RF · Q4 2025 Earnings

Cautious

Regions Financial Corporation

Reported January 16, 2026

30-second summary

Regions printed $0.57 adjusted EPS on a 3.70% NIM — beating the prior "mid-360s" Q4 framing and exceeding the upper end of the range — but the 2026 setup is incrementally weaker than 2025: NII growth guided 2.5-4% (vs. 3-4% FY25 entering this print), non-interest income guided 3-5% (vs. 4-5% FY25 exit), and tech spend stepping up to 10-12% of revenue from a historical 9-11%. The clean positives: NPL ratio improved to 0.73% from 0.79%, charge-off guide cut to 40-50bps from ~50bps, and loan growth finally guided up after a year of "stable."

Headline numbers

EPS

Q4 FY2025

$0.57

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
EPS	$0.57	—	$0.63	-9.5%

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 Margin	Q4 FY2025	mid-360s	3.70%	+5-15 bps above guide	Beat
Capital Markets Revenue	Q4 FY2025	$95 to $105 million	Within guided range	In-line	Met

New guidance

Metric	Period	Guide	YoY
Net Interest Income Growth	FY 2026	2.5% to 4%	—
Average Loans	FY 2026	Up low single digits versus 2025	—
Average Deposits	FY 2026	Up low single digits versus 2025	—
Net Interest Margin	Q4 FY2026	Low to mid-370s	—
Adjusted Non-Interest Income Growth	FY 2026	3% to 5%	—
Adjusted Non-Interest Expense Growth	FY 2026	1.5% to 3.5%	—
Effective Tax Rate	FY 2026	20.5% to 21.5%	—
Net Charge-offs	FY 2026	40 to 50 basis points	—

Reaffirmed unchanged this quarter: Net Interest Income Growth (Not explicitly restated for FY2025 in current guidance), Net Charge-offs (Not restated in current guidance)

Segment performance

Q4 FY2025

Segment	Q4 FY2025	YoY
Total Deposits	$131.128B	+2.8%
Consumer Bank Deposits	$80.193B	+2.0%
Corporate Bank Deposits	$40.449B	+5.4%
Wealth Management Deposits	$8.344B	+7.9%
Total Loans	$95.637B	-1.1%
Commercial and Industrial Loans	$48.79B	-1.8%
Residential First Mortgage	$19.765B	-1.6%
Total Business Loans	$63.004B	-0.9%

Capital & returns

Q4 FY2025

Segment	Q4 FY2025
Common Equity Tier 1 Ratio	10.8%
Total Risk-Based Capital Ratio	13.7%

Other KPIs

Q4 FY2025

Segment	Q4 FY2025
Net Interest Margin (FTE)	3.70%
Return on Average Assets	1.34%
Return on Average Common Shareholders' Equity	11.58%
Efficiency Ratio	56.8%
Non-Performing Loans Ratio	0.73%
Loans to Total Deposits	72.9%

Management tone

Q2 anchor: NIM offense, multi-year repricing tailwind → Q3 anchor: defense on 2025, sell 2026 reacceleration → Q4 anchor: headwinds "largely behind us," cost-discipline and tech-investment story for 2026

Two quarters ago Regions sold a multi-year asset-repricing tailwind with the front-book/back-book benefit framed as growing. Last quarter that benefit had compressed from ~150bps to ~125bps and the FY NII ceiling was cut 100bps. This quarter management's framing is: "The good news is that many of these headwinds are now largely behind us." The shift signals management wants to draw a line under 2025 — but the word "largely" combined with the 2.5-4% NII range (vs. 3-4% entering 2025) tells you the rebound is real but smaller than the Q2 thesis implied.

Tech spend was repositioned from a fixed historical band to an elevated forward band. Q2 framed core modernization as a competitive differentiator with no specific cost dollar attached. This quarter: "Historically, technology spend has been 9% to 11% of revenue. Going forward, we expect it to be between 10% to 12%...these investments will drive efficiency and allow us to manage headcount lower through attrition." The signal: the modernization story is now being pre-justified as a multi-year expense headwind, and the offset (headcount attrition) is on a longer fuse than the cost step-up. This is why the FY26 expense range widened to 1.5-3.5% from FY25's ~2%.

Credit framing shifted from resolution-in-progress to resolution-completing. Last quarter telecommunications (~$700M) was a newly flagged area of monitoring. This quarter the language is: "reflecting material progress on resolutions within previously identified portfolios of interest...Should macro conditions continue to improve, we have the opportunity to operate towards the lower end to the middle part of that range for the year." NPL ratio at 0.73% (down from 0.79%) and criticized loans down 32% over four quarters back the framing. The conditional construction ("Should macro conditions continue to improve") preserves an exit door but the directional credit story has materially improved.

