Regions Financial Reports Third-Quarter 2026 Earnings of $611 Million

Regions Finl (NYSE: RF ) reported third-quarter financial results on Friday. The transcript from the company's third-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Regions Financial Corporation reported Q3 2026 earnings of $611 million, or $0.71 per share. Adjusted earnings were $622 million, or $0.73 per share. The company highlighted strong financial performance with an adjusted return on tangible common equity of 22%, and a consistent focus on investments in talent, technology, and key markets. Credit quality remained strong with annualized net charge-offs at 29 basis points of average loans, and a decline in non-performing loans.

Record revenues were reported in Capital Markets and Treasury Management, while Wealth Management revenue moderated but remained strong. Significant progress was made on the cloud-based deposit platform, expected to be completed by mid-2027, enhancing customer service capabilities. Regions Financial expects full-year average loan and deposit growth in low single digits compared to 2025, with a focus on noninterest-bearing deposits. The net interest margin increased to 3.68%, supported by disciplined deposit cost management and structural repricing dynamics.

Adjusted noninterest income increased by 3% quarter-over-quarter, driven by robust capital markets and treasury management performance. The company maintains a strong capital position with a common equity tier 1 ratio of 10.8%, allowing flexibility for strategic growth and capital returns. Management reiterated a long-term commitment to investing in technology, community engagement, and maintaining a strong franchise position. Full Transcript OPERATOR Good morning and welcome to Regions Finl's quarterly earnings call.

My name is Chris, and I will be your operator for today's call. I would like to remind everyone that all participant phone lines have been placed on listen-only. At the end of the call, there will be a question-and-answer session. If you wish to ask a question, please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue. I will now turn the call over to Chris Best to begin. Chris Best, Investor Relations Thank you. Welcome to Regions Finl's third quarter 2026 earnings call.

John and Anil will provide high-level commentary. We ask that you review the cautionary statements included in our earnings documents, which are available in the Investor Relations section of our website. These materials contain information regarding the use of non-GAAP measures and reconciliations to GAAP results, as well as forward-looking statements about Regions Finl's performance. These statements speak only as of today, and we undertake no obligation to update them.

I will now turn the call over to John. John Turner, Chairman, President & Chief Executive Officer Thank you, Chris, and good morning, everyone. We appreciate you joining our call today. Earlier this morning we reported earnings of $611 million, resulting in earnings per share of $0.71.

On an adjusted basis, earnings were $622 million, or $0.73 per share. We delivered adjusted pre-tax, pre-provision income of $870 million and an adjusted return on tangible common equity of 22%. As we move through the second half of the year, what stands out most to me is the consistency of our performance. While continuing to generate strong financial results, we've remained focused on strengthening the franchise through investments in talent, technology, products, and key markets.

Those investments continue to enhance our ability to serve customers and compete effectively. Across our businesses, we continue to see healthy customer engagement. On the consumer side, we continue to grow households and checking accounts while deepening primary relationships. Commercial clients continue to invest in their businesses, technology, and long-term growth initiatives.

While the operating environment continues to evolve, activity levels across the franchise remain constructive. Credit quality continued to be a source of strength during the quarter. Annualized net charge-offs were 29 basis points of average loans, while business services criticized and total non-performing loans continued to decline. Despite these positive trends, we remain focused on actively managing risk across the portfolio.

While soundness remains the foundation of our strategy, we're also generating strong momentum across our fee-based businesses. Capital Markets and Treasury Management each delivered record revenue during the quarter, reflecting strong client engagement and continued execution across both businesses. Wealth Management revenue moderated from record second-quarter levels but remained strong relative to the prior year. Collectively, Capital Markets, Treasury Management, and Wealth Management continue to perform at historically strong levels, demonstrating the strength of our diversified fee-based business model and the value we provide to our clients.

We continue to make meaningful progress on our cloud-based deposit platform implementation and broader modernization efforts. As we've discussed previously, we're taking a deliberate, phased approach that we believe appropriately balances execution discipline with the scale and complexity of the initiative. This is one of the most significant technology investments in our company's history, and we remain confident in both our approach and the long-term benefits this investment will deliver. Our commitment to long-term investment extends beyond talent and technology to the communities we serve.

This year marks 30 years as the official bank of the Southeastern Conference, a milestone we're proud to celebrate. We believe the longevity of that relationship reflects the strength of our brand, the depth of our community relationships, and our long-standing commitment to customers and businesses we serve. As we look ahead, we remain confident in our position. We have a strong franchise, healthy customer relationships, and a leadership team focused on execution.

