Regions Financial NYSE: RF reported what CEO John Turner described as “strong first-quarter earnings” as the company posted net income of $539 million, or $0.62 per share. Turner said that result represented an 11% and 15% increase, respectively, versus adjusted prior-year results. Adjusted pre-tax, pre-provision income totaled $805 million, up 4% year-over-year, and the company generated a return on tangible common equity (ROTCE) of 18%.
Turner also opened the call by noting that Dana Nolan, Head of Investor Relations, will retire after a nearly 40-year career at Regions. He said Nolan had been “a steady and trusted voice for our company” and praised her communication style and credibility with investors.
Loan and deposit growth, with customer sentiment “generally optimistic”
Management said the momentum from late 2025 carried into the first quarter as the company grew loans and deposits on both an average and ending basis. Turner said conversations with customers indicate sentiment remains “generally optimistic” despite volatility, adding that businesses are managing balance sheets prudently with “strong liquidity and solid capital positions.” On the consumer side, Turner said trends are “stable to modestly positive,” with labor markets showing no signs of “material weakness,” though he noted pressure among lower-income customers that has been partially offset by larger income tax refunds.
On the balance sheet, management said ending loans rose 2% and average loans increased about 1%, driven by broad-based C&I lending, including power and utilities, manufacturing, healthcare, and asset-based lending. About half of the growth came from higher loan utilization, with the remainder driven by new loans, “approximately 80% of which were to existing clients,” according to prepared remarks. Nearly two-thirds of growth was investment-grade credits, with most of the remainder near investment grade.
CEO John Turner later quantified utilization as up about 200 basis points across both corporate banking and middle market customers, and said customer liquidity at Regions was up about 7% year-over-year. He added the bank expects “a little more activity” as the year progresses based on customer feedback.
On deposits, the company said average balances increased modestly while ending balances rose about 1%, reflecting seasonal patterns tied to tax refunds and payments. Management said deposit costs continued to decline, supported by product management and a shift from CDs into money market accounts across consumer and wealth businesses. Non-interest-bearing deposits remained “in the low 30% range,” consistent with the company’s target.
- Full-year 2026 average loan growth outlook: low single digits versus 2025
- Full-year 2026 average deposit growth outlook: low single digits versus 2025
Net interest income: softer quarter, but management expects a second-quarter rebound
Management said net interest income (NII) was lower quarter-over-quarter, primarily due to two fewer days in the quarter and the absence of non-recurring items that benefited the fourth quarter. Net interest margin (NIM) was 3.67%, though management said it came in below expectations due to “tighter asset spreads” from market conditions, paydowns of higher-yielding loans, and remixing into higher-quality credits.
In Q&A, management emphasized confidence in guidance. In response to Goldman Sachs’ Ryan Nash, management pointed to strong exit-quarter loan growth and continued deposit cost improvement. The company said it exited the quarter with interest-bearing deposit costs at 1.69%.
Management also described a securities repositioning completed after quarter-end: it sold about $900 million of shorter-duration securities “at a $40 million loss” and repositioned into longer-duration product types. The company characterized the move as aligned with balance sheet management objectives, with an approximately two-year payback period and improved security yields.
Looking ahead, management said it expects “a strong rebound” in the second quarter with roughly 2% NII growth, followed by additional expansion in subsequent quarters, driven by fixed-rate asset turnover, seasonal deposit inflows, accelerating loan growth, and funding cost discipline in a stable Fed funds environment.
- Full-year 2026 NII growth guidance reiterated: 2.5% to 4%
- Full-year 2026 NIM exit-rate guidance reiterated: low 3.70s
Fees: capital markets mixed, while wealth and treasury management cited as growth areas
Adjusted non-interest revenue declined 2% from the prior quarter as seasonally lower card and ATM fees and a decline in other non-interest income were partially offset by higher capital markets revenue. Capital markets income increased 5% quarter-over-quarter, driven by improvements in commercial swap, loan syndication, and securities underwriting activity, partially offset by lower real estate capital markets and M&A fees.
