He points out that higher long-term rates with no follow-through rise in short-term rates could mean that the modest benefit to net interest income from deploying excess liquidity into higher-yielding investments could be offset by lower mortgage banking income as refinancing volumes dry up.
But other analysts say the rise could be positive at least in the beginning.
"The initial rise in rates is very favorable to banks because it widens their spread. But if that rise in rates turns out to be parabolic and the losses in their bond portfolios become much greater than anticipated, that rise in rates turns negative," Gerard Cassidy, an analyst at RBC Capital Markets, told CNBC. "We're not there yet, but it's something we're watching."
For Wells Fargo, which has a large mortgage business, lower mortgage banking revenue means that earnings growth could be more challenging. And with little reason to hike earnings estimates, KBW's Mutascio downgrades the stock to "market perform" after its recent run up.
Mutascio said the multiple would have to expand for the stock to trade higher. But already trading at a premium to its long-term average, that's a tall order.
"In the current environment where revenue growth and pretax, pre-provision earnings growth is tough to come by [even for a strong franchise like Wells Fargo] and re-regulation continues to impact the largest banks, we are hesitant to raise target prices on multiple expansion alone and are unwilling to apply premium multiples to historical valuations," Mutascio wrote.