What happened

PNC Financial Services Group (PNC 0.29%) saw its stock price fall 10.9% this week as of Friday at 10:35 a.m. ET, according to S&P Global Market Intelligence. The stock was trading at about $116 per share as of Friday at 10:35 a.m. ET, down about 26% year to date (YTD).

The markets were all down this week, as the S&P 500 was off 1.2%, the Dow Jones Industrial Average fell 1.5%, and the Nasdaq Composite dropped 0.6% this week, as of Friday at 10:35 a.m. ET.

So what

PNC Financial is the holding company for PNC Bank, the sixth-largest bank in the country, with about $562 billion in assets. It is considered a super-regional bank, with branches in 27 states, from California to Massachusetts.

There was no issue specific to PNC that caused its decline this week; rather, it was factors within the larger banking industry that seemed to sour investor sentiment on most banks. 

The major catalyst was the failure of another bank, Memphis, Tennessee-based First Republic. It was seized by federal regulators on Monday and immediately sold off to JPMorgan Chase. First Horizon, with $212 billion in assets as of Dec. 31, was the 14th largest bank in the country and the second-largest bank failure in U.S. history, behind only Washington Mutual, which went under in 2008. 

Then on Thursday, it was reported that Toronto-Dominion Bank and First Horizon called off their merger, citing regulatory uncertainty. But the recent turmoil that regional banks are facing may have played a role, particularly from the standpoint of the larger bank, TD Bank. 

Also, this week, the Federal Reserve Board raised interest rates for the 10th straight time in an ongoing effort to cool inflation. It was only hiked by 25 basis points, but the market fell on the news on fears of an economic slowdown or recession.

Now what

Fed Chair Jerome Powell, mindful of the problems in the banking industry, indicated a pause on rate hikes may be near. He also called the U.S. banking system "sound and resilient," but acknowledged that "tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation."

A recession or economic slowdown is not great for banks. But PNC had a solid first quarter and beat earnings estimates, with net income up 9% year over year. It is one of the better large banks and looks like a solid long-term buy at its current low valuation, particularly for its dividend. But given current conditions and economic uncertainty, expect near-term volatility.