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 The Bancorp (NASDAQ: TBBK) fell 3.8%. Is now the time to buy The Bancorp? Access our full analysis report here, it’s free.
- Regional Banks company Live Oak Bancshares (NYSE: LOB) fell 3.8%. Is now the time to buy Live Oak Bancshares? Access our full analysis report here, it’s free.
Zooming In On The Bancorp (TBBK)
The Bancorp’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 3.1% on the news that April CPI hit 3.8%, lifting the 10-year Treasury yield to 4.43% and confirming what bank Q1 earnings already telegraphed: rates could stay higher for longer.
Banks earn revenue from the spread between what they charge borrowers and pay depositors (net interest margin) plus fee income from advisory and trading.
Higher-for-longer rates produce a mixed effect: trading desks benefit from volatility and capital-markets activity is strong, but the marginal benefit to NIM peaks because deposit competition catches up as savers reprice into higher-yielding products faster than banks can reset loan portfolios.
The Bancorp is down 22.5% since the beginning of the year, and at $52.41 per share, it is trading 34.8% below its 52-week high of $80.34 from October 2025. Despite the year-to-date decline, investors who bought $1,000 worth of The Bancorp’s shares 5 years ago would now be looking at an investment worth $2,104.
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