Updated from 8:41 a.m. EST

Wachovia ( WB - Get Report) posted a 22% rise in fourth-quarter profits Thursday, showing why it was one of the best-performing bank stocks in 2002.

The nation's fifth-largest bank closed out the year by generating $891 million in net income, or 66 cents a share, compared to a year ago, when it recorded $730 million in profits, or 54 cents a share.

The Charlotte, N.C.-based regional bank, which merged just over a year ago with First Union, saw its shares rise nearly 24% last year, during a time when the Philadelphia KBW Bank Index was down about 7%. Wachovia was one of a slew of big regional banks reporting earnings on Thursday.

Wachovia's fourth-quarter earnings included a merger and restructuring charge of $92 million, or 6 cents a share.

The consensus estimate of Wall Street analysts, as compiled by First Call, called for the bank to earn 72 cents a share, but the figure didn't include the 6-cent charge.

Bank One ( ONE - Get Report), the nation's sixth-largest bank and a major credit card lender, reported a 10% rise in profits compared to a year ago, excluding a $224 million after-tax charge it took in the fourth quarter of 2001.

The Chicago-based bank earned $842 million in the quarter, or 72 cents a share, compared to $541 million, or 46 cents a share -- a figure that includes the $224 million restructuring charge. The bank's earnings were in line with analyst expectations.

Bank One's earning rise was fueled by a 16% year-over-year increase in net income from its retail banking operation. The bank took in $335 million in net income from retail banking, compared with $289 million a year ago.

In another potential bright spot, Bank One reported that the dollar value of its nonperforming commercial loans -- those overdue by more than 90 days -- fell 24% from a year ago to $873 million. The bank, which began bolstering its reserves for bad loans before many other lenders, said it had taken a number of steps the past two years to reduce its loan portfolio.

But in a potentially troubling sign for the nation's banks --especially ones that rely on derivatives to hedge against bad loans -- Bank One booked a $59 million pretax loss on a decline in value of those hedging instruments. Bank One's action comes a day after Fannie Mae ( FNM), the big mortgage buyer, announced it had to take a big accounting write-down on the value of some of its hedging derivatives.

However, in a sign that bank executives remain wary of the future, Bank One Chief Executive Jamie Dimon was cautious in commenting on the prospects for the coming year, noting that there is still a lot of "lumpiness" in the economy.

And much of the earnings growth at the banks came from continued cost-cutting and consumer lending -- the same two areas have fueled earnings growth at the banks for much of last year.

The one big downer in the banking sector on Thursday was FleetBoston Financial ( FBF), which last week said its earnings would come in well below expectations because it was setting aside an additional $800 million to cover loan losses to the energy and airline sectors. As expected, the bank reported earnings of $261 million, or 24 cents a share, compared to the original First Call estimate of 57 cents a share.

But FleetBoston's numbers were still an improvement over a year ago, when it lost $507 million in the quarter.

Other regional banks that reported relatively strong year-over-year profits numbers were Pittsburgh-based PNC Financial ( PNC - Get Report) and Detroit-based Comerica ( CMA - Get Report).

PNC earned $262 million, or 92 cents a share, compared to a loss of $430 million, or $1.52 a year ago, when the bank incurred major charges and loan losses. Soon after that big charge, PNC ran afoul of bank regulators over its handling of some of its loan losses. The bank eventually reached a settlement over its unorthodox method for trying to push some of its bad loans off its balance sheet.

Comerica, meanwhile, earned $206 million, or $1.18 a share, compared to with $199 million, or $1.11 a share a year ago. The bank's fourth quarter earnings came in two cents ahead of the First Call consensus estimate of $1.16.

Regional banks like Wachovia, PNC and Comerica were aided last year by strong growth in consumer lending -- mainly new mortgages and home refinancings -- and borrowing by midsize businesses. Some bank analysts, however, question whether that can continue this year now that the mortgage refinancing boom appears to be running out of gas and consumers are tightening their belts a bit.