J. Scott Applewhite/Associated Press 
 
 Even as profit surged, the board of JPMorgan Chase cut the pay package of its chief executive, Jamie Dimon, by 50 percent, in light of a multibillion-dollar trading loss last year. 
 
 By the overall numbers, it was a good year for JPMorgan. The bank reported a record profit of $5.7 billion for the fourth quarter, up 53 percent from the period a year earlier. Revenue was also strong, rising 10 percent, to $23.7 billion for the period. 
 
 “The firm’s results reflected strong underlying performance across virtually all our businesses for the fourth quarter and the full year, with strong lending and deposit growth,” Mr. Dimon said in statement. 
 
 But the year was clouded by a multibillion-dollar trading loss stemming from a bad bet on derivatives. JPMorgan continues to unwind the bungled trade, which had racked up $6.2 billion in losses through the third quarter of 2012. The bank said it “experienced a modest loss” in the last three months of the year. 
 
 In light of the trading losses, the bank’s board voted to reduce Mr. Dimon’s total compensation. That decision was driven by a desire to hold him accountable for some of the oversight failings that led to the troubled bet, according to several people close to the board. 
 
 The board cut Mr. Dimon’s total compensation for 2012 to $11.5 million from $23 million a year earlier. While his salary remained the same at $1.5 million, his bonus was reduced to $10 million, paid out in restricted stock. 
 
 On an earnings call on Wednesday, Mr. Dimon emphasized that this latest quarter largely signaled the end of the trading debacle. “We are getting near the end of it,” he said. Mr. Dimon acknowledged that the board “had a tough job” in assessing how to reduce his total compensation for the year. While “this was one huge mistake,” Mr. Dimon said, the board had to look at “the positives and the negatives.” He added that he “respects their decision.” 
 
 Although Mr. Dimon’s compensation fell sharply, he dodged much of the criticism for the trading losses in two reports released on Wednesday. One report details the result of a sweeping investigation into the trades led by Michael J. Cavanagh, formerly the bank’s chief financial officer, and the other outlines the board’s findings. 
 
 In the case of Mr. Dimon, the reports mainly took aim at his over-reliance on senior managers. “He could have better tested his reliance on what he was told,” the investigation found. 
 
 Instead, much of the blame centered on Ina R. Drew, who oversaw the chief investment unit where the trading took place. Ms. Drew resigned in May shortly after the losses were disclosed. 
 
 Under Ms. Drew’s leadership, there were failures “in three critical areas,” including the execution of a complex trading strategy and gaps in oversight of the large portfolio, according to the investigation. The report indicated that Ms. Drew failed “to appreciate the magnitude and significance of the changes” as the riskiness of the trades escalated. 
 
 Barry Zubrow, the bank’s former chief risk officer, was also singled out. Douglas Braunstein, who left his position as chief financial officer in November, was cited “for weaknesses in financial controls.” The investigation found that the organization should “have asked more questions or to have sought additional information about the evolution of the portfolio.” 
 
 Despite the overhang of the bad bet, JPMorgan produced record profit for the quarter, as economic and credit conditions improved. The bank reduced the money it set aside for potential losses, adding to overall profit. And the bank recorded gains in all its major divisions, showing strength in both consumer and corporate banking operations. 
 
 For the full year, JPMorgan reported earnings of $21.3 billion, compared with $19 billion in 2011. Revenue in 2012, at $97 billion, was essentially flat. 
 
 Despite the rocky market conditions and uncertainty related to the budget impasse, the corporate-focused businesses reported nice gains. Investment banking fees jumped 54 percent, to $1.7 billion, with improvements in debt and equity underwriting. Revenue in the commercial banking group hit $1.75 billion, after the 10th consecutive quarter of loan growth. 
 
 Income in JPMorgan’s asset management group rose 60 percent, to $483 million. JPMorgan has been ramping up the business, as riskier ventures get crimped by new regulation. 
 
 Like other big banks, JPMorgan’s earnings have been bolstered by a surge in mortgage lending, driven in part by a series of federal programs that have helped drive down interest rates. As homeowners seize on the low rates, JPMorgan is experiencing a flurry of refinancing applications. The bank is also making bigger gains when those loans are packaged and eventually sold to big investors. 
 
 Over all, the mortgage banking group posted profit of $418 million for the fourth quarter, compared with a loss of $269 million in the period a year earlier. 
 
 But those low interest rates also present a challenge for JPMorgan, which is dealing with glut of deposits. The bank reported average total deposits of $404 billion, up 10 percent from the fourth quarter of 2011. 
 
 As deposits pile up, the situation is weighing on profitability. The margin on deposits continued to shrink, dropping to 2.44 percent from 2.76 percent the period a year earlier. 
 
 The bank also continues to face a slew of legal problems. 
 
