First Republic shares are higher as regional banks recover from Monday’s sell-off

shares of First Republic surged Tuesday as regional bank stocks tried to recover from a deep sell-off, but many of the stocks struggled to hold their ground throughout the day.

First Republic is up 22% in afternoon trade after rising more than 60% earlier in the day. PacWest rose 25% after following a similar move, and Karl Schwab about 8% added.

However, the SPDR S&P Regional Banking ETF (KRE) rose just 1% as other regional banks failed to maintain earnings. Zions Bancorp and Western Alliance are each down about 4% in afternoon trade after rising earlier in the session.

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

First Republic led Monday, down 61.8%. Chief Executive Jim Herbert told CNBC’s Jim Cramer that the bank is not seeing any major outflows and is operating as usual. The bank also announced on Sunday that it had received additional liquidity from JPMorgan and the Federal Reserve.

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

“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.

Upbeat statements from financial managers appeared to support Tuesday’s rally. Walt Bettinger, CEO of Charles Schwab, told CNBC’s The Exchange that the company is seeing inflows in “significant numbers.” Meanwhile, KeyCorp CEO Chris Gorman said Tuesday on CNBC’s “Squawk on the Street” that his bank hadn’t seen any significant outflows of deposits in recent days and was indeed receiving cash inflows from retail customers.

However, shares of First Republic fell from daily highs after S&P Global took a negative impact on the bank’s credit rating volatile deposit flows. Moody’s Investors Service also downgraded its assessment of the US banking system to negative from stable.

In addition to backstopping deposits at SVB and Signature Bank, which was closed on Sunday, federal regulators also announced efforts on Sunday 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.

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