Short interest in First Republic Bank soared in March as concerns over the institution spiked amid the bank's significant deposit outflows following the failures of two other regionals.

Median short interest in the bank's shares outstanding for March was 29.3%, sharply up from 2.69% at the end of February, according to S&P Global Market Intelligence data. That marked the biggest percentage point increase in short interest among all publicly traded banks during the month.

As of March 31, First Republic was the second-most shorted US bank stock on a percentage of shares basis, trailing only Silvergate Bank, which finished the month with a median short interest in shares outstanding of 46.4%.

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Silvergate most shorted

Cryptocurrency-focused Silvergate was also the most-shorted financial stock at the end of February. The company announced March 8 that it would wind down operations. Two of the three largest bank failures in US history soon followed with the demise of Silicon Valley Bank and Signature Bank.

The turmoil rippled through the financial system and stirred up investor worries. Silicon Valley was focused on venture capital companies, and other venture capital-exposed banks such as First Republic, Western Alliance Bancorp. and PacWest Bancorp witnessed drops in their stock prices and increased interest from short investors.

"When the run started on SVB, I think they looked around at who else is in this space, but that perception quickly metastasized into a short narrative," Western Alliance CFO Dale Gibbons said April during the company's earnings conference call.

The small short

The median short interest for all US public banks increased 9 basis points during March to 1.1% of all shares outstanding. Much of the increase occurred in the larger asset buckets.

Median short interest for large regional banks with assets above $100 billion, which include First Republic, increased 37 basis points to 1.9% of their shares outstanding as of March-end. However, the median short interest in March was highest for banks with assets between $10 billion and $100 billion, at 2.8% of all shares outstanding. That marked an increase of 27 basis points from February.