fees that banks charge to merchants for processing debt- and credit-card purchases. Bank of America estimates that new rules will chip away about $5 billion a year from consumer-banking revenue by the end of 2011. More troubling was its expectation of writing down its credit-card business by $7 billion to $10 billion because of how much the reform bill has hurt its value. CEO Brian Moynihan said his management team was working to mitigate the impact of the reform bill -- in other words, charging fees elsewhere -- but warned that "normalized" earnings could be a ways off. "This is going to be in my mind a one, two, three year type of work," said Moynihan, later adding, "it's not an overnight thing." Bank of America shares reflected the strong headwinds the firm faces, trading down 7.2% to $14.28 in recent trades. Volume of 130 million compared to the issue's three-month trailing daily average of 187 million. Bank of America's report is important because, as the biggest bank in the country with a diverse line of operations, it serves as a useful indicator for how the broader financial-services industry is doing and how the reform bill will impact the industry. From B of A -- as well as JPMorgan Chase ( JPM) and Citigroup ( C), which also reported this week -- investors can glean clues about what may come from Wells Fargo ( WFC), Goldman Sachs ( GS), Morgan Stanley ( MS) and smaller regional banks whose reports are coming down the pike. Moynihan said the firm is exerting "a ton of effort and expense" to work through problem mortgages via short sales, foreclosures and outright liquidations. He also noted that while losses from the worst loans have declined, demand from strongest borrowers in corporate America remains "muted" because companies are hesitant to expand. Meanwhile, investment banking profits were down 71% and wealth management earnings fell 24%. Moynihan said this was partly because the markets were so volatile that senior managers thought "it was best to get out of the way."