First Republic drops 70%, leads decline in bank stocks despite government’s backstop of SVB

First Republic Bank led a decline in bank shares Monday that came even after regulators’ extraordinary actions Sunday evening to backstop all depositors in failed Silicon Valley Bank and Signature Bank and offer additional funding to other troubled institutions.

San Francisco’s First Republic shares lost 70% in premarket trading Monday after declining 33% last week. PacWest Bancorp dropped 37%, and Western Alliance Bancorp lost 29% in the premarket. Zions Bancorporation shed 11%, while KeyCorp fell 10%. Bank of America lost 6% in premarket trading, while Charles Schwab tumbled 20% early Monday.

The Federal Reserve created a new Bank Term Funding Program that will offer loans up to a year to banks in return for high quality collateral like Treasurys. The central bank also eased conditions at its discount window.

First Republic said Sunday it had received additional liquidity from the Federal Reserve and JPMorgan Chase. The bank said the move raises its unused liquidity to $70 billion, before any funding it could get 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,” said founder Jim Herbert and CEO Mike Roffler in a statement.

The SPDR S&P Regional Banking ETF lost 4% in premarket trading Monday following a 16% decline last week.

The slide for regional bank stocks on Monday comes after a rush of withdrawals from SVB Financial forced that bank to close. A key issue was SVB’s high percentage of uninsured deposits, as the majority of the bank’s customers were not guaranteed to get their money back before the regulatory moves over the weekend.

While SVB had an unusually high percentage of uninsured deposits, there are other mid-sized banks that could be at risk of large withdrawals.

“We  believe  regionals  with  less  diversified  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 raise cash levels. In a fragile environment like we are in, we believe banks should be cautious about the potential negative signaling effect of raising deposit rates to keep deposits,” Citi analyst Keith Horowitz said in a note to clients.

SVB was the largest U.S. bank failure since 2008, with $212 billion in assets. First Republic reported roughly $213 billion in assets as of Dec. 31, according to a securities filing.

“When the dust settles, we hope to find a degree of normalcy, but expect near-term volatility and potentially a different regional bank landscape longer term as depositors weigh the risks of banking with small-to-mid sized banks vs larger [strategically important financial institutions],” Evercore ISI analyst John Pancari said in a note to clients.

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

This is a developing story. Check back for updates.