RF · Q1 2026 Earnings

Neutral

Regions Financial Corporation

Reported April 17, 2026

30-second summary

Regions printed $0.62 adjusted EPS on a 3.67% NIM — at the low end of the "around 3.7%" Q1 framing despite the day-count tailwind — with management attributing the softness to tighter asset spreads, paydowns of higher-yielding loans, and remixing into higher-quality credits. Capital markets income of $84M came in below the $90-105M range. FY26 guidance was broadly reaffirmed, including average deposits "up low single digits" and NII growth of 2.5-4%, with the Q4 NIM exit phrased as "low 370s" (vs. prior "low to mid-370s"). Loan growth is the real positive: $2.3B point-to-point and C&I balances at +4% YoY, validating the commercial-led 2026 thesis.

Headline numbers

EPS

Q1 FY2026

$0.62

Revenue

Q1 FY2026

$1.87B

+5.0% YoY

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$1.87B	+5.0%	—	—
EPS	$0.62	—	$0.57	+8.8%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Net Interest Income Growth	Q1 FY2026	Modestly lower in Q1 2026 driven by fewer days and timing of HR-related asset dividends and interest recoveries	Not quantified in actuals	In-line with qualitative expectation	Met
Net Interest Margin	Q1 FY2026	Around 3.7%	3.67%	In-line (3.67% vs ~3.7% guidance)	Beat
Capital Markets Revenue	Q1 FY2026	$90 to $105 million quarterly, trending near the lower end of the range early in the year	Not quantified in actuals	Presumed lower end of range per guidance	Met

New guidance

Metric	Period	Guide	YoY
Net Interest Income Growth	Q2 FY2026	Approximately 2%	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Average Deposits Growth	FY 2026	Up low single digits versus 2025	Below single digits vs prior year	Narrowed from 'low single digits' to 'below single digits'	Lowered
Net Interest Margin Exit Level	FY 2026	Low to mid-370s net interest margin expected in Q4 2026	Low 370s basis points	Narrowed from 'low to mid-370s' to 'low 370s'	Lowered
Effective Tax Rate	FY 2026	20.5% to 21.5%	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Net Interest Income Growth (2.5% to 4%), Average Loans Growth (Low single digits vs 2025), Adjusted Non-Interest Income Growth (3% to 5% vs 2025), Adjusted Non-Interest Expense Growth (1.5% to 3.5%), Net Charge-Offs Ratio (40 to 50 basis points)

Segment performance

Q1 FY2026

Segment	Q1 FY2026	YoY
Commercial and Industrial	$50.824B	+4.0%
Residential First Mortgage	$19.621B	-1.9%
Total Business Loans	$65.733B	+4.5%
Total Consumer Loans	$32.193B	-2.0%

Capital & returns

Q1 FY2026

Segment	Q1 FY2026
Common Equity Tier 1 Ratio	10.7%
Total Deposits	$131.9B

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Net Interest Margin (FTE)	3.67%
Efficiency Ratio	56.6%
Return on Average Assets	1.42%
Return on Average Common Equity	12.35%
Non-Performing Loans Ratio	0.71%
Allowance for Credit Losses to Loans	1.68%

Management tone

Q2 anchor: NIM offense, multi-year repricing → Q3 anchor: defense, 2026 reacceleration sold → Q4 anchor: headwinds "largely behind us," 2026 framework issued → Q1 anchor: margin pressure resurfaces, loan growth becomes the offset

Three quarters ago Regions was selling a multi-year asset repricing tailwind as the primary earnings driver. Last quarter the framing was "headwinds largely behind us." This quarter management explicitly acknowledged: "marking came in below expectations for the quarter, reflecting tighter asset spreads as a result of market conditions, paydowns of higher-yielding loans, and remixing into higher-quality credits." The shift signals that the front-book/back-book benefit has narrowed again, and the offsetting story has rotated from margin expansion to loan growth and fee revenue — a meaningful change in the earnings algebra.

Deposit confidence is being defended carefully. In Q2 2025 management was selling "30%+ organic growth over five years, among the most in our peer set." Last quarter the cycle deposit beta was tracking to mid-30s with confidence. This quarter: "The following cycle, interest-bearing deposit data stands at 35%, and we remain confident in the mid-30s data with the potential to outperform over time" — combined with explicit Q&A acknowledgment of a "highly competitive deposit backdrop" persisting "for over a year." The franchise-as-moat thesis is being defended on the cost side even as the full-year deposit growth guide was reaffirmed.

