Wells Fargo ( WFC) and Bank One ( ONE), two of the nation's biggest regional lenders, on Tuesday reported higher first-quarter profits that were fueled by a combination of strong consumer borrowing and improving credit quality.

Wells Fargo, the nation's fifth-largest bank, earned $1.77 billion, or $1.03 a share, up 18% from a year ago, when it earned $1.5 billion, or 88 cents a share. The Thomson First Call consensus estimate for the bank was 97 cents a share.

Total revenue at San Francisco-based Wells rose 7% to $7.1 billion, from $6.6 billion. The bank posted strong revenue even as rising interest rates took a bite of out of Wells' big mortgage business, which saw revenue fall to $800 million, down from $1.2 billion a year ago. That decline was offset by a 15% gain in revenues in other business segments.

Still, the bank reported consumer-borrowing demand rose. Consumer loans, which include mortgages, home equity loans and credit cards, rose 52% to $57 billion, compared to a year ago.

Bank One, which is merging with J.P. Morgan Chase ( JPM), posted a profit of $1.2 billion, or $1.09 a share, a 50% increase of a year ago, when it earned $818 million, or 71 cents a share. The analyst consensus estimate for Bank One was 81 cents a share.

The Chicago-based bank, in its earnings release, said the quarter's profit numbers were aided by a number of "significant items" that added 22 cents a share, or $247 million in after-tax earnings, to the bottom line. Some of those items included gains from sales of securities and the release of money from a reserve account for bad commercial loans.

Bank One was able to release those reserve funds because of significant improvement in the level of bad loans in its portfolio. Net income from commercial banking rose 93% to $425 million, largely due to the release of those reserves.

The bank also posted healthy gains from its big credit card business, the main jewel J.P. Morgan is getting in the merger. The division's net income rose 29%, or $71 million, to $319 million.