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    RF
    Earnings call· Mar 2026(Q1 FY26)

    REGIONS FINANCIAL Q1 FY26 earnings call RF

    Apr 17, 2026 Source

    Executive summary

    Regions Financial Q1 FY26 — Strong Earnings and Reaffirmed Full-Year Outlook

    Regions Financial reported strong first-quarter earnings, driven by loan and deposit growth and improving credit metrics, reaffirming its full-year guidance despite a softer start to net interest income. The company continues to invest in technology and strategic hiring, positioning for sustained growth while navigating market volatility and regulatory changes. Management expressed confidence in achieving its financial targets for the year.

    Highlights

    5

    • Reported strong Q1 earnings of $539 million, up 11% versus adjusted prior year results.

    • Adjusted pretax pre-provision income was $805 million, up 4% year-over-year.

    • Generated a return on tangible common equity of 18%.

    • Grew ending loans by 2% and average loans by approximately 1%.

    • Wealth Management revenue increased 9% year-over-year.

    Concerns

    3

    • Net interest income was lower linked quarter, and NIM of 3.67% came in below expectations due to tighter asset spreads and paydowns of higher-yielding loans.

    • Other noninterest income declined 29% linked quarter, driven by $7 million of losses from commercial lease sales.

    • Capital Markets revenue is expected to trend near the lower end of its $90 million to $105 million quarterly range in Q2 due to market volatility and elevated interest rates.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year average loans growth
    up low single digits
    high materiality
    High
    Full-year average deposits growth
    up low single digits
    medium materiality
    High
    Net interest income growth
    ~2% growth
    high materiality
    High
    Full-year 2026 Net interest income growth
    between 2.5% and 4%
    high materiality
    High
    Full-year 2026 Net interest margin exit rate
    low 3.70s
    high materiality
    High
    Capital Markets quarterly revenue
    $90 million to $105 million range, trending near the lower end of the range in the second quarter and moving higher thereafter
    medium materiality
    Medium
    Full-year 2026 adjusted noninterest income growth
    between 3% and 5%
    high materiality
    High
    Full-year 2026 adjusted noninterest expense growth
    between 1.5% and 3.5%
    high materiality
    High
    Full-year adjusted positive operating leverage
    expect to deliver
    medium materiality
    High
    Full-year 2026 net charge-offs
    between 40 and 50 basis points
    high materiality
    High
    Fully implemented Basel III CET1 ratio management target
    around the midpoint of our established 9.25% to 9.75% operating range
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Wealth Management
    Supported primarily by continued sales momentum.
    		—9%——
    Capital Markets
    Driven by improvements in commercial swap, loan syndication and securities underwriting activity, partially offset by lower real estate capital markets and M&A fees.
    		——5%—
    Treasury Management
    Including strong growth in core payments revenue. Expected to remain a source of growth within overall service charges.
    		——6%—

    Operational metrics

    21
    Adjusted pretax pre-provision income
    $805Mup 4% YoY
    Q1 FY26
    Return on tangible common equity
    18%
    Q1 FY26
    Interest-bearing deposit cost
    1.69%declined 13 bps QoQ
    Q1 FY26 exit rate

    Exit rate for Q1 FY26.

    Interest-bearing deposit beta
    35%
    Cycle average

    Following cycle interest-bearing deposit beta.

    Securities portfolio repositioning
    $900M$40M loss
    Q1 FY26

    Sale of shorter duration securities, repositioned into longer-duration product types.

    Commercial lease sales gain/loss
    -$7Mvs $6M gain in Q4 FY25
    Q1 FY26

    Impact on other noninterest income.

    Allowance for credit losses
    -$39M
    Q1 FY26

    Decline in allowance for credit losses.

    Coverage of nonperforming loans
    238%
    Q1 FY26
    Share repurchases
    $401M
    Q1 FY26
    Common dividends
    $227M
    Q1 FY26
    Basel III CET1 ratio (pro forma)
    10.4%
    Pro forma

    Estimated fully implemented Basel III CET1 ratio based on proposed changes.

    Customer liquidity
    7%
    YoY

    Customer liquidity at Regions is up year-over-year.

    Line utilization rates
    200 bpsup
    Q1 FY26

    Increase across corporate banking and middle market customers.

    Private credit exposure
    <2%
    Q1 FY26

    Limited exposure, largely investment-grade, with existing client paydowns exceeding draws.

    Allowance for macro uncertainty
    $17MQoQ growth
    Q1 FY26

    Portion of allowance increase attributed to macro uncertainty, primarily Middle East conflict.

    Transportation NPLs
    $51M
    Q1 FY26

    Nonperforming loans in the transportation portfolio.

    Transportation loans as % of total
    1.2%
    Q1 FY26

    Represents total loans in the transportation portfolio.

    Core transformation: Commercial lending system & digital origination
    on track
    Summer 2026

    Deployment expected this summer.

    Core transformation: Core deposit system pilot
    on track
    Q3 FY26

    Pilot expected in Q3, conversion in 2027.

    Strategic growth hiring progress
    >2/3
    Ongoing

    More than two-thirds of planned hiring accomplished as part of 3-year plan.

    Existing banker attrition
    nice decline
    YoY

    Year-over-year decline in attrition among existing bankers.

