KeyCorp (KEY), SunTrust Banks, Inc. (STI): A Very Positive Sign for Banks

It should come as no surprise, in turn, that industry analysts expect this trend to continue. In the same presentation cited above, for example, Wells Fargo’s chief financial officer noted that “the favorable conditions that drove the [reserve] release in the second quarter have not dissipated, and we currently expect our reserve release in the third quarter to be greater than what we experienced in the second quarter” — for the record, a reserve release is the counterpoint to an increase in loan loss provisions.

For current bank investors, this is very good news, as it suggests that an increasing share of profits will be passed onto shareholders in future quarters. But for those just looking to get into the industry, it may mean valuations will continue to climb, making a profitable entry point harder to come by.

The article A Very Positive Sign for Banks originally appeared on Fool.com.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of KeyCorp, PNC Financial Services, and Wells Fargo.

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