With earnings season fast approaching, investors should get to see whether this has become a pain point for banks. The Fed’s data show a $15 billion drop in unrealized gains since March. According to the FDIC, total bank profits for the first quarter were around $40 billion. So we’re talking significant numbers here.
Longer term, higher rates should be — as the bank CEOs contend — better for the banks. But that doesn’t mean the shorter-term rate-transition period will be without hiccups and dislocations — like losses on the balance sheet. This may agitate some investors. But for patient investors with their eyes on well-run banks, it could also mean opportunity.
Is Wells Fargo a buy?
Wells Fargo & Co (NYSE:WFC)’s dedication to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains?
The article There May Be a Leak in Banks’ Balance Sheets originally appeared on Fool.com.
Matt Koppenheffer owns shares of Bank of America Corp (NYSE:BAC). The Motley Fool recommends Bank of America and Wells Fargo & Co (NYSE:WFC). The Motley Fool owns shares of Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC).
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