We believe the investments we've made and the momentum we're seeing across the business position Regions Finl well for a strong finish to 2026 and sustained success in the years ahead. Now Anil will provide some highlights regarding the quarter. Neil Thank you, John. Let's start with the balance sheet.

Both average and ending loans increased modestly versus the second quarter, as expected and consistent with market trends. Growth moderated from the stronger pace experienced during the first half of the year. Growth was again driven by broad-based commercial lending activity, including continued strength across several C&I categories including government and public sector, and wholesale and financial services. While net loan growth remained concentrated among investment-grade commercial clients.

Production trends continue to be healthy across our emerging commercial and middle market businesses supported by recent talent investments. Consumer loan balances declined modestly during the quarter. Growth in credit card and home equity was offset by continued softness in residential mortgage and Regions' Home Improvement Finance, reflecting the higher rate environment and muted housing market activity. As we look ahead, current levels of client engagement, production activity, and pipeline strength continue to support our confidence in the growth outlook.

We continue to expect full-year average loan growth to be up low single digits versus 2025. Turning to deposits, both average and ending balances decreased modestly, primarily reflecting activity from a few of our largest commercial customers utilizing our institutional investment services for specific investment strategies combined with expected seasonal outflows in public funds deposits. As a reminder, the company continues to manage substantial excess client balances for our commercial clients totaling approximately $16 billion through highly liquid off-balance-sheet investment solutions.

Underlying commercial trends remain healthy with continued growth in new accounts and increases in both average and ending commercial noninterest-bearing balances during the quarter. Retail deposits performed as expected with growth in new accounts partially offset by late summer seasonal spending. Consumer money market balances continued to grow while year-to-date small business account openings reached their highest level in the past decade excluding the pandemic period and are approximately 100 basis points higher than the prior year period.

We remain disciplined in managing deposit costs in an elevated rate environment while leveraging the strength of our deposit franchise to drive customer acquisition and retention. Our noninterest-bearing deposit mix remained in the low 30% range, consistent with our target and reflective of the operational nature of our deposit base. We continue to expect 2026 average deposits to be up low single digits versus the prior year. Let's shift to net interest income.

Net interest income increased 2% linked quarter, building on recent momentum and supported by structural repricing dynamics and balance sheet expansion. Net interest margin increased 2 basis points to 3.68%, reflecting our strong profitability and deposit funding advantage. During the third quarter, interest-bearing deposit costs were largely stable, increasing just one basis point to 1.70%. Disciplined deposit cost management and our operating account mix continues to provide a strong foundation for earnings in the current elevated interest rate environment.

We expect the interest-bearing deposit beta will remain in the mid- to high-30% range through the rising rate cycle, supporting a mostly neutral interest rate risk position in the fourth quarter. However, lags in the repricing of certain retail deposit products following the September rate hike will provide a modest lift to net interest income. We are positioned well to benefit from higher middle and long-term interest rates through fixed-rate asset turnover. In the third quarter, yields on newly originated fixed-rate assets were approximately 100 basis points higher than the yields on maturities.

We expect this repricing advantage to expand to between 100 and 125 basis points in the fourth quarter, providing a tailwind that persists for multiple years assuming current rate levels while moderating through time. As previously mentioned, loan growth moderated during the quarter. However, we did see momentum pick up late, further supporting average balance and net interest income growth into the fourth quarter. The mix of loan growth continues to migrate towards high-quality credits and while this creates a headwind for asset spreads, net interest income and margin, the economic trade-off is evident in improving credit results and deepening customer relationships.

Similarly, while the funding mix in the third quarter was negatively impacted by the migration of certain deposits to off-balance-sheet products, the resulting shift supports fee revenue. Looking forward, we expect a more balanced loan and deposit growth profile to sustain profitability. Assuming the next Fed rate hike occurs in December, we expect fourth quarter net interest income to increase between 1 and 2% supported by persistent tailwinds from higher rates, structural repricing, disciplined deposit cost management, balance sheet growth, and the seasonal HR asset dividend. The fourth quarter net interest margin is expected to be approximately 3.70%.

Now let's turn to fee revenue performance for the quarter. Adjusted noninterest income increased 3% on a linked-quarter basis driven primarily by record capital markets and treasury management revenue, as well as growth in commercial credit fees, bank-owned life insurance income, and other noninterest income, partially offset by a $28 million decline in the market value on employee benefit assets. Capital markets income increased 23% compared to the prior quarter driven by stronger M&A advisory activity, securities underwriting and placement fees, commercial swap income, and syndications revenue.

