Wells Fargo ( WFC), the nation's fifth-largest bank, reported a 9% gain in second-quarter profits, fueled by a surge in fee revenue from customer deposits and its mortgage-servicing business. In the quarter, the San Francisco-based bank earned $2.09 billion, or $1.23 a share, up from $1.91 billion, or $1.12 a share, in the year ago period. Revenue rose 12% to $8.79 billion. Earnings per share fell a penny shy of the Thomson First Call consensus estimate of $1.24 a share. But total revenue came in slightly ahead of the $8.77 billion forecast. Included in this quarter's result was a one cent charge for the cost of expensing stock options to employees, something that was not included in last year's second quarter results. Shares of Wells Fargo, in premarket trading, fell 58 cents to $69.97. The stock closed Monday at $68.55. A big revenue driver at Wells Fargo was non-interest income, which rose 14% to $3.8 billion. Service charges on customer deposits rose 6% to $665 million. Mortgage banking servicing fees, helped by rising interest rates, surged 210% to $735 million. Wells Fargo boasts one of the nation's largest mortgage servicing portfolios. Net interest income, the profits earned from a bank's lending and reinvestment operation, rose 10% to $4.98 billion. Wells Fargo, unlike other banks, showed little ill-effect from the narrowing of the spread between short- and long-term interest rates, something that can crimp a lender's ability to make money off of its customer deposits. The bank's net interest margin of 4.76% barely declined from the first quarter of the year, when it was 4.85%. The net interest margin is a way of measuring a bank's ability to generate income from its deposit and investment businesses. "Our second quarter net interest margin of 4.76% remained one of the highest in banking,'' says Wells Fargo CFO Howard Atkins.