Regions Financial Corp. ((RF)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Regions Financial Corp. recently held its earnings call, revealing a generally positive sentiment with strong quarterly earnings and record performances in wealth management and capital markets. Despite these achievements, the company acknowledged challenges in loan growth and elevated charge-offs in specific sectors. However, Regions Financial remains optimistic about maintaining positive momentum into 2026.
Strong Quarterly Earnings
Regions Financial Corp. reported robust quarterly earnings of $548 million, translating to earnings per share of $0.61. When adjusted, earnings rose to $561 million or $0.63 per share, showcasing the company’s strong financial performance over the period.
Deposit Growth and Market Share
The company achieved top quartile deposit growth and an above-peer median change in market share, all while maintaining the lowest deposit cost among its peers. This indicates a solid competitive position in the banking sector.
Capital Markets Performance
Regions Financial’s capital markets income, excluding CBA, increased by 22% compared to the previous quarter. This record performance was driven by higher M&A advisory activity, commercial swap sales, loan syndications, and debt underwriting activity.
Wealth Management Success
Wealth Management at Regions Financial delivered its third consecutive quarter of record-setting income. This success was primarily driven by elevated sales activity and favorable market conditions, highlighting the strength of this segment.
Asset Quality and Criticized Loans
The company reported significant improvements in business services criticized loans, which decreased by almost $1 billion or 20%. Additionally, nonperforming loans saw a 2% decrease, indicating improved asset quality.
Loan Growth Challenges
Regions Financial faced challenges in loan growth, with average loans growing by only 1% and ending balances declining by 1%. The company has been reshaping its portfolio, exiting approximately $900 million in targeted loans year-to-date, with another $300 million expected by year-end.
Net Interest Margin Decline
The net interest margin declined by six basis points, affected by day count and elevated cash levels slightly above long-term targets. This decline poses a challenge for the company’s profitability.
Elevated Charge-offs
Annualized net charge-offs increased by eight basis points to 55 basis points, primarily due to charge-offs in the office and transportation sectors. This highlights areas of concern within the company’s loan portfolio.
Expense Increase
Adjusted non-interest expense rose by 4% compared to the prior quarter. This increase was driven by higher health insurance costs and growth initiative-related hires, reflecting the company’s investment in its workforce and future growth.
Forward-Looking Guidance
Looking ahead, Regions Financial Corp. expects full-year 2025 average loans to remain stable compared to 2024, with stronger loan growth anticipated entering 2026. The company aims for net interest income growth between 3-4% and adjusted non-interest income growth between 4-5% compared to 2024. Asset quality is expected to remain strong, supporting strategic growth and shareholder returns.
In summary, Regions Financial Corp.’s earnings call highlighted strong financial performance and strategic growth initiatives, despite challenges in loan growth and elevated charge-offs. The company remains optimistic about maintaining its positive trajectory into 2026, driven by robust deposit growth, capital markets performance, and wealth management success.