Banking crisis: Regional bank stocks soar after Yellen reassurance

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First Republic and other regional bank stocks surge as Yellen sees crisis 'stabilizing' and big lenders eye more support

The Treasury Department, the FDIC and the Federal Reserve protected all depositors at Silicon Valley Bank and Signature Bank after they were seized to ward off a broader run on banks. Deposits were covered above the FDIC's account limit of $250,000. ."And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."late Monday that JPMorgan CEO Jamie Dimon was working on a second round of funding for First Republic.

Despite the latest rally, the largest 12 banks in the S&P 500 Financials Sector are widely underperforming theso far this year, DataTrek Research co-founders Nicholas Colas and Jessica Rabe wrote in a Tuesday note. "On the plus side, they are very cheap now and have solid dividend coverage ratios. Also, despite all the recent turmoil, analysts are not cutting their 2023 EPS estimates," they wrote.

"On the downside, every name here will have to go through the Fed's 2023 Stress Test/CCAR process. This will determine their ability to raise/maintain dividends and stock buybacks. These results will not be out until June, a long time to wait for a catalyst."

 

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