First Republic Slides Even as Regional Bank Stocks Rebound

First Republic Bank plunged after S&P Global Inc. cut its credit rating for the second time in a week, missing out on a strong rebound by its regional bank peers led by New York Community Bancorp.

Shares of the struggling San Francisco-based bank slumped by as much as 22%, extending a recent rout that had taken First Republic down more than 80% in two weeks.

Meanwhile, other mid-sized U.S. lenders saw renewed interest from investors as New York Community Bancorp jumped by a record 40% after taking over Signature Bank’s deposits and some of its loans. Western Alliance Bancorp rose 9.7%, while PacWest Bancorp gained 23% and the KBW Regional Banking Index added 3.6%.

“While this is the most serious bank crisis since 2008, the selloff is overdone, in our view, creating a buying opportunity for our Smid-Cap names,” Maxim analyst Michael Diana wrote in a note. Diana cut his price target on multiple firms — including buy-rated First Republic.

S&P lowered First Republic’s long-term issuer credit rating to B+ from BB+, having already downgraded the lender to sub-investment grade, or junk, territory last Wednesday.

The ratings agency said a recent $30 billion infusion from some of Wall Street’s biggest lenders may not solve the “substantial” challenges the bank is now likely facing, even if it does ease near-term pressure on liquidity.