Regions Financial (NYSE:RF) used its fourth-quarter earnings call to highlight full-year profitability, investments in technology and banker hiring, and an improving outlook for loan growth and credit trends heading into 2026. Management also confirmed a key leadership transition, with long-time CFO David Turner retiring and Anil Chadha stepping into the role.
Full-year results and fourth-quarter items
CEO John Turner said the company delivered “strong full-year earnings” of $2.1 billion, with earnings per share of $2.30, or $2.33 on an adjusted basis. He also cited return on tangible common equity “just over 18%,” which he described as among the highest in the industry.
- $26 million of incremental tax expense tied to adjustments in certain state income tax reserves (full-year effective tax rate 21.4%).
- $14 million of incremental expense related to severance, a pension settlement, and Visa Class B litigation escrow funding.
For 2026, management said it expects the effective tax rate to return to a 20.5% to 21.5% range.
Loan growth: headwinds easing, pipelines strengthening
Management described 2025 as a year where loan growth was “challenged,” citing elevated refinancing by large corporate customers into the capital markets and more than $2 billion of strategic runoff, primarily from leveraged lending and “resolutions within our portfolios of interest.” David Turner said average and ending loans were relatively stable versus 2024 and the third quarter.
However, executives said several of those pressures are “largely behind us.” David Turner pointed to improving client sentiment, strengthening loan pipelines and commitments, and normalization of excess corporate liquidity as customers deploy cash into business investments—conditions the company expects will support bank borrowings in 2026.
For 2026, the company guided to average loans up below single digits versus 2025, with CEO John Turner emphasizing that commercial banking is expected to be the primary driver, while the consumer side is expected to contribute more modestly. He also said Regions believes it has “worked through most of the portfolio shaping activities” that were a headwind over the past 12 to 18 months.
On refinancing into capital markets, management said the activity was concentrated among investment-grade borrowers in areas such as REITs within real estate corporate banking, parts of energy, and financial services (including insurance), where customers could borrow more cheaply and potentially secure better terms. John Turner said it appeared “more pronounced” in 2025, particularly after the market reopened following a period when it was less accessible.
Deposits, margin performance, and 2026 outlook
Regions reported stable deposit performance in the fourth quarter. Ending deposits rose by about $800 million, while average deposits were “roughly flat,” which management said modestly outperformed typical year-end seasonality, especially in consumer banking. The company said it reduced total deposit costs during the quarter while seeing mix shift from CDs into money market accounts.
Net interest income increased 2% from the prior quarter, and net interest margin rebounded to 3.7%, up 11 basis points, including what management described as non-recurring benefits from seasonal HR-related asset dividends and credit-related interest recoveries. Interest-bearing deposit costs declined 16 basis points in the quarter, which David Turner said equated to a 36% linked-quarter beta; the cumulative beta for the cycle was cited at 33%.
Looking ahead, Regions guided to 2026 net interest income growth of 2.5% to 4%. The first quarter is expected to be “modestly lower” due to fewer days and the timing of HR-related dividends, along with the absence of fourth-quarter recoveries. Management said that after normalizing for non-recurring fourth-quarter items, a “mid-360s” margin is a better starting point for 2026, and projected margin improvement through the year toward a “low to mid-370s” net interest margin by fourth quarter 2026. To mitigate exposure to longer-term rate moves, the company added $3.5 billion of forward-starting receipt-fixed swaps scheduled to begin throughout 2026.
Fee income, expenses, and technology investments
Regions said adjusted non-interest income rose 5% for 2025, aided by record results in wealth management and treasury management products and services, and what management called capital markets’ “second best year ever.” Still, adjusted non-interest income declined 6% compared with the third quarter, which management attributed to postponed M&A transactions, seasonality in syndication and underwriting activity, and impacts from a temporary government shutdown on real estate capital markets and commercial swap activity.
For 2026, the company guided to:
- Capital markets quarterly revenue of $90 million to $105 million, trending near the lower end early in the year and improving as 2026 progresses.
- Adjusted non-interest income growth of 3% to 5% versus 2025.
- Adjusted non-interest expense growth of 1.5% to 3.5%, with full-year adjusted positive operating leverage.
Management said adjusted non-interest expense increased 2% in 2025 and was stable quarter over quarter. Salaries and benefits rose 3% for the year, driven by higher health insurance costs, higher revenue-based incentives, and hiring tied to growth initiatives. Equipment and software expenses increased 4%, and executives said technology spending as a share of revenue is expected to rise from a historical 9% to 11% range to 10% to 12% as core modernization and software-as-a-service migration continue.
John Turner also provided an update on the multi-year core systems modernization effort, saying the project has moved into a user testing phase expected to last “the next two-plus quarters,” followed by a pilot in the third quarter. He said the company expects full completion “toward the latter part of 2027.” Management described the modernization as a driver of speed to market, improved customer experience, and better data organization that supports broader use of AI, including generative AI.
Credit trends, capital returns, and strategy
On asset quality, Regions reported annualized net charge-offs rising to 59 basis points, which management described as reflecting progress on resolving previously identified portfolios of interest that had been reserved in prior periods. Non-performing loans declined, with the NPL ratio improving by 6 basis points to 73 basis points. The company reduced the allowance for credit losses by $27 million, with the ACL ratio at 1.76%. Management guided to 2026 net charge-offs in a range of 40 to 50 basis points, with the potential to run toward the lower end or middle of that band if macro conditions improve.
Regions ended the quarter with an estimated CET1 ratio of 10.8% while repurchasing $430 million of shares and paying $231 million in common dividends. Adjusted for AOCI, CET1 was unchanged versus the prior quarter at an estimated 9.6%. New CFO Anil Chadha said the company’s first priority for capital is funding “good quality loan growth,” and that share repurchases are a lever when loan growth is not available at attractive returns.
On M&A, management reiterated that depository M&A is “not part of our strategy today,” and said the company is focused on executing its plan, including completing the core deposit system transformation. Executives added that while systems conversion does not technically prevent M&A, it would be “very challenging” in practice during the modernization effort.
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.
