First Republic shares sold-off more than other regional bank stocks on Friday after it said net interest margin will be at the lower end of its prior forecast.
The bank (ticker: FRC) reported third-quarter earnings of $2.21 per share, beating consensus of $2.18 a share among analysts tracked by FactSet. Its net income of $405 million for the quarter was slightly below the $406 million forecast, but higher than the $345 million reported a year earlier.
Still, shares fell nearly 18% during Friday's trading. That is its largest intraday percent decrease on record and the stock, down 45% this year, is on pace for its worst year on-record, based on data available back to December 2010, according to Dow Jones Market Data.
That is because investors, in typical Wall Street fashion, focused on what is coming ahead for the bank rather than the past quarter as the Federal Reserve is expected to continue raising rates aggressively.
First Republic said the full year 2022 net interest margin, a key driver of performance, is impacted by the velocity of Federal Reserve's rate hikes. NIM, which measures the difference between interest income generated versus what is paid out to depositors, is now expected to be at the lower end of the 2.65% to 2.75% range estimated by the bank earlier.
Other regional banks such as PNC Financial Services (PNC) dropped as much as 3% on Friday, despite beating earnings and revenue estimates for the quarter. The bank reported $3.78 per share, ahead of the $3.70 consensus. Total revenue of $5.55 billion was more than estimates of $5.42 billion.
Huntington Bancshares (HBAN), dropped a little more than 1% on Friday, after it reported third-quarter earnings of 35 cents a share, a penny ahead of the 36 cent estimate.
First Republic assumes a Fed funds rate of 4.5% at year end, which the bank said is in line with the current market view.