(Reuters) – Shares of major U.S. regional lenders erased premarket gains in the early hours of trading on Friday, underscoring the sector’s volatile status quo as worries of a deepening banking crisis rattled investors.
Comerica (NYSE:CMA) Inc, Fifth Third Bancorp (NASDAQ:FITB) and KeyCorp (NYSE:KEY) fell between 1% and 2%.
Shares of Western Alliance (NYSE:WAL) Bancorp also dipped. The bank’s stock had ticked down just 0.8% on Thursday, less than other industry peers, after it said total deposits jumped $600 million in the week to May 9.
PacWest Bancorp was an outlier, recovering 1% a day after the lender lost over a fifth of its market value.
The Los-Angeles-based bank had disclosed that its deposits declined last week and it posted $5.1 billion more in collateral to the U.S. Federal Reserve to boost its liquidity.
“More U.S. banks have been in the market crosshairs… despite many of the pressured banks having generally solid credit fundamentals,” DBRS Morningstar analysts said.
“In our view, these fears are likely to persist until U.S. authorities revamp deposit insurance or place a temporary prohibition on short-selling.”
Persistent worries about sector instability, worsened by the collapse of First Republic Bank (OTC:FRCB) earlier in May, have pushed down the KBW Regional Banking index nearly 14% so far this month.
Retail traders looking to buy the dip bet aggressively on the sector during the bigger selloffs on May 2 and May 4, but had lost nearly 33% of their investments as of May 10, according to a report from Vanda (NASDAQ:VNDA) Research.
The Federal Deposit Insurance Corporation (FDIC) said on Thursday it will charge lenders with a special assessment fee of 0.125% on uninsured deposits in excess of $5 billion.
But analysts suggested that the FDIC’s fees were no cause for concern.
“While the special assessment is meaningful in terms of dollars overall to the industry, it is not as meaningful on a per-bank basis,” Raymond James analysts wrote in a note.
Charles Schwab (NYSE:SCHW) shares were up 2.5% after the banking and brokerage firm said that so far in May, it had seen fewer clients move their funds away from its accounts to other high-yield products.
The pace of such “cash realignment” has slowed for three straight months and will abate during 2023, it added.