Management said it expects capital markets revenue to remain within a $90 million to $105 million quarterly range, “trending near the lower end of the range in the second quarter and moving higher thereafter.” In response to Morgan Stanley’s Manan Gosalia, Turner said the primary area impacted by the rate environment has been real estate capital markets, which has been soft for “4 or 5 quarters.” He added that if longer-term rates come down, Regions expects a benefit in that business “which would be important.”
Wealth management revenue rose 9% year-over-year, which management attributed primarily to continued sales momentum. Treasury management was also highlighted as a contributor within service charges, as “record treasury management fees” offset seasonally lower consumer revenue. Treasury management grew 6% linked-quarter, including strong growth in core payments revenue.
Other non-interest income fell 29% driven by commercial lease sales activity, with $6 million in gains recognized in the fourth quarter and $7 million of losses recognized in the first quarter.
- Full-year 2026 adjusted non-interest income growth guidance reiterated: 3% to 5%
Expenses and credit: improved metrics and lower allowance
Adjusted non-interest expense declined 4% from the prior quarter, reflecting “broad-based improvement across most expense categories,” according to prepared remarks. Salaries and benefits were relatively stable as lower incentives and declines in market value adjustments for employee benefits liabilities offset seasonal increases for payroll taxes, 401(k) match, and merit increases.
- Full-year 2026 adjusted non-interest expense outlook: up 1.5% to 3.5%
- Management reiterated expectations for full-year adjusted positive operating leverage
Credit metrics showed continued improvement as the company worked through “previously identified portfolios of interest.” Annualized net charge-offs declined 5 basis points to 54 basis points. Non-performing loans remained stable, and the NPL ratio declined 2 basis points to 71 basis points. The business services criticized ratio declined 16 basis points to 5.15%.
Management said allowance increases tied to loan growth and macro uncertainty were more than offset by progress resolving the targeted portfolios, upgrades outpacing downgrades, and improved criticized and non-performing loan ratios. As a result, the allowance for credit losses declined $39 million, and the allowance ratio fell 8 basis points to 1.68%, while coverage of non-performing loans remained 238%.
In Q&A, Turner said the bank had previously flagged office, multifamily, transportation, and communications as areas of focus, and that most of the workout activity has been completed, though a few larger credits remain. He said non-performing assets may “come down a little further,” but he would not expect significant movement below current levels, adding that credit appears “pretty well normalized.”
- Full-year 2026 net charge-off guidance: 40 to 50 basis points
Capital actions, regulatory proposals, and transformation initiatives
Regions ended the quarter with an estimated common equity Tier 1 (CET1) ratio of 10.7% while repurchasing $401 million of shares and paying $227 million in common dividends. Management discussed proposed regulatory capital framework changes that would include AOCI in capital and update standardized risk-weighted asset calculations. Including AOCI would reduce the reported CET1 ratio to an estimated 9.4%, but management’s preliminary assessment suggests the proposals could reduce risk-weighted assets by about 10%, contributing roughly 100 basis points of capital benefit. Taken together, management said the fully implemented Basel III CET1 ratio would be about 10.4% on a pro forma basis.
Turner told investors the company does not want to get ahead of the proposed rule and said capital priorities remain unchanged. Management said it expects to continue managing fully implemented Basel III CET1 around the midpoint of its 9.25% to 9.75% operating range once rules are finalized.
On technology and transformation, Turner said the company continues to make progress on its “core transformation,” including investments in artificial intelligence. Regions remains on track to deploy a commercial lending system and a small business digital origination platform this summer. Testing on the core deposit system is underway, with a pilot expected in the third quarter and conversion beginning in 2027. Management also said its strategic growth hiring initiative is on track, with Turner noting the company has completed more than two-thirds of planned hiring under its three-year plan and expects meaningful business impact in the latter part of 2026 and into 2027.
About Regions Financial NYSE: RF
Regions Financial Corporation NYSE: RF is a U.S. bank holding company headquartered in Birmingham, Alabama, that provides a broad range of banking and financial services. Its primary banking subsidiary, Regions Bank, serves retail and commercial customers through a combination of branch and ATM networks, digital channels and relationship-based delivery. The company offers deposit accounts, consumer and commercial loans, mortgage origination and servicing, and payment and treasury services.
In addition to core banking, Regions offers wealth management, trust and brokerage services, insurance solutions, and capital markets capabilities to corporate and institutional clients.
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