Looking ahead, activity levels remain constructive and we continue to expect fourth quarter revenue to be within our previously communicated range of $90 to $105 million. The timing of client activity and market conditions will influence where we land within that range. For full year 2026, we continue to expect adjusted noninterest income to grow between 3 and 5% versus 2025 with results continuing to track toward the lower end of that range. Let's move on to noninterest expense.

Adjusted noninterest expense was relatively stable compared to the prior quarter. Lower salaries and benefits expense, attributable primarily to lower market value adjustments for supplemental employee benefit liabilities along with a decline in other expense, helped offset higher equipment and software expense and increased professional, legal, and regulatory costs during the quarter. As expected, continued investments in technology and infrastructure were offset by disciplined management across the broader expense base. Overall expense trends remain consistent with our expectations for the year.

For full year 2026, we continue to expect adjusted noninterest expense to be up between 1.5 and 3.5%, and we expect to deliver full-year adjusted positive operating leverage. Regarding asset quality, we were encouraged by strong credit performance during the quarter reflecting the strength and resiliency of our customer base and our continued disciplined approach to risk management. As John highlighted, annualized net charge-offs as a percentage of average loans declined 13 basis points to 29 basis points. Business Services criticized and nonperforming loans both improved during the quarter.

The Business Services criticized ratio declined 30 basis points to 4.71% while the nonperforming loan ratio declined 8 basis points to 59 basis points. The allowance for credit losses ratio declined 2 basis points to 1.61%. Continued progress within previously identified portfolios of interest were largely offset by reserves maintained for macroeconomic uncertainty and other qualitative factors, resulting in a relatively stable reserve balance during the quarter. We continue to expect full year 2026 net charge-offs to be between 40 and 50 basis points and, based on performance to date, now expect to trend toward the lower end of that range.

Let's turn to capital and liquidity. We ended the quarter with an estimated common equity tier 1 ratio of 10.8% while executing $95 million in share repurchases and paying $255 million in common dividends during the quarter. Liquidity remains robust with total sources well above required levels. Modest declines during the quarter reflect the impact of higher interest rates on collateral valuations as well as the changes in loans and deposits discussed previously.

Regions remains well positioned to support future loan growth while maintaining its disciplined approach to balance sheet management, including the impact of ASEI and reflecting the proposed Basel III endgame risk-weighted asset changes. Our estimated CET1 ratio was approximately 10%. This level remains well above our target range of 9.25 to 9.75% and provides continued flexibility to support strategic growth and return capital to shareholders. Regions maintains a strong earnings profile that consistently generates capital and we will continue to execute strategies to further reduce our sensitivity to interest rates.

Overall, we're pleased with our third quarter performance, which reflects the strength of our franchise, the resiliency of our customer base, and the disciplined execution of our long-term strategy. We remain well positioned to support our customers, invest in growth opportunities, and deliver sustainable value for shareholders. With that, we'll open the line for your question. OPERATOR Thank you.

We will now be conducting a question-and-answer session. If you would like to ask a question, please press Star-One on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star-Two if you would like to remove your question from the queue.

Please hold while we compile the Q&A roster. Thank you. Our first question comes from the line of Ryan Nash with Goldman Sachs. Please proceed with your question.

Ryan Nash, Analyst at Goldman Sachs Good morning, guys. So you guys have been able to buck the trend this quarter. Deposit growth is up just one basis point. Maybe just talk about expectations embedded in the 4Q NII guide.

And ahead. Neil, I know you mentioned they could lag a bit, but looking forward, just how do you think about balancing growing deposits to support the balance sheet and also continuing to maintain a peer-leading margin? Maybe just a little bit of color on how you think about incremental funding from here. Thank you.

And I have a follow-up. Neil Yeah, thank you. So the most important thing to protect the margin is to make sure we continue to grow noninterest-bearing deposits. And so that has been a key focus of ours.

That's why we're making the investments we are across our retail network, across the small business platform. We've seen great results so far this year. Small business operating accounts are up over 100 basis points this year. And so continuing to do that, it is day-to-day fighting.

But that is the key to success. The overall composition of our balance sheet is also what helps us. Having a relatively lower loan-to-deposit ratio is helpful. Having a lower debt footprint is helpful.

It allows us to continue to invest in profitable loan growth while being able to maintain deposit cost flexibility and having the funding needed to fund that growth through time.