Bank of America (BAC) said Tuesday that first quarter profits dropped 18% from a year ago as a key revenue source weakened, offering the latest example of how even the biggest banks are increasingly challenged by high interest rates.

Net interest income at Bank of America fell 3% from the year-earlier period "as higher deposit costs more than offset higher asset yields and modest loan growth," the bank said in a release.

That measure captures the difference between what a bank earns on its loans and other assets versus what it pays out on deposits. It is a critical contributor to profits for all banks.

Three other giant banks — JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) — also disclosed challenges with this revenue source as higher-for-longer interest rates from the Federal Reserve continue to pressure lenders to pay more to keep their depositors.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

One sign of how higher deposit rates are affecting Bank of America is that its non-interest-bearing deposits fell 16% to $520.6 billion. Another is the higher rate it paid on US interest-bearing deposits, which rose to 2.53% in the first quarter compared with 1.28% a year earlier.

Bank of America's CFO Alastair Borthwick told analysts that the company's expectation is that the second quarter will be the "low point" for net interest income and "we expect the back half of 2024 to grow" — repeating guidance it had provided previously.

Its net interest income did rise when compared to the fourth quarter and beat expectations. The bank expects to earn $14 billion from that source in the second quarter, which is more optimistic than what it implied in previous guidance.

If the Fed does in fact pull back the number of cuts it expects to make in 2024 from the current estimate of three, that could also help Bank of America since elevated rates would allow it to charge more for its loans.

"If we have less rate cuts we will benefit from that," Borthwick said, adding that "generally speaking higher for longer is better for banks."

Bank of America's stock fell 3.5% Tuesday.

Deposit pricing pressure is also rising at Wells Fargo and Citigroup, which disclosed they are shelling out more for that funding than a year ago.

That pressure is likely to intensify now that investors no longer expect a rate cut from the Fed in June, due to hotter-than-expected inflation data this past week and a surprisingly resilient economy.

One bright spot for Bank of America was its Wall Street operations.