Wells (NYSE:WFC), US Bancorp (NYSE:USB) Earnings Up, as Margins Shrink

Wells Fargo & Co (NYSE:WFC) and U.S. Bancorp (NYSE:USB) both posted a profit in the fourth quarter, led by the improvement in credit quality.

But margins at both banks were under pressure during the latest quarter.

For Wells Fargo, their increase in profits came in large part from the fashionable practice of releasing loan loss reserves in order to make their bottom line look stronger. In their case the release came to $850 million.

Even so, Wells did state their problem loans did get lower, with net charge-offs dropping 29 percent year-over-year.

Both banks noted that ongoing low interest rates continue to put pressure on profits from lending.

The bad news is companies have been borrowing, i.e. opening credit lines with banks at a higher level, but they're still not tapping into them, revealing their lack of confidence in economic growth, which has been going on since the recession began.

There will be no economic recovery until businesses begin to borrow, and their reluctance continues to confirm we're still in for a long and ongoing recession.

U.S. Bancorp was trading at $26.51, losing $0.80, or 2.93 percent, as of 2:17 PM EST. Wells Fargo was trading at $31.86, down $0.63, or 1.94 percent.