After three U.S. banks collapsed within a matter of days, spooked investors widely sold bank stocks on concerns that problems could be lurking elsewhere in the financial sector.

One of the main issues that led to those bank failures was that banks were sitting on huge unrealized losses in their bond portfolios. Higher interest rates led customers to move deposits out of their banks or into higher-yielding products, and as liquidity became pressured, institutions like SVB Financial faced potentially having to sell their bonds at huge losses, which could have wiped out all of their equity. These fears triggered an outright bank run on SVB's Silicon Valley Bank.

While there are lots of banks sitting on lesser levels of unrealized bond losses, several correctly predicted that interest rates were going to rise significantly and made smart moves to position their balance sheets accordingly, avoiding the bond debacle.

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Source Fool.com