What has changed for regional banks this week?

It’s spring and you know what that means: the bears are coming out of hibernation.

This week is the California outcrop of regional bank bears. SPDR-managed regional bank ETF (ticker KRE) is smoked again, down about 6%. So far this week it’s 15% off.

But the declines come after everyone has said that the “acute” phase of the banking crisis is over; from Fed Chairman Jay Powell to Wells Fargo analyst Mike Mayo and his frantic ex Jamie Dimon.

If a new challenge for regional banks has emerged just this week, it’s hard to find. Financing costs have increased, which has been obvious for months. We have it covered HereAND HereAND Here.

Now, this week has led to the bankruptcy of First Republic and its purchase from JPMorgan’s receivership of the FDIC. But that failure was widely expected, and this handy chart from CreditSights shows why:

The First Republic almost lost 60 percent of its deposits in the first quarter. Even after that, she spent a full month funding fumes.

Western Alliance, for its part, lost just over 10 percent of its deposits in the first quarter. And 73% of its deposits were insured as of April 14th.

PacWest is also not an outlier in deposit losses and said it lost 17% of deposits in Q1. To scale, we’ve done an extremely rough addition of that deposit loss to the CreditSights chart from above:

“The thing I fail to understand is that we have no evidence – and if anything we have evidence to the contrary – that there is still concerted deposit flight in the system,” said CreditSights’ Jesse Rosenthal. Alfaville this week.

Data released later may show that banks had to increase their reliance on the Federal Reserve’s Bank Term Funding Program in the week ending May 3. In the week ending April 26, its usage rose about 9% to $81.3 billion. (At the same time, there were only about $73.8 billion in loans through the primary credit facility at the Fed’s discount window, compared with $153 billion during the March 16 post-SVB panic.)

And there are many signs that regional banks won’t have one Well weather in the coming months and years.

First, PacWest and Western Alliance both need to pay more, overall, to keep deposits. The share of interest-free bank deposits is constantly decreasing, as we reportedbecause US interest rates have risen and money market funds present an attractive alternative.

Regional banks’ exposure to offices will also be important, but could be shake on a longer timeline. Western Alliance and PacWest are both West Coast banks, after all, and San Francisco office ratings have been hit by the rapid collapse of the venture capital bubble.

Office loans made up about 3% of PacWest’s total loans at the end of the first quarter and about 21% of its commercial real estate portfolio, according to his presentation 1Q. Western Alliance Commercial Real Estate Loans net approx 25 percent of his loan bookbut he did not break down the office share in his presentation.

None of that means deposits are going out, as CreditSights’ Rosenthal points out. For now, banks can still access FHLB funding, which they don’t appear to have noticeable increase in emissions as it did after the SVB bankruptcy and the Fed’s discount window. Banks holding safe fixed-income securities can pledge them with the The Fed’s new BTFP for them nominal valueeffectively eliminating any losses on safe Treasuries or agency-backed securities.

Shareholders face a different set of risks, of course. And they seem to discover those risks only in fits and starts.

One could argue that, prior to this week, shareholders had expected regulators to force banks to buy out their failing peers before their shares were written off. Even so, the time pressure for mergers or bailouts seems lighter, as it’s hard to find other major banks that lost anything like 60% of deposits in the first quarter. PacWest announced Wednesday that “core customer deposits have increased since March 31st. . . with insured deposits equal to 75% against 71% at the end of the quarter.” The Western Alliance is paying a dividend this month.

But hey, Mercury is retrograde. Maybe that’s why.