Contagion. People are nervous that other banks are as insolvent as SVB. And even if those banks aren’t, nervous people making a bank run could replicate this. And if another bank falls, then another it would increase velocity and spread more rapidly until every bank is wiped out.
I have an account with First Republic. Should I panic and desperately try to withdraw all my money?
Only if you have more than 250k in the account - the first 250k is insured by the government and if the bank fails is typically paid back in less than a week.