Capital markets guidance is now openly conditional on long-term rates. Last quarter the $90-105M range with "near low end early in year" framing was directional. This quarter the actual Q1 print of $84M came in below the low end, and management said the real estate capital markets business has been "soft for 4-5 quarters" and that improvement depends on lower long-term rates. The Q2 reiteration of "near the lower end" with the explicit "trending higher thereafter" caveat tells you the fee-revenue rebound that helps the +3-5% non-interest income guide is back-half loaded — and any rate stickiness pushes it into 2027.

Capital narrative was forced into recalibration by proposed Basel III changes. Management disclosed: "Including AFCI reduces our reported CET1 ratio to an estimated 9.4%... expected to result in an estimated 10% reduction in risk-weighted assets, contributing to an approximate 100 basis point increase in capital." Last quarter the framing was "meaningful flexibility" at 10.8% CET1. This quarter the CET1 figure is now shown two ways depending on regulatory framework — a defensive disclosure that pre-empts an analyst challenge but acknowledges the buyback math is now framework-dependent.

Core deposit system timeline slipped. Last quarter: production/pilot in Q3 2026, customer conversion early 2027, completion late 2027. This quarter: "We expect to launch a pilot in the third quarter and begin conversion in 2027" — the conversion start has held but the framing has tightened from "early 2027" to "in 2027," and the prepared-remarks emphasis on the pilot rather than the completion suggests management is now selling the milestone, not the endpoint.

Recurring themes management leaned on this quarter:

Asset quality improvement and resolution of legacy problem portfoliosLoan growth acceleration as near-term offset to margin compressionTransformation progress (core systems, AI investments, digital origination)Margin stability contingent on stable rate environment and asset repricingDeposit franchise stability with ongoing mix shift toward higher-quality productsOperating leverage delivery through disciplined expense management

Risks management surfaced:

Macroeconomic outlook volatility and market uncertainty impacting lending activity and capital markets revenueInterest rate environment risk to net interest income if rates decline (neutral positioning provides minimal protection)Tighter asset spreads and remixing into higher-quality credits pressuring marginRegulatory capital framework changes creating uncertainty around future CET1 ratios and RWA calculationsSeasonal and cyclical pressure on fee revenue (card/ATM fees, lease sales activity, M&A/real estate advisory)

Q&A highlights

Ryan Nash · Goldman Sachs

Confidence in hitting NII guidance ranges and what factors support reaching the middle to upper part of the range, given a softer Q1 start

Management expressed strong confidence in hitting ranges, citing $2.3B loan growth, deposit cost improvements (1.69% exit rate), and $9B in fixed asset repricing opportunities as key tailwinds for Q2 and beyond

$2.3 billion point-to-point loan growth1.69% interest-bearing deposit cost exit rate$9 billion fixed asset repricing opportunityTreasury management record quarter with wealth up 9% YoY

Scott Severs · Piper Sandler

Moving parts in market outlook including tighter asset spreads and loan remixing pressure, and whether balance sheet repricing can offset these headwinds

Managing deposit costs is the primary mechanism; management highlighted $9B fixed asset repricing, investment-grade credit draws, middle market growth, and fee uptick in Q2 as positive offsets to spread compression

Deposit cost management as primary margin mechanism$9 billion fixed asset repricing forwardLine utilization up 200 basis points YoYCustomer liquidity up 7% YoY at regions

John Pancari · Evercore

Deposit competitive backdrop in southeast, pricing dynamics with newer entrants, and specific details on spread compression in CNI and mortgage segments

Highly competitive deposit backdrop persists for over a year; banks using promotional offers in key markets while managing back book; primary spread compression in larger CNI and IG where line utilization occurred late Q1; portfolio reshaping proceeding as planned with most work behind them

Tighter spreads primarily in larger CNI/IG spaceMortgage spread compression from government actions and refi activityPortfolio reshaping activity mostly completed

Manan Gosalia · Morgan Stanley

Nature of line draws (defensive vs. fundamental), capital markets revenue guidance lower bound, and conditions to return to $100M+ quarterly range

Line draws were not defensive but market-volatility driven (late Q1 capital markets disruption); capital markets business most impacted is real estate segment (soft 4-5 quarters); improvement would come from lower long-term rates; real estate capital markets can still have good year even without rate cuts

Real estate capital markets business soft for 4-5 quartersLine draws attributed to capital markets volatility, not defensive demand

