Wells Fargo (WFC), the largest mortgage lender in the U.S., reported record income of $4.1 billion, or 73 cents a share, for the fourth quarter, up 20% from one year ago. For the full year, Wells earned $15.9 billion, up 28% from 2010. Revenue at the San Francisco-based bank dipped to $20.6 billion in the fourth quarter from $21.5 billion last year. For all of 2011, revenue dropped to $80.9 billion, down 5% from the prior year. The bank's mortgage department earned $2.4 billion in the fourth quarter, down slightly from $2.7 billion a year earlier. Wells originated $120 billion in new mortgages during the fourth quarter, down from $128 billion in the last quarter of 2010. For all of 2011, Wells Fargo originated $357 billion in new home loans down from $386 billion the prior year. The amount of mortgages listed as nonaccrual or in foreclosure dropped to $4.08 billion at the end of the fourth quarter, down from $5.2 billion a year earlier. Wells lost $272 million directly from repurchasing soured mortgages from investors, however it was nearly half of the $572 million in losses in for the three months ended Dec. 31, 2010. At the end of 2011, the bank held roughly $2 billion in provisions for credit losses, down from nearly $3 billion at the end of the prior year. Chief Risk Officer Mike Loughlin said that number is on the way down albeit at a slower pace heading into 2012. "We have seen significant improvement in credit performance over the past eight quarters, and expect continued but slower improvement in 2012 as portfolio quality approaches a stable, more normal level," Loughlin said. "Absent significant deterioration in the economy, we continue to expect future reserve releases in 2012." Write to Jon Prior. Follow him on Twitter @JonAPrior.