What Happened?

A number of stocks fell in the afternoon session after oil-driven inflation pushed markets to price in Federal Reserve rate hikes rather than cuts, a direct threat to the credit cycle that regional lenders depend on. 

The 10-year Treasury yield climbed to 4.48%, up from 3.97% before the Iran conflict began, while futures markets moved to fully price in a 25-basis-point rate hike by January and an 80% probability of one by December. 

For regional banks, higher-for-longer became higher-than-higher: rising rates lift funding costs on deposits faster than they lift loan yields, squeezing net interest margins. Their commercial real estate loan books, already under stress from elevated vacancy rates, face additional pressure as tighter credit conditions slow refinancing. The Russell 2000, which contains a large concentration of regional bank stocks, fell approximately 0.9%, underperforming the broader market.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company Butterfield Bank (NYSE: NTB) fell 2.7%. Is now the time to buy Butterfield Bank? Access our full analysis report here, it’s free.
• Regional Banks company Provident Financial Services (NYSE: PFS) fell 2.9%. Is now the time to buy Provident Financial Services? Access our full analysis report here, it’s free.

Zooming In On Provident Financial Services (PFS)

Provident Financial Services’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 4 months ago when the stock gained 6.7% on the news that the company reported fourth-quarter 2025 earnings and revenue that surpassed Wall Street's expectations. 

The company's sales increased 9.6% year on year to $225.7 million, narrowly beating consensus estimates. Earnings per share for the quarter came in at $0.64, significantly ahead of the consensus estimate of $0.56 and showing strong growth from the $0.37 per share reported in the same period last year. 

Additionally, the bank's tangible book value per share, a key metric for financial institutions, also outperformed analyst expectations. The overall decent quarter, with beats on key metrics, appeared to resonate with investors.

Provident Financial Services is up 9.3% since the beginning of the year, but at $21.59 per share, it is still trading 9.3% below its 52-week high of $23.79 from February 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Provident Financial Services’s shares 5 years ago would now be looking at only $856.89.

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