Brian Moynihan

Bank of America isn’t living up to its self-generated hype, and investors are making the bank pay.

The company’s stock dropped as much as 1.7% on Tuesday, even after it reported quarterly profit and sales figures that beat estimates.

The problem? Net interest income (NII), which saw a surprise drop after climbing 7% in the first quarter.

To add insult to injury, JPMorgan and Wells Fargo — two of the bank’s biggest rivals — saw their respective measures rise during the period.

Bank of America’s results flew in the face of conventional wisdom — not to mention guidance from the bank itself — suggesting that Federal Reserve interest rate hikes would boost the metric. And now here it sits, firmly in the red in an area that was supposed to be one of its greatest strengths.

On the earnings call, CFO Paul Donofrio blamed the shortcoming on the sale of a credit card business in the UK, which he said suppressed long-term interest rates and other “transient factors.”

Still, the miss wouldn’t be quite as bad if Bank of America hadn’t touted itself as the biggest beneficiary of higher interest rates. In a regulatory filing from last year, the firm estimated that every 100-basis-point interest rate hike would yield $5.3 billion of NII. That blew estimates for competitors JPMorgan ($2.8 billion) and Citigroup ($2 billion) out of the water.

But fear not, said Bank of America in an online presentation. It sees NII climbing back into positive territory in the third quarter, although on the call Donofrio stopped short of giving a numerical forecast.

At the end of the day, Bank of America investors are still in good shape. Even following Tuesday’s decline, the firm is still the third best-performing company in the 24-stock KBW Bank Index since the presidential election, up a whopping 41%.

The bank pared earlier losses in late trading on Tuesday, falling 0.4% to $23.93 at 2:15 p.m. ET.

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