Still struggling with sluggish revenue - even as it reported record second-quarter profits Tuesday - Wells Fargo & Co. is ramping up efforts to cut costs, bank officials said.

During a conference call with analysts, executives at the San Francisco-based bank, which bought Charlotte's Wachovia in 2008, shed more light on a companywide savings initiative launched last year. They plan to trim noninterest expenses to $11 billion by the end of 2012, down 12 percent from the current level, they said.

Called Project Compass, the effort will target unnecessary expenses, from inefficient technology to overlapping staff functions to foreclosure-related costs. Analysts on Tuesday said the savings goal was better than they expected. But Nancy Bush of NAB Research wondered whether the cost-control program would affect front-line employees tasked with boosting business.

Bank executives said the initiative won't stop the bank's growth and that "very little" would come from its branches. Much of the cuts will result from waning expenses related to the nearly complete Wachovia merger, while others will come from back-office functions.

Officials didn't provide details on how the initiative would affect jobs at Wells Fargo, which employs more than 270,000 workers, including about 20,000 in Charlotte.

"Revenues remain king around here," chief executive John Stumpf said. "And we think that by becoming more efficient, we actually can grow revenue faster."

Wells Fargo said Tuesday it earned $3.7 billion after paying dividends to preferred shareholders, or 70 cents per share. That's up nearly 30 percent from the second quarter last year, when the bank made $2.9 billion for common shareholders, or 55 cents per share.

Analysts surveyed by Bloomberg predicted an average earnings per share of 69 cents.

The nation's fourth-largest bank by assets, Wells Fargo outperformed some of its top competitors in the second quarter as its loan demand increased and loan losses and expenses decreased. The bank released about $1 billion it had set aside to cover loan losses, helping boost its results.

Like other big banks, though, Wells Fargo is still struggling to boost revenue in a shaky economy.

The bank's revenue climbed to $20.4 billion from $20.3 billion the previous quarter, but that was down about 5 percent from the second quarter of 2010, due in part to lingering mortgage-related issues.

New mortgage originations, for instance, slowed to $64 billion, down 21 percent over the year. Applications for mortgages, an indication of future lending, fell to $109 billion, a drop of 24 percent from 2010.

In addition, the bank racked up $428 million in operating expenses in the second quarter, substantially all from litigation accruals for foreclosure-related matters, chief financial officer Tim Sloan said. Wells Fargo and other large lenders are in settlement talks with the U.S. Justice Department and state attorneys general over allegations of faulty foreclosure practices.

Despite the difficulties, bank officials said the quarter-over-quarter revenue growth suggests stability in its loan balances and the overall strength of Wells Fargo's sources of fee income.

The bank reported big second-quarter growth in businesses including corporate banking, commercial real estate, debit card and small-business lending. It continues to attract new checking and credit card customers. And its credit quality is improving, with charge-offs, or the loans it had to write off as uncollectible, dropping to $2.8 billion from $4.5 billion last year.

Its operating expenses are already shrinking, too, falling $258 million from the first quarter to $12.5 billion.

"In a tough environment, the company's results were solid," analysts from Stifel Nicolaus said in a report.

But they cited several factors that could affect the bank's performance going forward, including the uneven economic recovery.

Sloan said the bank's second-quarter results reflect a strong franchise, with more growth and greater efficiency to come.

"We're optimistic that the momentum demonstrated in our results this quarter will drive future growth as we complete the Wachovia merger integration, remain disciplined on expenses and continue to focus on meeting the financial needs of our customers," he said.

Wells Fargo shares closed at $28.46 Tuesday, up about 6 from the previous day's close, outpacing its other big bank competitors.