Regional Bank Stocks Rebound. First Republic, PacWest, and Others to Watch.

Regional bank stocks rebounded early Thursday as the market digested remarks made by Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen.

Powell and Yellen both spoke about the safety of deposits but weren’t quite on the same page when it came to messaging. Powell, attempting to reassure the public, said “depositors should assume that their deposits are safe,” at a news conference after the Fed decided to hike rates by 25 basis points. He added that the central bank has the tools to protect depositors when there’s a threat of serious harm to the economy.

Yellen, speaking to lawmakers around the same time, said she has not considered or discussed a “blanket insurance” of more U.S. deposits.

Confidence in the regional banking sector is brittle, to say the least and Yellen’s comments were enough to fray investors’ nerves. Shares of both First Republic Bank FRC –2.85% (ticker: FRC) and PacWest Bancorp PACW –4.10% (PACW) dropped double digits Wednesday.

Shares of those banks and others were higher Thursday. The SPDR S&P Regional Banking exchange-traded fund (KRE) was up 0.9% Thursday.

First Republic was up nearly 1%, while PacWest edged about 1% lower. Western Alliance Bancorp WAL +3.33% (WAL), another regional bank, was up 6%.

On Wednesday, Citigroup C +2.12% (C) CEO Jane Fraser said the banking system is “pretty sound,” according to media reports%20%2D%20Citigroup,turmoil%20in%20global%20financial%20markets.). “This is not a credit crisis. This is a situation where a few banks have some problems and it’s better to make sure we nip that in the bud,” she said.

Billionaire investor Bill Ackman said that Yellen’s remarks, coupled with the Fed’s rate hike, could lead to an immediate acceleration of deposit outflows, in a post on Twitter. “We have gone from implicit support for depositors to [Yellen’s] explicit statement that no guarantee is being considered with rates now being raised to 5%.”

He said that 5% is a threshold that makes bank deposits “that much less attractive.”

“The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back,” he added.