Just when you thought the S&P 500 banking crisis was over, tanking financial stocks remind investors the crisis still rages.
Shares of 11 bank stocks in the SPDR S&P Bank ETF, including First Republic Bank, Atlantic Union Bankshares and Northern Trust, dropped 6% or much more on Tuesday, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. First Republic alone plunged 47% — in one day — following its disclosure that its deposits from customers fell to $104 billion from $176 billion in the fourth quarter.
That's exactly the kind of scare bank investors don't want to deal with now.
"It was a devastating quarter for FRC," said CFRA analyst Alexander Yokum. "FRC's brand has been severely tarnished over the last two months, noting many high-profile advisors have been leaving the bank."
Here We Go Again: Banking Crisis
Banks are saying emergency moves by the government offer stability. But bank investors seem to figure it's best to sell first and ask questions later.
All of the more than 94 stocks in the SPDR S&P Bank ETF fell on Tuesday on the heels of First Republic Bank. And some of the selling is more severe than can be easily ignored. Nearly 20% of the banks in the ETF dropped more than 5% on the day. Keep in mind, too, this is only additional pain heaped on top of already vicious selling. These banks stocks, on average, already lost more than a third of their value this year.
And what about the narrative that smaller banks will merge as deposits shift to larger banks? There's truth to that: shares of JPMorganChase are up 3% this year. But that doesn't soothe the pain of the bank ETF, dominated by smaller bank stocks. All the bank stocks in the ETF, on the other hand, are down an average of 21% this year so far. The SPDR Bank ETF itself is down 22%.
First Republic Bank: Poster Child Of Pain
When you're looking for where bank pain is the most severe, it's First Republic Bank.
Following the 47% drop on Wednesday, shares of the San Francisco-based bank are down 93% this year. Investors are fearful the bank shares some of the traits of other banks that have failed, like Silicon Valley Bank. First Republic Bank's year-to-date-drop is more severe than any other bank in the bank ETF. Next worst is PacWest Bancorp, down 55% on the year.
But what's most concerning is the fresh sell-off from already low levels. Take Atlantic Union Bankshares. The Richmond, Va.-based bank had been holding up better than most until Tuesday. Shares on the year are only down 22% on the year. But the problem is the stock tanked 15% just on Tuesday. The bank on Tuesday reported a March quarter profit of 81 cents, missing expectations by 22%.
"It was an eventful start to the year across the industry," Atlantic Union CEO John Asbury told investors on Tuesday. "Early in the quarter, deposit rate competition hit a tipping point and rapidly intensified as idle funds when in search of higher-yielding alternatives. Late in the quarter, we witnessed the dramatic back-to-back failures of Silicon Valley Bank and Signature Bank, which initially stripped confidence in an American banking system that is fundamentally built on confidence."
More bad news came from Northern Trust. Shares of the Chicago-based bank tanked nearly 10% Tuesday after it reported a nearly 15% fall in first-quarter profit. That was slightly worse than analysts had feared. Shares are now down nearly 12% on the year.
Investors hoped the government could wish away the bank crisis. But it seems investors need more than just promises.
Bank Stock Bust
Biggest sell-offs of members of SPDR Bank ETF
| Company | Ticker | Day % ch. | Year to date % ch. |
|---|---|---|---|
| First Republic Bank | -46.5% | -93.0% | |
| Atlantic Union Bankshares | -15.1% | -21.6% | |
| Northern Trust | -9.5% | -11.9% | |
| Independent Bank Group | -8.9% | -37.8% | |
| PacWest Bancorp | -8.4% | -54.8% | |
| WSFS Financial | -7.4% | -24.0% | |
| Veritex Holdings | -6.5% | -41.1% | |
| Live Oak Bancshares | -6.4% | -26.2% | |
| Columbia Banking System | -6.3% | -32.7% | |
| Simmons First National | -6.3% | -28.5% | |
| WesBanco | -6.1% | -27.3% |
Source: IBD, S&P Global Market Intelligence, based on April 25 trading
Follow Matt Krantz on Twitter @mattkrantz