 In the last year, JPMorgan has worked to move beyond some of the issues stemming from the mortgage crisis. Along with competitors, JPMorgan reached deals with federal regulators over claims that its foreclosures practices might have led to wrongful eviction of homeowners. JPMorgan and other banks agreed this month to a $8.5 billion settlement with the Comptroller of the Currency and the Federal Reserve, which ends a costly and flawed review of loans in foreclosure ordered up by the regulators in 2011. The bank spent roughly $700 million this quarter on costs associated with the review. 
 
 Still, the bank is dealing with other cases that could prove costly. New York’s attorney general, Eric T. Schneiderman, filed a lawsuit against the bank related to Bear Stearns, the troubled unit that JPMorgan bought in the depths of the financial crisis. In the suit, filed in October, the attorney general claimed JPMorgan had defrauded investors who bought securities created from shoddy mortgages. 
 
 JPMorgan was also hit with two enforcement actions this week, the first formal sanctions from federal banking regulators over the bank’s multibillion-dollar trading loss. Regulators from the Federal Reserve and the Comptroller of the Currency identified flaws throughout the bank, citing failures in its ability to assess how big losses might swell as a result of the complex trades. In addition, regulators found that bank executives did not adequately inform board members about the potential losses. ||||| JPMorgan Chase slashed CEO Jamie Dimon's bonus by 53%, citing the fallout from the bank's so-called London Whale trading losses. 
 
 Dimon will take home $11.5 million, including a $10 million bonus. Last year, he was the best paid bank CEO with a $23.1 million pay package that included a $21.5 million bonus. 
 
 JPMorgan's board also decided to push back Dimon's eligibility to sell $79 million of JPMorgan's stock for 18 months. Roughly 2 million shares were eligible for vesting on Jan. 22. 
 
 "As Chief Executive Officer, Mr. Dimon bears ultimate responsibility for the failures that led to the losses in CIO and has accepted responsibility for such failures," the board said in regulatory filing. 
 
 At the same time, the board also noted that JPMorgan has reported record profits for three consecutive years and praised what they called Dimon's forceful response to the trading problems. 
 
 Related: Why is JPMorgan's board unchanged? 
 
 JPMorgan reported fourth-quarter net income of $5.7 billion, or $1.39 a share, beating forecasts, while revenue of $24.4 billion was in line with estimates. 
 
 The bank's strong results were driven by a sharp uptick in new mortgages, with mortgage originations increasing 33% year-over year. Fees from mortgages jumped 181% from the prior year. 
 
 While the housing recovery is underway, Dimon said on an analyst call that he expects mortgage revenue to bounce around over the next several quarters. 
 
 Revenues in all of the bank's business line, including investment banking and consumer banking, increased from last year. Investment banking fees jumped 52% in the fourth quarter. 
 
 JPMorgan reduced its staff by 1,500, or roughly 0.5%, to end the year with 258,965 employees. Even with the cuts, compensation expenses jumped 12% from the prior year. 
 
 For the full year, the bank earned $21.3 billion, or $5.20 a share, on revenue of $99.9 billion 
 
 Related: Hey Wall Street, get ready for more layoffs 
 
 Still, investors weren't thrilled by the bank's results. Shares of JPMorgan Chase (JPM) straddled the breakeven line Wednesday. So far this year, the bank's stock has gained more than 5%, after rallying 35% in 2012. 
 
 Going forward, Dimon said JPMorgan expects to buy back less stock in the coming quarters to shore up its capital reserves. The bank still plans to buy back up to $3 billion of stock during the current quarter, but will ask regulators for permission to repurchase fewer shares after that. 
 
 Since the financial crisis, the largest banks have been required to prove to the Federal Reserve that they have sufficient capital reserves to withstand another financial crisis. DImon said that the bank will spend this year building up its reserve related to international regulatory guidelines known as Basel III. 
 
 JPMorgan managed to generate profits during each quarter of 2012, despite recording a $6.2 billion loss from the so-called London Whale trade -- the massive bet on credit derivatives made by one of the bank's London units that went terribly wrong. 
 
 Since the trading losses were revealed, JPMorgan has shaken up its executive ranks and appointed a new chief financial officer. The bank has also fired executives and traders responsible for the losses and has said that their pay is subject to clawbacks. 
 
 In October, the bank filed suit against Javier Martin-Artajo, the former boss of Bruno Iksil, the trader who made the bad bets and came to be known as the "London Whale." A source familiar with the case said Wednesday that the suit had been settled, with Martin-Artajo agreeing to return some of his pay via the clawback mechanism in his contract. 
 
 Martin-Artajo could not be reached for comment. The news was reported earlier by Reuters. 
 
 The fallout from the London Whale continued this week, when the Federal Reserve and the Office of the Comptroller of the Currency ordered JPMorgan to improve its risk management procedures. 
 
 In November, the bank said other agencies -- including the Department of Justice and the Securities and Exchange Commission -- were also investigating the matter. 
 
 On a call with journalists early Wednesday, Dimon said he expects it to be "non-issue" very soon. "We're getting near the end of it," he said. 
 
