First Republic shares are rising as regional banks attempt to get better from Monday’s sell-off

A branch of First Republic Bank in New York, United States, on Friday March 10, 2023.

jeenah moon | Bloomberg | Getty Images

shares of First Republic were sharply higher in early trade on Tuesday as concerns over the state of the regional bank seemed to be easing after a day of selling.

The stock traded 45% higher premarket and was one of the best-performing stocks of the year SPDR S&P Regional Banking ETF (KRE) – representing an increase of 7%. Shares in other regional banks also rose before the bell. PacWest 35% jumped, KeyCorp gained 16%, and Zion Bancorp advanced 11%.

Karl Schwab Also rebounded, gaining 8% in premarket trading after falling nearly 12% on Monday.

The moves come after regional banks fell sharply on Monday, even after US regulators took extraordinary measures to prop up all depositors at the now-failing Silicon Valley bank. The KRE suffered its largest one-day loss since March 2020, losing 12.3%.

First Republic led the way down, losing 61.8%. Chief Executive Jim Herbert told CNBC’s Jim Cramer that the bank was not seeing 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 the backstopping of deposits at SVB and Signature Bank, which closed on Sunday, federal regulators on Sunday also announced efforts to stabilize the broader banking system. One of these is the Fed’s Bank Term Funding Program, which allows banks to swap certain high-value assets for cash without incurring mark-to-market losses.

And while Monday’s declines in regional bank stocks showed that many investors were unconvinced that regulators’ actions would be enough to stem further bank runs, there appears to have been no widespread bank withdrawals in recent days, according to analyst Raymond James to have Daniel Tamayo.

“Outflows have not accelerated in recent days and indeed some banks have seen net inflows as SVB and Signature Bank deposits have moved,” Tamayo said in a note to clients.

Correction: The Fed announced the Bank Term Funding Program on Sunday. A previous version specified the name of the program incorrectly.