First Republic drops, bank stocks decline

First Republic Bank led a decline in bank shares Monday that got here even after regulators’ extraordinary actions Sunday evening to backstop all depositors in failed Silicon Valley Bank and Signature Bank and offer additional funding to other troubled institutions.

San Francisco’s First Republic shares lost 65% in premarket trading Monday after declining 33% last week. PacWest Bancorp dropped 24%, and Western Alliance Bancorp lost 61% within the premarket. Zions Bancorporation shed 21%, while KeyCorp fell 12%. Bank of America lost 4% in premarket trading, while Charles Schwab tumbled 8% early Monday.

The Federal Reserve created a latest Bank Term Funding Program that can offer loans as much as a yr to banks in return for prime quality collateral like Treasurys. The central bank also eased conditions at its discount window.

First Republic said Sunday it had received additional liquidity from the Federal Reserve and JPMorgan Chase. The bank said the move raises its unused liquidity to $70 billion, before any funding it could get from the brand new Fed facility.

“First Republic’s capital and liquidity positions are very strong, and its capital stays well above the regulatory threshold for well-capitalized banks,” said founder Jim Herbert and CEO Mike Roffler in a press release.

The SPDR S&P Regional Banking ETF lost 4% in premarket trading Monday following a 16% decline last week.

The slide for regional bank stocks on Monday comes after a rush of withdrawals from SVB Financial forced that bank to shut. A key issue was SVB’s high percentage of uninsured deposits, as nearly all of the bank’s customers weren’t guaranteed to get their a reimbursement before the regulatory moves over the weekend.

While SVB had an unusually high percentage of uninsured deposits, there are other mid-sized banks that may very well be liable to large withdrawals.

“We  consider  regionals  with  less  diversified  and  large  uninsured  deposit bases are liable to deposit flight but not on the speed of SVB they usually should  have time to tap wholesale funding markets (resembling FHLB) and lift money levels. In a fragile environment like we’re in, we consider banks ought to be cautious concerning the potential negative signaling effect of raising deposit rates to maintain deposits,” Citi analyst Keith Horowitz said in a note to clients.

SVB was the most important U.S. bank failure since 2008, with $212 billion in assets. First Republic reported roughly $213 billion in assets as of Dec. 31, in response to a securities filing.

While First Republic is just not as concentrated in a single industry as SVB was with technology, the bank does are likely to cater to businesses and wealthy individuals who are likely to have large uninsured deposits.

“Unfortunately, certainly one of the primary consequences of SIVB’s collapse might be that it would cause a flight of uninsured deposits from smaller, less diverse banks to larger, more diverse ones,” Oppenheimer analyst Chris Kotowski said in a note to clients.

Correction: The SPDR S&P Regional Banking ETF fell 16% last week. An earlier version misstated the proportion.

This can be a developing story. Check back for updates.