By Dan Fitzpatrick and Christina Rexrode 

Wells Fargo & Co. showed that lending to consumers and businesses can be more lucrative than being a big name on Wall Street, upstaging J.P. Morgan Chase & Co. with its first-quarter results.

The San Francisco bank reported a 14% rise in net income, while J.P. Morgan, based in New York and the U.S.'s largest bank by assets, suffered a 19% profit decline from last year's first quarter.

Friday's earnings reports included a fall in revenue at both giant banks as they struggled with the prolonged mortgage downturn. J.P. Morgan also was hit by its outsize clout on Wall Street, as trading revenue dropped 17% to $5.1 billion. That hurt profits in the company's investment-banking unit, which slid 24% to $1.98 billion.

In contrast, Wells Fargo, fourth-biggest in assets, benefited from its focus as a lender to consumers and businesses. Total loans at Wells Fargo rose 4% and were flat at J.P. Morgan.

"I cannot imagine a greater contrast between two sets of quarterly results," said banking analyst Nancy Bush of NAB Research LLC. Wells Fargo "continues to show why it is good not to be tied so closely to capital markets."

Of the six largest U.S. financial institutions, only Wells Fargo is expected to post a higher profit in the first quarter than it did in the same period a year earlier, according to analyst estimates collected by Thomson Reuters. The same trading slump that hurt J.P. Morgan is also expected to bruise results next week at Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc.

Wells Fargo's ascension punctuates the industry upheaval that resulted from the financial crisis. Before 2008, Wells Fargo was a regional institution on the West Coast known for purposely avoiding attention and for a cross-selling strategy of offering customers additional products and services.

"I think there were banks that were trying to grow for size," said former Wells Fargo CEO Paul Hazen, who left that role in 1998 and stayed as chairman until 2001. "We're a pretty mundane bank."

Wells Fargo's shares rose 0.8%, to $48.08, in 4 p.m. New York Stock Exchange composite trading, the only big bank to post a gain amid a broadly lower market. J.P. Morgan's shares dipped 3.7%, to $55.30.

So far this year, Wells Fargo's stock price is up nearly 6%, while J.P. Morgan is down more than 5%.

The rise in earnings for Wells Fargo is the latest in a string of triumphs for a company founded in 1852 amid the California gold rush. It still uses a horse-drawn stagecoach as its corporate logo.

Last year, Wells Fargo posted the highest net income of any U.S. bank, and its banking unit surpassed Citigroup's to become third-largest in assets behind J.P. Morgan Chase and Bank of America, according to federal data. In November, Wells Fargo became the largest bank in the world as measured by stock-market value, according to SNL Financial. Wells Fargo is now within striking distance of eclipsing Citigroup's all-time U.S. record set in 2006.

"If we just had good earnings for the quarter, it would be one thing," Wells Fargo Chief Financial Officer Timothy Sloan said. "But if you look back since the crisis, for the last five years we've been growing earnings. At some point, you have to start running out of luck and it's got to be based on something else."

Even though Wells Fargo has a smaller presence on Wall Street than J.P. Morgan, J.P. Morgan Chairman and Chief Executive Officer James Dimon told investors in February that he expects Wells Fargo to evolve into a major rival within five years.

"Wells Fargo will be in our business," Mr. Dimon said at the bank's annual Investor Day in February. "I have enormous respect for them."

He assured analysts on Friday that J.P. Morgan isn't losing any customers because of recent legal woes, noting that "clients vote with their feet and they seem to be coming to our branches and our bankers."

Wells Fargo's overreliance on U.S. consumers could still backfire amid a sharp falloff in mortgage lending, a key source of profits.

Wells Fargo made $36 billion in mortgages in the first quarter, down 67% from a year earlier and the smallest quarterly total since at least 2008. In its search for new business, Wells Fargo has been lowering minimum credit-score requirements for certain borrowers and pushing into higher-end "jumbo" home loans.

Wells Fargo's small presence on Wall Street and outside the U.S. could cause the firm to miss out on profits if the global economy accelerates and provides new momentum for J.P. Morgan and other large rivals. For now, though, Wells Fargo is "kind of fitting this nice groove," said Ken Usdin, a banking analyst with Jefferies Group LLC.

In 2008, Wells Fargo outmaneuvered Citigroup to buy troubled Charlotte, N.C., lender Wachovia Corp., giving Wells Fargo its first retail branches in nine Southern and Eastern states, including New York. Citigroup, in turn, needed a $45 billion U.S. rescue and soon began shrinking its global footprint.

Since then, Wells Fargo and J.P. Morgan have emerged as two of the sturdiest large U.S. banks, while Citigroup and Bank of America have struggled.

Legal troubles in 2012 and 2013 tripped up J.P. Morgan, which agreed to more than $20 billion in payouts as it resolved a number of government probes and lawsuits. Some of the cases involved mistakes made by the firms J.P. Morgan scooped up during the crisis: securities firm Bear Stearns Cos. and Washington Mutual Inc.

J.P. Morgan didn't admit to any criminal wrongdoing as part of the settlements.

Wells Fargo has avoided such quagmires, largely because many of the loans it inherited from Wachovia weren't been bundled into mortgage securities and resold to investors, a process that formed the basis of multiple lawsuits for other banks once those securities went bad.

It also benefited from its decision to stockpile reserves for bad loans after it bought Wachovia.

"The Wachovia portfolio turned out to be better than we had thought," Wells Fargo Chairman and CEO John Stumpf told analysts Friday. Wells Fargo's first-quarter results also got a boost from a tax gain and from setting aside less than J.P. Morgan for future losses.

Saabira Chaudhuri contributed to this article.

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