First Citizens BancShares slides after downbeat annual interest income forecast
Written by: Pritam Biswas and Arasu Kannagi Basil
Jan 23 (Reuters) – First Citizens BancShares on Friday forecast full-year interest income below Wall Street expectations, sending shares of the regional lender down more than 9%.
The Federal Reserve’s interest rate cuts in the second half of 2025 are expected to suppress the interest income of regional banks in the near term, as loan yields fall faster than deposit costs, suppressing margins and earnings growth.
According to estimates provided by LSEG, the bank expects its annual net interest income (the difference between what it earns on loans and what it pays on deposits) to be between $6.5 billion and $6.9 billion in 2026, compared to analysts’ expectations of $6.92 billion.
“Given ongoing rate cuts, we expect loan interest income to also decline due to declining returns despite asset growth levels,” Chief Financial Officer Craig Nix told analysts.
The forecast assumes zero to four rate cuts of 25 basis points in 2026. The bank expects NII to bottom out in the first quarter.
“It’s clear that lowering interest rates is a difficult adjustment, and there will be debate as to whether this is the ultimate cut,” Truist analyst Brian Foran said.
The results also weighed on other bank stocks. The KBW Nasdaq Regional Banking Index was down nearly 3% in afternoon trading.
“There is very little good news from financials today,” said Macrae Sykes, portfolio manager at Gabelli Funds, pointing to First Citizens BancShares’ weaker-than-expected 2026 NII forecast.
The bank reported an increase in fourth-quarter profit, helped by marginally rising NII in the last three months of 2025 and provisions falling by over 65% compared to last year.
First Citizens’ adjusted earnings available to common shareholders were $634 million in the three months ended Dec. 31, compared to $628 million a year earlier.
The bank’s shares are up just 1.6% in 2025 after two strong years; It recorded growth of approximately 49% and 87% in 2024 and 2023, respectively. (Reporting by Pritam Biswas and Arasu Kannagi Basil in Bengaluru; Editing by Alan Barona)
