Two big banks report Q2 results, setting the stage for a flurry of bank earnings announcements next week.

The second quarter earnings season kicked off on a rather uneasy note, with Alcoa (AA.N) managing to beat analysts’ estimates by reporting a profit of 6 cents a share, a penny above the consensus. But the aluminum giant’s results still represented an 81% decline in profitability from the second quarter of 2011, when Alcoa announced earnings of 32 cents a share. “European demand remains uncertain, pricing and demand pressures persist,” Chuck McLane, Alcoa’s chief financial officer, explained during the company’s conference call. “We expect slower growth rates in China and Russia and productivity gains to continue.”

The other big news of this quarter’s earnings period so far has come from two of the largest U.S. banks, Wells Fargo & Co. (WFC.N) and JPMorgan Chase & Co. (JPM.N). All eyes had been on the latter, waiting for CEO Jamie Dimon to disclose the most up-to-date information on the size of the losses from the bank’s London-based CIO division. Despite a $4.4 billion charge for the derivatives trading loss, the bank still beat consensus earnings forecasts of 70 cents a share, reporting adjusted earnings of $1.09 a share. While that is significantly better than expected, it’s 20% below year-ago levels. Dimon spelled out the bank’s exposure to the eurozone crisis, and his view that “we still think they’re going to muddle through, but it may not be in the form or fashion or timetable we all would prefer.” Current exposure has shrunk to $6 billion from $12 billion on a net basis; stress tests reveal the possibility of a $3 billion loss, Dimon told the audience on a lengthy conference call, though he added, “in a bad scenario, it could be worse.”

Both banks reported they are seeing a hefty increase in the number of mortgage applications. At Wells Fargo, mortgage applications hit a record in the second quarter, totaling $208 billion, up 90% from a year-earlier, CEO John Stumpf said. Mortgage originations were up less at JPMorgan – 29% — but that is still a healthy gain. Those figures support the comments by Lennar Corp. (LEN.N), which recently announced its own fiscal second quarter earnings soared to $2.06 a share (or 21 cents, excluding a tax-related gain) from 7 cents a share in the year-earlier period. Lennar’s CEO, Stuart Miller, told the company’s conference call that “the macro housing market has stabilized, has most likely bottomed, and perhaps is beginning the road to recovery.”

Are the banks also are sailing into calmer weather? The remainder of the biggest financial institutions are scheduled to report their results this week, and it will be interesting to see how the balance between an embryonic housing market recovery and the eurozone’s ongoing fiscal crisis plays out in their results and how their CEOs view the future. As can be seen in the chart below, most of these institutions have Earnings Quality (EQ) scores roughly in the middle of the range, but some (such as Bank of America Corp. (BAC.N)) have very low scores and generally, the trend is downward. It will be particularly important for investors to scrutinize the source of earnings by these banks, as they report their results.

For more on analysts’ changing views of second-quarter earnings, please watch this interview with Thomson Reuters analyst Jharonne Martis.