The market still appears to be hunting for weakness among some smaller U.S. banks and even across Europe after U.S. authorities stepped in to guarantee deposits at Silicon Valley Bank.

This makes little sense: There should be no snowballing of runs on banks. But profit expectations could be trimmed at many firms, which could justify some — but far from all — of the price declines.

The Federal Reserve brought out its bazooka Sunday, guaranteeing funds for any bank whose depositors might have been clicking “withdraw” over the weekend.

The central bank saw clear potential for a systemic crisis in the closures of SVB and Signature Bank and acted to kill it before it got started.

In Europe, the much smaller local office of SVB in the UK was easily absorbed into HSBC Holdings Plc in a private solution negotiated by regulators swiftly over the weekend. The chances of contagion were far smaller in Europe anyway, in part because rules designed to ensure that banks can cope with a sudden wave of deposit withdrawals apply to many more institutions than in the U.S.

SVB was knocked over by a combination of its highly concentrated deposit base and very large unrealized losses on Treasuries and mortgage bonds. There are no other publicly traded U.S. banks with balance sheets that look similar to SVB’s, according to Bloomberg Intelligence’s Herman Chan.

But on Monday morning, investors continued to react as if more were equally endangered.

Shares in another California-based lender, First Republic Bank, dropped more than 60% in pre-market trading, even though its deposit base and assets are more diversified than SVB’s. First Republic had only 8% of its deposits from venture capital and private equity related businesses and funds, versus 52% for SVB, and it had a much smaller portfolio of bonds, according to analysts at UBS Group AG.

Still, investor jitters and whatever the Fed was hearing at the weekend from banks about deposit flows were enough for U.S. regulators and the Treasury to deem that there were real risks for the wider banking system.

The response was a system-wide solution, pledging cash in exchange for all Treasuries, agency debt and mortgage-backed bonds without any discount being applied to face value.

That is like quantitative easing on demand for the financial system: No bank should fail for want of cash.

In the UK and Europe, there are even fewer financial firms that might look anything like SVB or Signature Bank, or Silvergate Bank, a third lender that was shuttered last week.

HSBC has bought SVB’s UK operations for a nominal $1.20, taking responsibility for $8.04 billion worth of deposits and getting in return $10.6 billion of assets. HSBC’s UK bank had nearly $336 billion of deposits at the end of 2022, so SVB will be easily swallowed.

Many banks are likely to see profit forecasts cut if this episode leads to official interest rates peaking sooner.

Also, the costs of bank deposits are still rising to catch up with the rate rises that have already happened, so banks’ lending margins could peak sooner rather than later, too. For banks that are already weakened, or struggling with strategy, a margin squeeze and any prolonged spell of tensions will be very unhelpful.

That’s likely the main reason why Credit Suisse Group AG, along with other banks deemed to be among Europe’s weakest, saw its stock take another pasting on Monday.

But an earnings hit for many banks isn’t a crisis for the entire financial system.

Paul J. Davies is a Bloomberg Opinion columnist covering banking and finance. Previously, he was a reporter for the Wall Street Journal and the Financial Times.