The First Republic falls, banking stocks fall

The declines came despite news on Sunday that the Federal Reserve created a new term bank financing program which will offer loans for up to one year to banks in exchange for high-quality collateral like treasury bills. The central bank also eased conditions at its discount window.

The First Republic said on Sunday it had received additional cash from the Federal Reserve and JPMorgan Chase. The bank said the move brings its idle liquidity to $70 billion, before any funding it may obtain from the new Fed facility.

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

Herbert also told CNBC’s Jim Cramer on Monday that the the bank was operating as usual and didn’t see that many applicants leaving.

Western Alliance said in a statement that it was seeing “moderate” outflows and had taken additional steps to bolster its liquidity.

During this time, the SPDR S&P Regional Banking ETFs lost 12% on Monday after falling 16% last week.

The fall in regional bank stocks on Monday comes after a wave of withdrawals from SVB Financial forced the bank to close. A key issue was SVB’s high percentage of uninsured deposits, as the majority of the bank’s customers were uncertain of getting their money back before the weekend’s regulatory measures.

While SVB had a high percentage of uninsured depositsthere are other medium-sized banks that could be exposed to large withdrawals.

“We believe regions with less diverse and large uninsured deposit bases are at risk of deposit flight, but not at the speed of SVB and they should have time to tap wholesale funding markets (such as FHLB) and to increase cash levels. In a fragile environment such as we are, we believe that banks should be cautious about the potential negative signal effect of an increase in deposit rates to retain deposits,” said Citi analyst Keith Horowitz in a note to clients.

SVB was the biggest US bank failure since 2008, with $212 billion in assets. The First Republic reported about $213 billion in assets as of Dec. 31, according to a securities filing.

While the First Republic is not as concentrated in an industry as SVB was with technology, the bank tends to cater to businesses and high net worth individuals who have large uninsured deposits.

“Unfortunately, one of the first consequences of the SIVB’s collapse is likely to cause uninsured deposits to flow from smaller, less diversified banks to larger, more diversified banks,” the analyst said. ‘Oppenheimer Chris Kotowski in a note to clients.

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