The opening days of the first-quarter earnings season have spurred a sigh of relief among investors, especially when it comes to the regional banks whose future seemed seriously in doubt just a month ago. The headliner of the group is Western Alliance , which said on Tuesday that its deposits dropped 11% in the first quarter, to $47.6 billion, but that the trend has reversed and deposits grew by $2 billion in the first two weeks of April. The stock surged by 17% on Wednesday after being down about 45% for the year before the report. WAL 1D mountain Western Alliance’s stock surged on Wednesday. The inflows of deposits suggest that individual and business customers have grown comfortable with the banks again after a wave of withdrawals led to the failures of Silicon Valley Bank and Signature Bank in March. “It appears that mgmt. has stabilized the liquidity stress that it experienced in the aftermath of SVB’s failure,” Bank of America analyst Ebrahim Poonawala said in a note to clients about Western Alliance’s report. Similarly, Wells Fargo analyst Timur Braziler said in a note that “existential risk” is off the table for Western Alliance, and that sentiment could be extended across much of the group. For example, Wedbush upgraded Western Alliance to outperform from neutral and added the stock to its best ideas list, but it also added Regions Financial , M & T Bank and New York Community Bancorp . A quick glance at the early reports from the biggest regional banks show only modest deposit declines in the first quarter. One deposit drop that caught some analysts off-guard among the larger regional banks was a nearly $20 billion decline at US Bancorp , but the bank still has more than $500 billion in deposits. More than half of the decline came from accounts associated with MUFG Union Bank, which US Bancorp acquired late last year. The much smaller SVB, by contrast, suffered more than $40 billion in withdrawals in a single day before it was seized by regulators. There were even some smaller banks that reported growing deposits for the first quarter, including Pinnacle Financial Partners and United Community Banks . Consumer finance company Synchrony also reported an expanded deposit base. Longer term outlook However, the stabilized funding may not be enough for the regional bank stocks to catch up to their larger competitors, which are viewed as safer and have more diversified businesses. “We’re struck by the dichotomy developing between the big banks and the small banks… the former have stabilized post JPM earnings, while the latter continues to plumb fresh lows,” Strategas partner Chris Verrone said in a note to clients on Wednesday morning. Even if deposits stabilize, a shift away from noninterest-bearing accounts is squeezing profit margins at all manner of financial institutions. Citizens Financial , for example, cut its full-year guidance for net interest income growth to 5%-7% from 11%-14% previously. The loan books for these banks could also hold back the stocks. A potential recession could cause credit losses at regional banks in the coming months, and commercial real estate exposure is particularly concerning for investors. And there is at least one big hurdle still to come for regionals this earnings season. First Republic , which saw larger banks step in to refill its deposit base last month, is set to announce its results next Monday, April 24. — CNBC’s Michael Bloom contributed to this report.