First Republic shares jump 50% as regional banks try to rebound from Monday’s sell-off

FAN Editor

A First Republic Bank branch in New York, US, on Friday, March 10, 2023.

Jeenah Moon | Bloomberg | Getty Images

Shares of First Republic were up sharply in early Tuesday trading as concern over the state of the regional bank appeared to ease after a day of heavy selling.

The stock traded 52% higher in the premarket and was one of the best-performing names in the SPDR S&P Regional Banking ETF (KRE) — which was up 8%. Shares of other regional banks also surged before the bell. PacWest jumped 44%, KeyCorp gained 16%, and Zions Bancorp advanced 21%.

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Charles Schwab was also rebounding, gaining more than 13% in premarket trading after dropping nearly 12% on Monday.

Those moves come after regional banks fell sharply on Monday, even after U.S. regulators took extraordinary measures to backstop all depositors in the now-failed Silicon Valley Bank. The KRE suffered its biggest one-day loss since March 2020, losing 12.3%.

First Republic led the way lower, losing 61.8%. Executive Chairman Jim Herbert told CNBC’s Jim Cramer that the bank was not seeing big outflows and was operating as usual. The bank also announced Sunday it received additional liquidity from JPMorgan and the Federal Reserve.

In addition the backstopping the deposits at SVB and Signature Bank, which was closed on Sunday, federal regulators also announced efforts on Sunday to stabilize the wider banking system. One of those is the Fed’s Bank Term Funding Program, which will allow banks to exchange certain high-quality assets for cash without booking mark-to-market losses.

And while the declines for regional bank stocks on Monday showed that many investors were not convinced the regulators’ moves would be enough to stop more bank runs, there does not appear to have been widespread withdrawals from banks in recent days, according to Raymond James analyst Daniel Tamayo.

“Outflows did not accelerate during the last few days and, in fact, some banks have seen net inflows given movement in deposits from SVB and Signature Bank,” Tamayo said in a note to clients.

Correction: The Fed on Sunday announced the Bank Term Funding Program. An earlier version misstated the name of the program.

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