Shares of First Republic (FRC) and other regional banks rose during a volatile session on Tuesday, reversing Monday’s heavy selloff following the collapse of the Silicon Valley bank.
Shares of First Republic closed 28% higher in their biggest one-day gain on record. The San Francisco-based bank’s stock soared as much as 55% on Monday after losing a record 62% of its value.
Shares of Western Alliance (WAL) soared over 47% but closed 15% higher in what proved to be a volatile session. PacWest Bancorp (PACW) stock rebounded 28% after falling 21% in the previous session. Zions Bank Corporation (ZION) closed higher by more than 4% but was flipping between positive and negative territory throughout the session. Zion fell 25% on Monday.
Charles Schwab (SCWH) rebounded 9% on Tuesday after closing 11% lower in the previous session. The stock of the financial services company was well positioned despite it being assured, and there was plenty of liquidity on hand.
Analysts at Deutsche Bank said liquidity risk was too high for Charles Schwab, but pointed to a near-term downside risk to earnings per share. Brian Bedell and Sam Desai reiterate their Buy rating on the stock and see “Earnings Impact from Cost of Carrying More Liquidity as Key for 2023”.
Market observers on Twitter noted the oversold positions of regional lenders on Monday despite measures from US regulators that secured guaranteed deposits. Noted investor Michael Berry wrote, “This crisis could unravel very quickly. I don’t see a real danger here.”
Last Friday, the Silicon Valley bank owned by SVB Financial (SIVB) was shut down by regulators as depositors flocked to the bank to withdraw their money. Many of the Silicon Valley bank’s clients were startups and venture capital firms, with accounts ever exceeding $250,000, an amount typically insured by the Federal Deposit Insurance Corporation, or FDIC.
Another domino fell on Sunday. Crypto-focused Signature Bank of New York (SBNY) was shut down by its state chartering authority.
On Sunday evening US regulators announced that all depositors at SVB and Signature Bank would be made whole, and announced new features to prevent deposit withdrawals into the banking system.
Ines is a Senior Business Reporter for Yahoo Finance. follow him on twitter @ines_ferre
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