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Shares of

First Republic Bank

are still in free fall even after the banking industry provided the lender with billions of dollars in cash. That money might be enough to avoid having regulators step in to protect depositors, but investors are still worried their stakes in the bank will be either diluted or wiped out.

First Republic Bank (ticker: FRC) stock fell $10.85, or 47%, to close at $12.18 on Monday, adding to a plummet that has wiped out 90% of the stock’s value this month. The shares closed at $123.01 at the end of February.

The

S&P 500
and

Dow Jones Industrial Average
rose 0.8% and 1.2%, respectively. The SPDR S&P Regional Banking ETF (KRE), which contains shares that were slammed as banks came under strain last week, gained 1.1%.

Shares of First Republic are still falling despite news on Thursday that the bank is receiving $30 billion in uninsured deposits from

Bank of America

(BAC),

Citigroup

(C),

JPMorgan Chase

(JPM),

Wells Fargo

(WFC),

Goldman Sachs

(GS),

Morgan Stanley

(MS),

Bank of New York Mellon

(BK),

PNC Financial

(PNC), State Street (STT),

Truist Financial

(TFC), and

U.S. Bancorp

(USB).

First Republic needed the cash and the vote of confidence because depositors had been rushing to withdraw their money last week, reasoning that the lender could face a crisis similar to the one that led to the collapse of Silicon Valley Bank, owned by

SVB Financial

(SIVB), earlier in the month.

Anyone with less than $250,000 at Silicon Valley Bank was automatically insured against losses by the Federal Deposit Insurance Corp., but customers with more than that in the bank were at risk of losing some of their money if the bank failed. On March 12, the FDIC moved to bail out uninsured depositors at Silicon Valley Bank, as well as those at

Signature Bank

(SBNY), which also went under.

Regulators’ decision to take over the banks and bail out depositors protected the lenders’ customers, but hurt investors in their stocks and debt. SVB bonds were at about 60 cents on the dollar late Monday, after trading above 90 cents before the crisis. SVB stock hasn’t traded since March 9.

Signature bonds are trading at about 25 cents on the dollar. The stock hasn’t traded since March 10.

Bonds of First Republic, meanwhile, have traded down to about 55 cents on the dollar, compared with about 80 cents before the bank’s crisis. First Republic shares are down about 90% so far this month, with a loss of about 64% since announcing the deposits from other financial institutions.

Many banks have been working to add cash to their balance sheets since regulators took over Signature and SVB, wrote Davidson analyst Gary Tenner in a Monday report.

One tool to do that, especially for banks that are under financial stress, is borrowing from the Federal Reserve’s so-called discount window. First Republic indicated March 16 that its use of the Fed’s discount window ranged from $20 billion to $109 billion over the prior week. The bank said last week that the flow of deposits out of the bank had slowed down before it received the $30 billion in deposits from other banks.

Still, The Wall Street Journal reported Monday that the banks that deposited money at First Republic were discussing other options for the lender, including a capital injection or converting some of the deposits into equity.

That might allow regulators to avoid stepping in, but any equity offered at current levels would greatly dilute the value of the existing stock, points out Wedbush analyst David Chiaverini.

If all $30 billion in deposits were to be converted into common stock, for instance, that would represent another 2.5 billion shares, a vast amount given that First Republic has about 185 million shares outstanding. Its market capitalization is down to about $2.3 billion from $23 billion at the start of March.

Chiaverini downgraded its shares to Hold from Buy on Friday, cutting his price target to $5 a share from $140. Any distressed sale of assets of the bank could result in “minimal, if any, residual value” for stockholders.

“Ultimately the range of uncertainty around outcomes is enormous, but I still would be very cautious on the stock,” said Autonomous Research analyst David Smith, adding that wholesale funding, from the Fed, an option that could help make up for lost deposits, is relatively expensive.

Smith now projects First Republic will lose $2.80 and $3.40, respectively, in 2023 and 2024, after recording a profit of $8.25 a share in 2022. He rates First Republic shares Sell and cut his price target for the stock to $18 from $23 on Monday.

Write to Al Root at allen.root@dowjones.com