Retail traders plowed more than $200 million into regional bank stocks over the last week
Individual investors plowed money into regional U.S. bank stocks over the past week despite a crisis that continues to rattle markets, betting that certain financial institutions would be able to withstand the current turmoil.
From March 17 to March 23, according to VandaTrack, these so-called retail investors funneled more than $200 million into five mid-sized lenders that attracted scrutiny following the seizures of Silicon Valley Bank and Signature Bank earlier this month.
They include San Francisco bank First Republic (FRC), which attracted $110 million in new bets. Another $36 million went to PacWest Bancorp (PACW) and Western Alliance Bancorp (WAL), according to VandaTrack. None of those banks performed well over the same period. Shares of First Republic, PacWest and Western Alliance dropped more than 54%, 7%, and 8%, respectively.
Individual traders also put another $67 million into U.S. Bancorp (USB) and Truist Financial (TFC), which are two of the country's largest regional banks. U.S. Bancorp was roughly flat over the same period, while Truist rose roughly 5%.
VandaTrack, in a note, called the buying of regional stocks "unprecedented" and said retail investors are eying "big pay-outs on a return of confidence" for the banking industry. But it expects purchases to wane and warned of more pain ahead for investors.
"We struggle to see how sentiment for banking stocks can meaningfully recover in this kind of environment."
Confidence in the regional banking sector has seesawed throughout the week as investors digest a forced marriage of UBS Group and Credit Suisse, another rate hike from the Federal Reserve, comments from Treasury Secretary Janet Yellen about future steps that could be taken if other banks run into trouble and mounting pressure on giant German lender Deutsche Bank.
This is the second straight week that some individual investors gravitated to banks despite the turmoil. But during the five trading days ending March 16, giant banks attracted the most new money.
Bank of America (BAC) pulled in almost $232 million on its own during that period. It is the nation's second-largest bank by assets. Overall, financial stocks collected “almost a billion of net flows” over that week, VandaTrack said.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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