Updated to include CEO comments during conference call.

NEW YORK ( TheStreet) -- JPMorgan Chase ( JPM) said the legal fallout from the robo-signing scandal lifted its expenses by more than half a billion dollars last quarter, though employees -- not mortgages -- were the firm's most costly item.

The New York-based bank said noninterest expenses related to its mortgage banking division were $1.7 billion during the last three months of 2010, roughly 11% of overall noninterest expenses. That figure was up $580 million, or 50%, from the fourth quarter of 2009, "driven by an increase in default-related expense for the serviced portfolio, including costs associated with foreclosure affidavit-related delays."

JPMorgan also added $1.5 billion to reserves for mortgage-related litigation and charged off $1.7 billion in mortgages gone sour, from subprime loans to prime loans and home-equity lines of credit.

In the fourth quarter, JPMorgan earned $4.8 billion, or $1.12 a share, up 47% from the year-ago period. In an encouraging sign, revenue also climbed 13% to $26 billion from $23.2 billion during the fourth quarter of 2009. The bank said improving credit trends and strong results in certain investment banking businesses helped strengthen results.

On a conference call to discuss fourth-quarter results, CEO Jamie Dimon predicted that lawsuits over defaulted mortgage debt will take "years" and that "litigation is going to be fought securitization by securitization - there's just no other way to do it."

"This is going to be a long, ugly mess," said Dimon, "but the important thing is it's not going to be life-threatening to JPMorgan."

Yet while mortgage-related issues have garnered a lot of attention, the most expensive item for JPMorgan had nothing to do with foreclosures or other delinquent loans. Instead, it was costs related to hiring and bonuses.

The firm said a rise in performance-based compensation was the biggest contributor to its $4.2 billion in noninterest expenses at its investment banking division -- a hike of 84% from the year-earlier period, and up 13% from the third quarter.

Similarly, costs at the broader retail banking division which houses the mortgage arm rose to $4.8 billion, a 12% year-over-year rise driven mostly by hiring.

Dimon said in a statement that JPMorgan "made substantial investments in the future of our businesses this year, opening branches and offices, and adding bankers around the world, including hiring more than 8,000 people in the U.S. alone."

-- Written by Lauren Tara LaCapra in New York.

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