    Industry KPIs

    13
    MetricValueDetails
    LoansUp 2% ending; Up 1% average%
    DepositsIncreased modestly average; Up 1% ending%
    Rotce ROE18%%
    Cet1 ratio10.7%%
    Capital returns$401M share repurchases; $227M common dividendsUSD
    Fee income linesWealth Management up 9% YoY; Capital Markets up 5% QoQ; Treasury Management up 6% QoQ%
    Allowance reserves1.68%%
    Net interest incomeLower linked quarter
    Net interest margin3.67%%
    Net charge offs npls54 bps NCO rate; 71 bps NPL ratiobps
    Total operating expensesDeclined 4%%
    Provision for credit losses—
    Efficiency ratio operating leverage—

    Risks & headwinds

    4
    Market volatility and elevated interest ratesQ2 FY26

    Capital Markets quarterly revenue trending near the lower end of $90M-$105M range in Q2

    Mitigation: Focus on other fee income drivers like Wealth Management and Treasury Management; expectation for Capital Markets to move higher thereafter.

    NIM compression from tighter asset spreads and higher-yielding loan paydownsQ1 FY26

    NIM of 3.67% came in below expectations

    Mitigation: Managing deposit costs, fixed asset repricing opportunities, continued loan growth, seasonal deposit inflows.

    Macroeconomic uncertaintyQ1 FY26

    $17M allowance increase attributed to macro uncertainty

    Mitigation: Allowance for credit losses is appropriately reserved; potential for modest release if macro risks resolve positively.

    Unfavorable impact of Basel III ERBA operational loss add-onPending finalization of Basel III rules

    Operational loss component overwhelms benefits from investment-grade credits and retail exposures

    Mitigation: Monitoring proposals, evergreen option to opt-in, engagement with regulators and other constituents.

    What to watch in Q2 FY26

    5

    Net Interest Income growth

    Q2 FY26
    CurrentLower linked quarter
    Target~2% growth

    Why it matters

    NII is the primary revenue driver for banks; achieving this rebound is critical for full-year guidance.

    In the second quarter, we expect a strong rebound with approximately 2% net interest income growth, followed by additional expansion in subsequent quarters.

    Q&A highlights

    7

    How confident is management in hitting the middle/upper part of NII range, and what needs to happen?

    Management is very confident, citing strong Q1 loan growth ($2.3B point-to-point), deposit growth, continued decline in deposit costs (1.69% exit rate for interest-bearing deposits), and fixed asset turnover. For noninterest revenue, Q1 is cyclically low for consumer fees, expected to rebound in Q2. Capital markets, treasury management, and wealth management are also expected to contribute positively.

    “So first of all, we're very confident in hitting the ranges. Let me start with net interest income. So I think importantly, exiting the quarter with the strong loan growth that we saw $2.3 billion point-to-point is really a great tailwind for us heading into the second quarter, our deposit performance.”

    asked by Ryan Nash · answered by Anil Chadha

    2 min read6 chapters

    Detailed Narrative

    01

    Balance Sheet Growth and Customer Sentiment

    Regions experienced broad-based loan growth in Q1, with ending loans up 2% and average loans up 1%, primarily driven by C&I lending and higher line utilization. Customer sentiment remains generally optimistic, with businesses maintaining strong liquidity and capital positions. Consumer fundamentals are sound, though some pressure is noted among lower-income customers, partially offset by tax refunds.

    02

    Net Interest Income and Margin Dynamics

    NII was lower linked quarter, and NIM compressed to 3.67%, below expectations, due to tighter asset spreads and paydowns of higher-yielding loans. However, the core balance sheet performed well, and management expects a strong NII rebound of approximately 2% in Q2, driven by fixed-rate asset turnover, deposit inflows, and continued funding cost discipline. The company reiterated its full-year NII growth guidance of 2.5% to 4% and expects NIM to exit the year in the low 3.70s.

    03

    Fee Revenue Performance

    Adjusted noninterest revenue declined 2% linked quarter, impacted by seasonal patterns in card and ATM fees and losses from commercial lease sales. Capital Markets income increased 5%, and Wealth Management revenue grew 9% year-over-year. Treasury Management also saw strong growth, up 6% linked quarter. Management anticipates a rebound in consumer fee items in Q2 and reaffirmed full-year adjusted noninterest income growth of 3% to 5%.

    04

    Credit Quality and Outlook

    Credit metrics continued to improve, with annualized net charge-offs decreasing 5 basis points to 54 basis points. The NPL ratio declined to 71 basis points, and the business services criticized ratio improved to 5.15%. The allowance for credit losses declined $39 million, and the allowance ratio decreased to 1.68%. Management expects full-year net charge-offs to be between 40 and 50 basis points, indicating confidence in continued asset quality improvement.

    05

    Capital and Regulatory Environment

    The estimated CET1 ratio stood at 10.7%, after executing $401 million in share repurchases and paying $227 million in dividends. The company discussed the proposed Basel III changes, which, on a pro forma basis, are expected to result in a fully implemented CET1 ratio of approximately 10.4%, including AOCI and an estimated 10% reduction in risk-weighted assets. Regions remains committed to managing its fully implemented CET1 ratio around the midpoint of its 9.25% to 9.75% operating range.

    06

    Technology and Strategic Investments

    Regions is making significant progress on its core transformation, including investments in AI and new commercial lending and small business digital origination platforms expected to launch this summer. A pilot for the core deposit system is planned for Q3, with conversion in 2027. Strategic growth hiring initiatives are on track, supporting long-term growth and enhancing customer experience.

    AI-generated summary of the company’s earnings call. Not investment advice.