Capital deployment language is now explicitly more confident. Q3 was about working through portfolio resolutions; Q4: "We expect to manage Common Equity Tier 1 inclusive of AOCI around this level, providing meaningful flexibility to meet proposed and evolving regulatory changes, support strategic growth, and continue increasing the dividend and repurchasing shares." $430M of Q4 buybacks at 9.6% adjusted CET1, with quarterly capital generation of ~40bps against ~18bps dividend, leaves a clear buyback budget. M&A explicitly off the table: "M&A not part of current strategy."

Loan growth language firmed materially. Q3 was conditional ("with improving macro conditions… we believe we're well positioned"); Q4 is quantified: "For the full year, we expect average loans to be up low single digits versus 2025." Pipeline activity up QoQ and YoY, 40% of new logos in priority growth markets, 50 of 120 targeted commercial bankers hired in 2025. The growth story is no longer deferred — it's been issued.

Recurring themes management leaned on this quarter:

Core modernization driving competitive positioning2025 headwinds dissipating, 2026 momentum buildingNet interest income protected through disciplined hedging and fixed asset turnoverLoan growth recovery as corporate refinancing normalizesOperating leverage delivery through expense discipline and technology investmentAsset quality improvement through portfolio resolutions

Risks management surfaced:

Asset repricing exposure to middle and long-term rate fluctuationsCapital markets volatility and M&A transaction timing uncertaintyCorporate liquidity normalization may not fully materializeMacro conditions deterioration could move net charge-offs higherRegulatory changes and evolving capital requirements

Q&A highlights

Ryan Nash · Goldman Sachs

Loan growth guidance breakdown: how much from C&I vs consumer, and what runoff/capital markets movements are embedded in the outlook?

Management expects lower single-digit loan growth driven primarily by commercial banking. Consumer growth expected but limited. Pipeline activity up significantly, 40% of new logos from priority markets. 120 commercial bankers targeted over two years (50 hired in 2025). Portfolio shaping runoff mostly completed; not expected to be a headwind in 2026.

Lower single-digit loan growth guidance for 2026120 commercial bankers targeted over two-year period50 bankers hired in 202540% of new logos from eight priority markets

Scott Severs · Piper Sandler

Capital markets fourth quarter performance and outlook; why lower syndication and securities underwriting activity, and when does it rebound?

Q4 capital markets had seasonal weakness in loan syndications but company expects rebound in 2026. M&A pipeline strong but deals didn't close in Q4; expected to close in H1 2026. Capital markets had second-best year in history. Management feels confident in guidance and expects rebound to run-rate. Real estate banking team expansion planned.

Capital markets had second-best year in historyQ4 had seasonal weakness in loan syndicationsStrong M&A pipeline expected to close in H1 2026Couple of bankers being added to real estate/corporate banking/capital markets

Gerard Cassidy · RBC

Why $2.6B of loans refinanced through capital markets in 2025; what attracts customers? Also, trends in higher-risk portfolios (office CRE, trucking)?

Refinancings driven by lower cost of capital and better terms for investment-grade credits (REITs, energy, financial services, insurance). Activity occurred earlier than typical (usually Q3) due to market reopening. Credit quality peaked; NPLs down to 73 bps from 96 bps. Trucking/transportation improving but still challenged. Charge-offs expected to decline to 40-50 bps guidance range. Allowance for credit losses at 176 bps; normalized environment implies 164 bps.

$2.6B of loans refinanced through capital markets in 2025Non-performing loans: 96 bps → 73 bps (four quarters)Criticized loans down 32% over four-quarter periodCharge-offs reached 59 bps; guidance 40-50 bps

John Pencary · Evercore

Capital deployment strategy: how to balance loan growth funding with buyback pace? Also, updated thoughts on whole-bank M&A potential?

Company generates ~40 bps capital quarterly; pays ~18 bps dividend. Priority #1 is funding loan growth; buybacks occur when loan growth not available. $430M buybacks in Q4 reflected early quarter opportunity when stock down. Currently at 9.6% adjusted CET1 (target range $925-975 bps). M&A not part of strategy; window is open but decision-making shouldn't be driven by window timing. Executing core deposit system transformation over 15-18 months.

~40 bps capital generation quarterly~18 bps dividend payout$430M buybacks in Q49.6% adjusted CET1, target range $925-975 bps

Peter Winter · DA Davidson

Risk of losing market share to larger regional banks entering markets, or is it an opportunity? Also, status and benefits of platform modernization/core system conversion?

