NEW YORK, January 24, 2026, 12:56 (EST) — Market closed.
- First Citizens BancShares dropped 8.5% on Friday following a weaker forecast for interest income in 2026
- Shares of regional banks slipped across the board as investors reassess how sensitive these stocks are to potential rate cuts
- Attention shifts to the Federal Reserve’s rate decision next week and fresh bank guidance
First Citizens BancShares shares will be back on traders’ radars when U.S. financial services stocks reopen Monday after the regional lender dropped 8.5% Friday, closing at $2,016.56. (Yahoo Finance)
The alert came late last week as investors were already gearing up for a packed earnings calendar and a Federal Reserve meeting that might reshape rate expectations for the year. (Reuters)
Net interest income—the difference between what banks earn from loans and pay out on deposits—remains the key driver for most regional lenders. But if loan yields drop faster than deposit costs when rates decline, that gap can shrink quickly.
First Citizens forecast net interest income of $6.5 billion to $6.9 billion for 2026, falling short of the $6.92 billion that analysts had anticipated, per LSEG data. CFO Craig Nix told analysts, “Given continued rate cuts, we expect loan interest income to decline.” The bank’s outlook factors in zero to four rate cuts of 25 basis points each next year, with net interest income set to bottom out in Q1. Truist analyst Brian Foran described the lower rate forecast as “a difficult adjustment,” while Gabelli Funds’ Macrae Sykes said there was “little good news from the financials” that day. (Reuters)
By the close, weakness had settled across the sector. The SPDR S&P Regional Banking ETF dropped 3.3% on Friday, with the Financial Select Sector SPDR Fund, a wider financial benchmark, slipping 1.38%. (Investing)
First Citizens reported steady credit quality in its quarterly update, highlighting $900 million returned to shareholders via buybacks and a $2.5 billion prepayment on a purchase money note. CEO Frank B. Holding, Jr. stated, “Our capital and liquidity positions remain strong.” The bank also confirmed its plan to acquire 138 branches from BMO Bank, a move expected to add roughly $5.7 billion in deposits and $1.1 billion in loans, assuming regulatory approval and a close in the second half of 2026. (First Citizens Newsroom)
Not all regional banks see the rate environment identically. Huntington Bancshares projected a record net interest income for 2026, anticipating 10% to 13% growth on its own. CEO Steve Steinour highlighted the company’s “excellent momentum” heading into the year and described its pipeline as “robust.” (Reuters)
The split matters since investors are zeroing in on banks’ rate sensitivity, funding structures, and their bets on how fast deposit costs will drop. It’s the guidance, not the headline profit, that’s driving the narrative.
The downside is straightforward: if rate cuts outpace banks’ projections, loan yields might drop before funding costs fall, squeezing margins and hitting earnings. Credit costs remain unpredictable — a downturn can swiftly push “stable” credit into higher provisions.
Monday’s open will reveal if Friday’s selloff spreads to other regional banks or remains isolated. A rebound in bank shares probably won’t happen on a “quarter was fine” report alone — investors are looking for reassurance on 2026 net interest income.
The Fed’s next major event is its two-day meeting on January 27–28. The policy decision is set for 2:00 p.m. ET on January 28, with a press conference shortly after at 2:30 p.m. (Federalreserve)
