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REGIONS FINANCIAL CORP (RF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 EPS was $0.61 GAAP and $0.63 adjusted; total revenue was $1.916B, with record Wealth Management and Capital Markets performance driving a 2% adjusted non-interest income increase sequentially .
  • Net interest income was stable (down 0.2% QoQ) and NIM fell 6 bps to 3.59% due to day count and elevated cash balances; management guides Q4 NIM to the mid‑3.60%s and Q4 NII up 1–2% QoQ .
  • Credit remained manageable: NCOs rose to 55 bps (annualized) amid continued resolutions in “portfolios of interest,” while Business Services criticized loans declined 20% ($1B), and ACL/NPL coverage improved to 226% .
  • FY25 guidance updated: NII growth narrowed to 3–4% (from 3–5%); adjusted non‑interest income raised to 4–5%; adjusted expense up ~2%; positive operating leverage targeted at lower end of 150–250 bps .
  • Capital and liquidity strong: CET1 10.8%, adjusted CET1 (incl. AOCI) ~9.5%; ~$69B liquidity covering ~181% of uninsured deposits; $251M buybacks and $235M common dividends declared in Q3 .

What Went Well and What Went Wrong

  • What Went Well

    • Record fee income in Wealth Management and Capital Markets (ex-CVA), with capital markets up 22% QoQ on higher M&A advisory, swaps, syndications and underwriting; Wealth Management marked its third consecutive record quarter .
    • Deposits remained a differentiator: average deposits up 0.1% QoQ and 2.9% YoY; interest-bearing deposit costs at 2.01%, peer‑leading per management .
    • Credit quality trending better beneath near‑term resolutions: Business Services criticized loans fell ~$1B (~20%); NPL ratio improved 1 bp QoQ to 0.79% .
    • CEO tone: “We…delivered another record quarter in Wealth Management and Capital Markets…These strengths position us to compete and win, with momentum building into 2026” .

  • What Went Wrong

    • NIM compressed 6 bps QoQ to 3.59% on day count and elevated cash; NII down 0.2% QoQ .
    • NCOs rose 8 bps QoQ to 55 bps annualized as RF continued resolving office and transportation exposures; Q4 losses expected to remain elevated .
    • Non‑interest expense increased 2.8% QoQ (adjusted +3.5%) on salaries/benefits, Visa Class B shares expense, and growth initiative hires; efficiency ratio worsened to 57.2% .
    • Adjusted items included a $25M pre‑tax loss from securities repositioning in Q3 (part of ongoing portfolio optimization) .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenue ($USD Millions)$1,790 $1,784 $1,905 $1,916
Diluted EPS ($USD)$0.49 $0.51 $0.59 $0.61
Adjusted Diluted EPS ($USD)$0.57 $0.54 $0.60 $0.63
Net Interest Margin (FTE, %)3.54% 3.52% 3.65% 3.59%
Efficiency Ratio (%)59.3% 57.9% 56.0% 57.2%

Q3 2025 vs Consensus

MetricConsensus (Q3 2025)Actual (Q3 2025)Beat/Miss
EPS ($USD)0.596*0.63 Bold beat
Revenue ($USD Millions)1,934.1*1,916 Slight miss

Segment Non‑Interest Income Detail

Metric ($USD Millions)Q3 2024Q2 2025Q3 2025
Service Charges on Deposit Accounts158 151 160
Card and ATM Fees118 125 122
Wealth Management Income128 133 139
Capital Markets Income92 83 104
Mortgage Income36 48 38
Securities Gains (Losses), net(78) (1) (27)
Total Non‑Interest Income572 646 659
Adjusted Non‑Interest Income650 646 684

Key Performance Indicators (KPI)

KPIQ3 2024Q2 2025Q3 2025
Average Loans ($MM)$97,040 $96,077 $96,647
Ending Loans ($MM)$96,789 $96,723 $96,125
Average Deposits ($MM)$125,950 $129,444 $129,575
Ending Deposits ($MM)$126,376 $130,919 $130,334
NCOs (% of avg loans, annualized)0.48% 0.47% 0.55%
ACL / Loans (%)1.79% 1.80% 1.78%
ACL / NPLs (%)210% 225% 226%
CET1 Ratio (%)10.6% 10.8% 10.8%
Tangible Common BVPS ($)$12.26 $12.91 $13.49

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income growth vs 2024 ($4,818B)FY25Up 3–5% Up 3–4% Lowered
Adjusted Non‑Interest Income growth vs adj. 2024 ($2,473B)FY25Up 2.5–3.5% Up 4–5% Raised
Adjusted Non‑Interest Expense vs adj. 2024 ($4,227B)FY25Up 1–2% (incl. investments) Up ~2% (incl. investments) Maintained (tightened to ~2%)
Adjusted Positive Operating LeverageFY25150–250 bps 150–250 bps (toward lower end) Maintained (lower end)
Average LoansFY25Stable to up modestly Relatively stable Tightened
Average DepositsFY25Up modestly Up low single digits Clarified higher
Net Charge‑Offs / Average LoansFY2540–50 bps (toward upper end) ~50 bps Clarified to ~50 bps
Effective Tax RateFY2520–21% ~20% Slightly lower
Net Interest Income QoQQ4 2025—Up 1–2% vs Q3 New
NIMQ4 2025—Mid‑3.60%s New
Capital Markets RevenueQ4 2025—$95–$105M New
Adjusted CET1 (incl. AOCI) op. rangeNear term—Manage around mid‑point of 9.25–9.75% New

