By Jonathan Stempel

NEW YORK (Reuters) - Wells Fargo & Co (WFC.N: Quote, Profile, Research) on Wednesday posted a quarterly profit that easily topped forecasts, as it won more mortgage customers, boosted revenue and cut costs, helping to offset a big increase in bad loans.

Though profit fell 11 percent, the second straight quarterly decline, the results show the fifth-largest U.S. bank continues to navigate the nation's housing and credit crisis more smoothly than most large rivals. Wells Fargo is also the second-largest U.S. mortgage lender.

"They're facing the same headwinds, but they have always been conservative in lending, and never were as far out on the risk curve," said Richard Moroney, chief investment officer of Horizon Investment Services LLC in Chicago.

Shares rose $1.69, or 6.1 percent, to $29.50 in late morning trading on the New York Stock Exchange.

First-quarter profit for San Francisco-based Wells Fargo fell to $2 billion, or 60 cents per share, from $2.24 billion, or 66 cents per share, a year earlier.

Revenue increased 12 percent to $10.56 billion, while expenses dropped 1 percent to $5.46 billion.

Analysts on average had forecast profit of 57 cents per share on revenue of $10.4 billion, according to Reuters Estimates. Results included gains of $485 million tied to credit card network Visa Inc's (V.N: Quote, Profile, Research) initial public offering last month.

"Despite a weakening economy, the continued downturn in housing and expected higher charge-offs, this was a remarkably strong quarter," Chief Executive John Stumpf said.