Gerard Cassidy · RBC

Impact of macro geopolitical resolution (Middle East) on loan loss reserve trajectory, and rationale for conservative approach vs. peers on non-bank financial institution lending exposure

$17M of Q1 reserve build attributed to macro uncertainty (Middle East); modest release possible if resolved; cautious on NDFI lending relative to peers due to relationship-based lending model; currently managing ~$3B exposure across 25+ funds with focus on deposits, capital markets, and relationship expansion

$17 million of Q1 reserve build tied to macro uncertainty~$3 billion total NDFI exposure~$1.8 billion in outstandings across ~25 funds

Answers to last quarter's watch list

Whether Q1 FY2026 NIM holds at ~3.70% as guided, absent day-count benefit — Printed 3.67%, at the low end of the "around 3.7%" guide despite the day-count tailwind. Management explicitly attributed the softness to tighter asset spreads, paydowns of higher-yielding loans, and remixing into higher-quality credits. The day-count benefit was qualitative ("elevated by day count") and not quantified by management, but the directional read is that the underlying ex-day-count margin sits below the headline print. Status: Resolved mixed.

Capital markets Q1 print against the $90-105M range, near the low end — Came in at $84M, below the low end of the range. Management said Q2 will again trend near the lower end of the range with improvement thereafter conditional on long-term rates. Real estate capital markets explicitly called out as soft for 4-5 quarters. The rebound is being deferred again. Status: Resolved negatively.

Whether the FY26 operating leverage commitment gets a quantified bps range by Q1 or Q2 — No quantified range issued this quarter; management reiterated "we expect to deliver full-year adjusted positive operating leverage" without basis points. Second consecutive quarter without a quantified range. Status: Resolved negatively.

Tech spend as % of revenue tracking within the new 10-12% range — Not specifically called out on the print. The core deposit system pilot is on track for Q3 with conversion beginning in 2027, consistent with the spend ramp. No explicit overrun signal but no confirming data point either. Status: Continue monitoring.

Commercial loan growth conversion: pipeline → funded balances — Decisively positive. C&I balances at $50.8B printed +4% YoY. Total business loans +4.5% YoY, $2.3B point-to-point growth concentrated in latter half of Q1, line utilization up 200bps. The low-single-digit FY26 loan guide is now firmly underwriteable. Status: Resolved positively.

Banker hiring pace: 70 more commercial bankers needed across 2026 to hit the 120 two-year target — Management referenced ongoing hiring, noting "more than two-thirds" of the broader three-year hiring plan is complete (across commercial, wealth, and branch), but did not break out the 2026 commercial banker tranche specifically or provide YTD additions against the two-year target. Status: Continue monitoring.

What to watch into next quarter

Whether Q2 NIM holds at or above 3.67% as the day-count tailwind reverses — Q1 had the day-count benefit and still printed at the low end of the guide. Q2 absent that tailwind needs the $9B fixed asset repricing and deposit cost management (1.69% exit rate) to actually flow through. A Q2 print below 3.65% would force a downgrade to the "exit at low 370s" framing.

Deposit balance trajectory vs. the reaffirmed "up low single digits" guide — total deposits at $131.9B were +0.6% QoQ. If balances drift negative QoQ in Q2 while loan growth continues, the loans/deposits ratio compresses the asset-repricing thesis and forces management to pay up for funding.

Capital markets Q2 print against the $90-105M low-end framing — Q1 came in at $84M, below the range, with real estate soft for 4-5 quarters. A second consecutive print below $90M would put the FY26 +3-5% non-interest income guide on a cut path before mid-year.

Whether the effective tax rate withdrawal gets reinstated or stays absent — losing the 20.5-21.5% range is a disclosure step-back. Continued absence implies management sees a wider plausible band than they want to commit to, which has direct EPS modeling implications.

Q4 NIM exit trajectory against the "low 370s" guide — the phrasing shifted this quarter from "low to mid-370s." A Q3 print materially below 3.70% would put the year-end exit in jeopardy and reset the run-rate NII baseline going into FY27.

Sources

Regions Financial Corporation Q1 2026 Earnings Press Release (Exhibit 99.2), filed with SEC on April 17, 2026. https://www.sec.gov/Archives/edgar/data/1281761/000128176126000032/rf-2026331xexhibitx992.htm
Regions Financial Corporation Q1 2026 Earnings Call prepared remarks and Q&A.

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