Why Shares of Wells Fargo Plunged in March
Shares of Wells Fargo (NYSE: WFC) fell by more than 20% between Feb. 28 and March 31, according to data provided by S&P Global Market Intelligence. The stock fell along with the rest of the banking sector after the collapse of several U.S. banks and the forced acquisition of Credit Suisse to prevent that bank from failing as well.
The main factors that brought down several U.S. banks in March are that they had lots of uninsured deposits and lots of unrealized losses in their bond portfolios that would destroy a lot of shareholder equity if the bonds had to be sold to cover deposit outflows. So, when taking a look at banks right now, it's a good idea to check out these two metrics.
At the end of 2022, Wells Fargo had about $41.5 billion of unrealized losses that had not yet been accounted for in its equity calculation. The bank's tangible common equity at the end of last year stood at nearly $134 billion, so while the sale of the bonds would certainly be devastating, the bank would likely be able to weather the storm.
Source Fool.com
