Last year treated the big banks badly. Of the seven largest banks, the best returner was only slightly positive for the year (after dividends):

Bank Name

2011 Return

US Bancorp (NYSE: USB)2.3%
Wells Fargo (NYSE: WFC)(9.5%)
JPMorgan Chase (NYSE: JPM)(19.9%)
Morgan Stanley(43.9%)
Citigroup (NYSE: C)(44.3%)
Goldman Sachs(45.6%)
Bank of America (NYSE: BAC)(58.1%)

Source: S&P Capital IQ. Return includes dividends.

January has been more kind to all stocks, with the S&P 500 up almost 5%. But the performance of the big banks dwarfs that gain: 

Bank Name

January Return

US Bancorp3.5%
Wells Fargo6.1%
JPMorgan Chase12.1%
Morgan Stanley20.6%
Goldman Sachs21.3%
Bank of America27.2%

Source: S&P Capital IQ. Return includes dividends.

Perhaps not surprisingly, the worst performers of 2011 generally rebounded more than the best performers of 2011. Lower bases and diminished expectations have a way of doing that.

The financial crisis has turned the should-be-staid banking world into a high-beta sector. In other words, the largest banks have been much more volatile than the market in recent years. As dividends have been lowered and securities portfolios questioned, these banks have been viewed less like financial utilities and more like gambles on the economy as a whole.

And so it is that the big bank stocks whipsaw with the daily news.

Versus a month ago, not a heck of a lot has changed. There's still uncertainty in Europe and the housing market. And litigation still looms regarding mortgages and foreclosures.

The banks did report earnings and in general showed some positive loan growth. And you wouldn't know it from the share-price gains (the purest regular banks, Wells and U.S. Bancorp, gained the least), but regular banking operations fared better than investment banking operations.

But remember, stocks move on changes in expectations. When you're priced for Armageddon, the rising of the sun boosts shares. See Bank of America's 27.2% gain.

That's where we are in banking. We'll see what February brings.

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Editor's Note: A previous version of this article misstated 2011 returns. The Motley Fool regrets the error.