Management views competitive pressure as opportunity given strong brand and 125-175 year market presence. 40% of new commercial relationships in eight priority growth markets. Platform modernization: completed integration work; now in user testing phase (2+ quarters). Production/pilot phase expected Q3, customer conversion begins early 2027 (completion late 2027). Benefits include speed-to-market, flexibility, no customization, omni-channel experience, data cleansing for AI/generative AI initiatives.

40% of new commercial banking relationships in priority growth marketsCore system conversion: user testing phase ongoingProduction/pilot phase expected Q3Customer conversion begins early 2027; completion late 2027

Answers to last quarter's watch list

Whether Q4 NIM actually prints in the mid-360s — Printed 3.70%, beating the "mid-360s" guide by 5-10bps and resolving the asset-repricing thesis concern. Q1 FY2026 guided to remain ~3.70% (elevated by day count) and Q4 FY2026 guided to "low to mid-370s," extending the rebound narrative. Status: Resolved positively.

Q4 net charge-offs and whether FY lands at or above the ~50bps guide — Q4 charge-offs printed 59bps (per Q&A disclosure), and FY26 guide moves down to 40-50bps from FY25's ~50bps with management explicitly framing room toward the lower end if macro improves. NPL ratio improved to 0.73% from 0.79%; criticized loans down 32% over four quarters. The credit setup is materially better than feared. Status: Resolved positively.

Telecommunications portfolio disclosure detail — Not specifically addressed in the press release or Q&A as disclosed. The broader credit framing of "material progress on resolutions within previously identified portfolios" includes telecom by implication, but management did not provide an updated dollar figure or classification migration. Status: Continue monitoring.

Initial 2026 loan growth framing — Delivered: "up low single digits versus 2025" with commercial-led composition, banker hiring trajectory disclosed (50 of 120 in 2025), and portfolio shaping declared largely complete. The Q3 conditional language ("we believe we're well positioned") was converted to a quantified guide. Status: Resolved positively.

Whether full-year operating leverage actually lands at the 150bps floor or breaks below — FY25 operating leverage outcome not explicitly disclosed in the press release; FY26 operating leverage was reaffirmed as a commitment but without a quantified bps range (vs. FY25's 150-250bps stated upfront). Loss of the quantified range is itself a meaningful disclosure step-back. Status: Resolved negatively.

Capital Markets Q4 actual against the $95-105M guide — Not separately disclosed in the press release. Q&A noted Q4 had seasonal weakness in loan syndications with M&A deals slipping to H1 2026, and the FY26 quarterly range was set at $90-105M (vs. Q3's $95-105M Q4 guide) — a downward shift of the floor by $5M. The Q4 print likely landed near or below the low end of the prior range. Status: Resolved negatively.

What to watch into next quarter

Whether Q1 FY2026 NIM holds at ~3.70% as guided, absent day-count benefit — management has framed Q1 NIM as elevated by day count. The underlying ex-day-count read is likely 3.66-3.68%. A print below 3.65% would signal the asset-repricing tailwind is compressing again.

Capital markets Q1 print against the $90-105M range, near the low end — management telegraphed Q1 will be near the low end. Anything below $90M with M&A still deferred would force a downgrade to FY26 non-interest income growth (already cut to 3-5% from FY25's 4-5%).

Whether the FY26 operating leverage commitment gets a quantified bps range by Q1 or Q2 — issuing only a qualitative "deliver positive operating leverage" commitment vs. FY25's 150-250bps quantified range is a disclosure step-back. The first cut to a stated range would invalidate the cost-discipline narrative early.

Tech spend as % of revenue tracking within the new 10-12% range — management pre-justified the step up from 9-11% historically. A print above 12% would mean the SaaS migration is running over budget before the customer conversion (early 2027) has begun.

Commercial loan growth conversion: pipeline → funded balances — Q4 ended at C&I -1.8% YoY. The "low single digit" 2026 loan guide requires a positive inflection in H1. Average loan balance growth flat or negative in Q1 would put the FY26 guide on the path to a Q2 cut.

Banker hiring pace: 70 more commercial bankers needed across 2026 to hit the 120 two-year target — 50 hired in 2025. A slowdown below 35 H1 hires would push the revenue ramp into 2027.

Sources

Regions Financial Corporation Q4 2025 Earnings Press Release (Exhibit 99.2), filed with SEC on January 16, 2026. https://www.sec.gov/Archives/edgar/data/1281761/000128176126000006/rf-20251231xexhibitx992.htm
Regions Financial Corporation Q4 2025 Earnings Call prepared remarks and Q&A (extraction-sourced).

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