 JPMorgan is the second major bank to report earnings. Wells Fargo (WFC) kicked off bank earnings season last Friday and Goldman Sachs (GS) reported fourth-quuarter profits that topped expectations early Wednesday. 
 
 Bank of America (BAC) and Citigroup (C) will release results Thursday morning, and Morgan Stanley (MS) reports early Friday. 
 
 CNNMoney's James O'Toole contributed to this report. ||||| Stung by a huge trading loss, JPMorgan Chase will replace three top traders starting Monday, including one of the top women on Wall Street, in an effort to stem the ire that the bank faces from regulators and investors. 
 
 They are the first departures of leading officials since Jamie Dimon, the chief executive, disclosed the bank’s stunning $2 billion loss on Thursday. 
 
 The huge scope of the complex credit bet caught senior bank officials off-guard when it began to sour last month and has set off renewed regulatory scrutiny of the industry. Mr. Dimon has largely sidestepped blame for the loss, although he has offered numerous apologies for the blunder, the biggest of his eight-year tenure at JPMorgan, the nation’s largest bank. 
 
 Ina Drew, a 55-year-old banker who has worked at the company for three decades and is the chief investment officer, has offered to resign and will step aside Monday, said several bank executives who would not speak publicly because the resignations had not been completed. 
 
 Her exit would be a precipitous fall for a trusted lieutenant of Mr. Dimon. Last year, Ms. Drew earned roughly $14 million, making her the bank’s fourth-highest-paid officer. From her desk in Manhattan, she oversaw the London office that assembled the trade, a growing unit that oversees a portfolio of nearly $400 billion. Two traders who worked for Ms. Drew are also likely to leave shortly. Ms. Drew was not available for comment. 
 
 Mr. Dimon, who will face shareholders at the company’s annual meeting Tuesday, has been on a public campaign of contrition in recent days. Mr. Dimon, the famously confident, even cocky, executive, repeated his apologies in a broadcast Sunday of NBC’s “Meet the Press.” 
 
 “We made a terrible, egregious mistake and there’s almost no excuse for it,” Mr. Dimon said, adding that the bank was “sloppy” and “stupid.” He also acknowledged that the timing of the loss was a gift for advocates of more stringent regulation. 
 
 Ms. Drew had tearfully offered to resign multiple times since the scale of the loss became apparent in late April, but Mr. Dimon had held off until now on accepting it, said people familiar with the situation. 
 
 A skilled trader who once said she relished a crisis, Ms. Drew — and the disastrous trade — had become a liability for the firm, whose announcement of the trading loss caused JPMorgan’s shares to plunge 9.3 percent on Friday. It was unclear what type of severance package Ms. Drew will receive. 
 
 “It’s not surprising that officials there are taking the fall, but this is one of the fastest movements I have seen,” said Michael Mayo, an analyst with Credit Agricole Securities in New York. “Mr. Dimon gets an A for moving to stem the wrath of regulators, but an F for not finding the problem in the first place.” 
 
 With the furor intensifying, former JPMorgan executives said, Ms. Drew was clearly feeling pressure to step down, especially with regulators and members of Congress pointing to the loss as an example of why tighter oversight of the nation’s biggest financial institutions is needed. 
 
 “The bank has taken bigger losses in investment banking and elsewhere, but because of the timing, she is being piled upon as this huge failure,” said a former senior executive, who spoke on the condition of anonymity because of the delicate nature of the situation. 
 
 Executives said that within the last several months, Ms. Drew told traders at the bank’s chief investment office to execute trades meant to shield the bank from the turmoil in Europe. Ms. Drew thought those bets could protect the bank from losses and even earn a tidy profit, these employees said. 
 
 But when market tides abruptly shifted in April and early May, Ms. Drew’s instructions to traders to trim what had become a gigantic bet came too late to avoid racking up losses that could eventually exceed the current $2 billion estimate. Within the bank, there is also ample frustration that instead of reducing the losses, Ms. Drew’s traders may have worsened them.
– That sound you're hearing is probably Wall Street's tiniest violin playing for Jamie Dimon. As many expected, JPMorgan Chase's board slashed the CEO's salary in response to the "London Whale" disaster, dropping his incentive pay a backbreaking 53.5% to $10 million, leaving him a mere $11.5 million with which to feed his family, CNN Money reports. "As Chief Executive Officer, Mr. Dimon bears ultimate responsibility for the failures that led to the losses," the board wrote. Of course, the New York Times notes that the firm had an excellent year despite the Whale episode, with fourth quarter profit up 53% year-over-year. Maybe Dimon can cry on the shoulders of Morgan Stanley's traders and investment bankers, thousands of whom will be getting IOUs instead of cash bonuses this year, the Wall Street Journal reports. In response to the financial crisis, the bank is now breaking bonuses into four chunks, the last of which will come in 2016—if the employees are still with the bank. "I don't think there will be a lot of cheers on the trading floors of Morgan Stanley," one former Fed official remarked.