NEW YORK  —  Wells Fargo & Co. and other smaller regional banks on Tuesday posted profit gains as low interest rates bolstered growth in loans like mortgages and improved lending profit margins. 

Eleven interest rate cuts last year by the Federal Reserve to thwart a recession encouraged people to take out home equity, mortgage and other loans. At banks like Wells, this loan growth as well as a reduction in wholesale borrowing costs offset rising numbers of bad loans in the weak economy. 

San Francisco-based Wells, the No. 5 U.S. banking company, posted a 5 percent rise in profits to a record $1.18 billion, or 69 cents a share, in the fourth quarter, compared with $1.13 billion, or 65 cents a share, in the 2000 quarter. 

"Our home finance businesses both had exceptional years in 2001, reflecting historically low mortgage rates and continued strength in the housing sector," Mark Oman, executive vice president of the Wells mortgage and home equity group, said. 

Smaller banks, like Cincinnati-based Fifth Third Bancorp and AmSouth Bancorp in Birmingham, Alabama, also posted gains, citing low interest rates and loan growth. 

Bank stocks were mostly higher on Tuesday. Wells shares rose 54 cents to $43.50 on the New York Stock Exchange, Fifth Third shares gained 91 cents to $61.03, and AmSouth added 25 cents to $19.25 a share. 

Fifth Third's profits rose 21 percent in the quarter to $385.5 million, or 65 cents a share, compared with $319.1 million, or 55 cents a share, in the year-ago period. 

AmSouth posted an 11 percent rise in profits to $140.5 million, or 38 cents a share, in the quarter, compared with $126.6 million, or 34 cents a share, in the 2000 quarter. 

"Our wider net interest margin and improving credit quality drove this quarter's earnings growth," AmSouth Chairman and Chief Executive Dowd Ritter said in a statement. 

Wider lending profit margins and healthy consumer loan growth against a backdrop of low interest rates fueled gains at Wells Fargo, which is a leader in the mortgage business. Its net interest income jumped 23 percent to $3.45 billion, offsetting a 6 percent drop in its noninterest income to $2.45 billion, partly on investment losses. 

"The increase in loans was mostly due to continued consumer demand for home mortgage and home equity products," Wells Fargo Chief Financial Officer Howard Atkins said on a recorded phone message. 

Profits rose despite Wells' mounting problem loans. The slack economy has put pressure on corporate profits, making it harder for companies to repay debts and generating a string of high-profile bankruptcies that have left losses on many banks' balance sheets. 

Wells' nonperforming assets, or loans with potential repayment problems, rose 2 percent to $1.81 billion. Its provision for loan losses rose to $536 million in the fourth quarter, compared with $352 million in 2000. 

Fifth Third's net interest income rose to $639.6 million in the fourth quarter, compared with $584.3 million in the 2000 quarter. 

AmSouth's net interest margin improved to 4.58 percent in the quarter from 3.88 percent in the 2000 quarter. Its net interest income rose 17 percent to $375.6 million from $320.1 million.