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UPDATE 1-Wells Fargo 3rd-qtr net up on strong mortgage lending

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(Adds details on mortgage banking, net interest margin)

Oct 12 (Reuters) - Wells Fargo & Co on Fridayreported a 22 percent increase in third-quarter profit on asurge in mortgage lending.

The fourth biggest U.S. bank said net income totaled $4.9billion, or 88 cents a share, in the quarter, up from $4.1billion, or 72 cents a share, in the same period a year earlier.The bank's latest EPS topped the analysts' consensus estimate of87 cents, according to Thomson Reuters I/B/E/S.

Wells Fargo, the largest U.S. home lender, posted mortgagebanking revenue of $2.8 billion, up more than 50 percent from ayear ago. The bank made $139 billion in mortgages versus $89billion a year ago, but up only slightly from the secondquarter.

Wells Fargo and other banks are experiencing a jump in homelending as borrowers refinance their homes at low interestrates.

The bank's net interest margin - the spread it makes on whatit pays on deposits and makes on loans - fell to 3.66 percentfrom 3.91 percent in the second quarter, a bigger drop than ithad warned of last month. Banks are seeing the margin shrink asolder loans with higher interest rates are paid down.

(Reporting By Rick Rothacker in Charlotte, N.C.; Editing byJeffrey Benkoe)

((rick.rothacker@thomsonreuters.com)(+1 704 998 2504)(ReutersMessaging: rick.rothacker.reuters.com@reuters.net))

Keywords: WELLSFARGO EARNINGS/