A branch of First Republic Bank in New York, USA, on Friday, March 10, 2023.
Jeenah Maan | Bloomberg | Getty Images
Shares of First Republic were up sharply on Tuesday as concerns over the condition of the regional bank appeared to ease after a day of heavy selling.
The stock was up 57% in early trading and was one of the best performing names in the SPDR S&P Regional Banking ETF (KRE) – which increased by 8%. The shares of other regional banks also rose. Pac West jump 52%, Key Corp won 15% and Zion Bank Corp advanced 17%.
Karl Schwab also recovered to gain more than 9% after falling nearly 12% on Monday.
Those moves come after regional banks fell sharply on Monday, even after US regulators took extraordinary measures to hold back all depositors from the now-failed Silicon Valley Bank. The KRE suffered its biggest one-day loss since March 2020, falling 12.3%.
First Republic ran lower, falling 61.8%. Executive Chairman Jim Herbert told CNBC’s Jim Cramer that the bank did not see any major outflows and was operating as usual. The bank also announced on Sunday that it had received additional liquidity from JPMorgan and the Federal Reserve.
In addition to reducing deposits at SVB and Signature Bank, which were closed on Sunday, federal regulators also announced efforts on Sunday to stabilize the broader banking system. One is the Fed’s Bank Term Funding Program, which allows banks to exchange certain high-quality assets for cash without recording market value losses.
And while the declines for regional bank stocks on Monday showed that many investors were not convinced that regulators’ action would be enough to stop more bank runs, there appear to have been no widespread withdrawals from banks in recent days, according to Raymond James- analyst Daniel tamayo.
“Outflows have not accelerated in recent days and some banks have even seen net inflows due to movement in SVB and Signature Bank deposits,” Tamayo said in a note to clients.
The rally held despite Moody’s Investors Service downgrading its view of the US banking system from stable to negative.
Correction: The Fed announced the Bank Term Funding Program on Sunday. An earlier version misrepresented the name of the program.