Other relevant Q3 press releases:

  • Common dividend declared: $0.265 per share payable Jan. 2, 2026; preferred dividends scheduled Nov./Dec. 2025 .
  • Prime lending rate reduced to 7.00% from 7.25% effective Oct. 30, 2025 .
  • Treasury Management enhancements for healthcare clients launched (MediStreams partnership) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/Technology and Core ModernizationOngoing investments; platform modernization referenced Cloud commercial loan system H1’26; deposit system pilots late ’26; mobile app launch with higher Zelle/chat usage Execution progressing
Macro/Rate Path & NIMNIM up 13 bps in Q2; hedging and fixed‑rate turnover benefits NIM 3.59%; Q4 mid‑3.60%s; hedges neutralize Fed cuts; deposit beta targeted mid‑30s Stable to improving
Fee Businesses (WM/Cap Mkts)Strength in Q1/Q2; MSR valuation benefited Q2 mortgage Both hit records; Cap Mkts +22% QoQ; Q4 guide $95–$105M Strong momentum
Deposits & Relationship GrowthAverage deposits +0.9% Q1; +1.4% Q2; low costs cited Average deposits +0.1% QoQ; NIB ~low‑30%; costs 2.01% Resilient
Regulatory/Capital (Basel Endgame)CET1 ~10.8%; discussion ongoing Adjusted CET1 (incl. AOCI) 9.5%; optionality maintained as rules finalize Prepared
Credit Portfolios of InterestIdentified transportation/multifamily; NCOs 52 bps Q1 Office/transportation resolutions driving elevated NCOs; criticized loans down ~$1B Resolving; improving criticized
Regional Footprint & DepositsDeposit growth in Southeast/Texas footprint Footprint advantages; FDIC data showed top‑quartile deposit growth; local presence defended Positive

Management Commentary

  • Strategic position and execution: “We grew average deposits, expanded client relationships, and delivered another record quarter in Wealth Management and Capital Markets…momentum building into 2026…” — John Turner, CEO .
  • Rate strategy: “We believe NII remains well protected from lower short‑term rates…neutral position when combining floating mix, hedging, and ability to manage deposit costs…target mid‑30s interest‑bearing deposit beta” — David Turner .
  • Loan growth outlook: “Pipelines are almost doubled YoY…we believe we’re well‑positioned to generate stronger loan growth as we move into 2026” — John Turner .

Q&A Highlights

  • Credit resolutions: Office and transportation remain focus areas; continued resolutions expected in Q4; criticized loans improved with more upgrades than downgrades .
  • Loan pipeline/utilization: Pipelines up ~100% YoY and commitments +$2B YTD; utilization remains below norms given client liquidity; $300M of exit portfolio paydowns expected by year‑end .
  • NIM/rate cuts: NIM resilient in gradual cuts; faster cuts create short‑term lag until repricing; hedging reduces negative carry as rates decline .
  • Deposits/betas: Guidance assumes ~35% falling‑rate beta; potential to outperform; large CD repricing in Q4 supports lower deposit costs .
  • M&A stance: Strategy remains organic; management sees M&A as potentially disruptive; will act if in shareholders’ best interests .

Estimates Context

  • Q3 2025: EPS $0.63 vs 0.596* consensus — bold beat; revenue $1.916B vs 1.934B* consensus — slight miss .
  • Prior quarters:
    • Q2 2025 EPS $0.60 vs 0.558* — beat; revenue $1.905B vs 1.860B* — beat .
    • Q1 2025 EPS $0.54 vs 0.509* — beat; revenue $1.784B vs 1.834B* — miss .

Quarterly Actual vs Consensus

PeriodEPS ActualEPS Consensus*Revenue Actual ($MM)Revenue Consensus* ($MM)
Q1 20250.54 0.509*1,784 1,834.6*
Q2 20250.60 0.558*1,905 1,860.5*
Q3 20250.63 0.5956*1,916 1,934.1*

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings quality: Underlying fee strength and stable NII offset transitory NIM headwinds; adjusted EPS growth and record fee lines support a constructive near‑term setup .
  • Near‑term catalysts: Q4 NIM recovery to mid‑3.60%s and NII up 1–2% QoQ; Capital Markets revenue guided to $95–$105M .
  • Credit watchpoints: Elevated Q4 losses tied to office/transportation resolutions are contemplated in guidance; improving criticized trends and strong ACL/NPL coverage mitigate downside .
  • Deposit advantage: Low-cost core deposits and targeted beta management (mid‑30s) underpin margin resilience in a falling‑rate environment; large CD repricing is a lever for Q4 .
  • FY25 outlook: NII growth narrowed (3–4%) but adjusted fee growth raised (4–5%); expenses up ~2% with positive operating leverage at lower end — implies steady profitability with disciplined investment .
  • Capital returns: CET1 10.8% with adjusted CET1 ~9.5%; ongoing buybacks and dividend support total shareholder return while preserving regulatory flexibility .
  • Strategic execution: Modernization and banker build‑out in priority markets, plus deposit growth momentum across the Southeast/Texas footprint, position RF for stronger loan growth into 2026 .