First Citizens BancShares (FCNCA.O) saw its shares plummet more than 9% on Friday after projecting full-year interest income below Wall Street expectations. The forecast reflects anticipated pressure on regional banks’ interest income due to expected Federal Reserve rate cuts in the latter half of 2025. These cuts are expected to cause loan yields to decline faster than deposit costs, squeezing margins and hindering earnings growth. First Citizens BancShares is a regional bank holding company. The company provides a range of financial services, focusing on retail and commercial banking.
The bank anticipates annual net interest income (NII)—the difference between earnings on loans and payouts on deposits—to range between $6.5 billion and $6.9 billion in 2026. This falls short of analysts’ expectations, which averaged $6.92 billion, according to LSEG estimates. Chief Financial Officer Craig Nix noted that with continued rate cuts, the bank expects loan interest income to decline due to a falling yield, despite asset growth. The forecast assumes zero to four rate cuts of 25 basis points in 2026, with NII expected to hit its lowest point in the first quarter.
The news impacted other bank stocks, with the KBW Nasdaq Regional Banking Index (.KRX) dropping approximately 3% in afternoon trading. Macrae Sykes, portfolio manager at Gabelli Funds, pointed to First Citizens BancShares’ weaker-than-expected 2026 NII forecast as a cause for concern in the financials sector. Truist analyst Brian Foran commented on the difficulty of adjusting to lower rates, questioning whether the current adjustment represents the final cut.
Despite the downbeat forecast, First Citizens reported a rise in fourth-quarter profit, supported by marginally higher NII in the last three months of 2025 and a provision decrease of over 65% compared to the previous year. The bank’s adjusted profit available to common shareholders reached $634 million for the three months ending December 31, compared to $628 million in the prior year. The bank’s stock gained only 1.6% in 2025, a marked contrast to the strong growth of nearly 49% and 87% seen in 2024 and 2023, respectively.
