Regions Financial Corporation (RF) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook. Positive factors include expected growth in net interest margin, loan growth, and deposit balances, along with a focus on tech modernization and capital allocation. However, concerns arise from stable loan growth in 2025, elevated charge-offs, and management's unclear responses on certain issues. The Q&A section highlights improvements in credit quality and a focus on managing expenses. Overall, the mixed signals result in a neutral sentiment, suggesting minor stock price fluctuations over the next two weeks.
Key Financial Performance
Full Year Earnings $2.1 billion, resulting in earnings per share of $2.30 or $2.33 on an adjusted basis. Reasons for change: Strong execution against strategic priorities and momentum heading into 2026.
Return on Tangible Common Equity Just over 18%. Reasons for change: Strong financial performance and strategic execution.
Fourth Quarter Earnings $514 million, resulting in earnings per share of $0.58 and $0.57 on an adjusted basis. Reasons for change: Negatively impacted by $0.04 due to incremental tax expense, severance, pension settlement, and Visa Class B litigation escrow funding.
Adjusted Noninterest Income Increased by 5% in 2025. Reasons for change: Record fee income in wealth management and corporate bank businesses, record treasury management products and services, and strong capital markets performance.
Loan Growth Challenged in 2025 with over $2 billion in strategic runoff. Reasons for change: Large corporate customers refinancing in capital markets, portfolio management, and focus on risk-adjusted returns.
Net Interest Income Grew by 2% linked quarter. Reasons for change: Fixed asset turnover, prudent funding cost management, and benefits from seasonal HR-related asset dividends and credit-related interest recoveries.
Deposits Ending balances up approximately $800 million. Reasons for change: Strong customer acquisition and retention, reduced total deposit costs, and mix shift from CDs to money market accounts.
Adjusted Noninterest Expense Increased by 2% in 2025. Reasons for change: Higher health insurance costs, revenue-based incentives, and technology investments for core modernization.
Annualized Net Charge-Offs Increased 4 basis points to 59 basis points. Reasons for change: Progress on resolutions within previously identified portfolios of interest.
Allowance for Credit Losses Decreased by $27 million. Reasons for change: Improvement in Business Services criticized loans and nonperforming loans, and continued resolutions in stressed portfolios.
Common Equity Tier 1 Ratio Estimated at 10.8%. Reasons for change: Share repurchases, dividend payments, and stable liquidity.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New native mobile app: Launched a new native mobile app with a 4.9 out of 5-star rating in the App Store.
Priority markets: Investments in priority markets accounted for over 40% of new corporate client growth during 2025.
Core system modernization: Made meaningful progress on a multiyear effort to modernize core systems, aiming to strengthen competitive position.
Technology investments: Invested in authentication, data governance, data management, and real-time data to enhance security, customer experience, and expand AI usage.
Loan growth and portfolio management: Loan growth was challenged due to corporate refinancing and strategic runoff, but net interest income benefited from prudent funding cost management.
Adjusted noninterest income: Grew by 5% in 2025, with record fee income in wealth management and corporate banking.
Expense management: Produced 140 basis points of adjusted positive operating leverage and increased tangible book value per share by 20%.
Leadership transition: Transitioned CFO role from David Turner to Anil Chadha, aiming to align with near-term goals and long-term priorities.
Capital and shareholder returns: Returned $2 billion to shareholders through dividends and share buybacks while maintaining a strong capital position.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Loan Growth Challenges: Loan growth was challenged in 2025 due to large corporate customers refinancing in capital markets and strategic runoff from leveraged lending portfolios.
Capital Markets Revenue Decline: Capital markets revenue declined due to postponed M&A transactions, seasonality in loan syndication, and temporary government shutdown impacts.
Technology Investment Costs: Increased technology costs due to core modernization and migration to Software-as-a-Service solutions, which may pressure short-term expenses.
Net Charge-Offs Increase: Annualized net charge-offs increased to 59 basis points, reflecting stress in certain portfolios.
Asset Repricing Exposure: Asset repricing is exposed to middle and long-term rate fluctuations, which could impact net interest income.
Incremental Tax and Legal Expenses: $26 million in incremental tax expense and $14 million in severance, pension settlement, and litigation-related costs negatively impacted earnings.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Effective Tax Rate: For the full year 2026, the effective tax rate is expected to return to the 20.5% to 21.5% range.
Loan Growth: Loan growth is expected to return to more normal levels in 2026, with average loans projected to increase by low single digits compared to 2025.
Deposit Growth: Average deposits are expected to grow by low single digits in 2026 compared to the prior year.
Net Interest Income: Net interest income is projected to grow between 2.5% and 4% in 2026. The net interest margin is expected to be around 3.7% in the first quarter, with a low to mid-370s range by the fourth quarter.
Capital Markets Revenue: Capital markets quarterly revenue is expected to range from $90 million to $105 million in 2026, starting near the lower end of the range early in the year and increasing as the year progresses.
Adjusted Noninterest Income: Adjusted noninterest income is expected to grow between 3% and 5% in 2026 compared to 2025.
Adjusted Noninterest Expense: Adjusted noninterest expense is expected to increase between 1.5% and 3.5% in 2026, with full-year adjusted positive operating leverage anticipated.
Net Charge-Offs: Full-year 2026 net charge-offs are expected to range between 40 and 50 basis points, with the potential to operate towards the lower to middle part of that range if macroeconomic conditions improve.
Technology Investments: Technology spending is expected to increase to 10% to 12% of revenue, up from the historical range of 9% to 11%, as the company continues its core modernization and migration to Software-as-a-Service solutions.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Dividends paid in Q4 2025: $231 million
Total dividends paid in 2025: Part of the $2 billion returned to shareholders through dividends and share buybacks
Dividend growth strategy: Commitment to increasing the dividend commensurate with earnings
Share repurchases in Q4 2025: $430 million
Total share repurchases in 2025: Part of the $2 billion returned to shareholders through dividends and share buybacks
Share buyback strategy: Commitment to repurchasing shares commensurate with earnings and maintaining flexibility for regulatory changes
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:What is the loan growth guidance and its breakdown between C&I and consumer?
A:The loan growth guidance is for lower single-digit growth. The primary driver will be commercial banking activities, with consumer loan growth expected to be minimal. The company has seen an increase in pipeline activity and commitment growth, and they are hiring additional bankers to support growth in priority markets.
Q:How is the company balancing growth and returns?
A:The company focuses on capital allocation, risk-adjusted returns, and delivering top quartile returns on tangible common equity. They aim to grow with the economy plus a little, ensuring soundness, profitability, and growth without trade-offs between growth and returns.
Q:What is the outlook for capital markets performance?
A:Capital markets had its second-best year in history but experienced a weaker fourth quarter. The company expects a rebound in 2026, with M&A activity expected to close in the first half of the year. They are adding bankers to support growth in real estate corporate banking and capital markets.
Q:What are the trends in deposit beta performance and pricing?
A:Deposit beta performance is improving, with a 36 basis point improvement in the fourth quarter. The company expects mid-30% beta changes and plans to remain competitive while reacting to market conditions and Federal Reserve actions.
Q:What is driving customers to refinance loans through capital markets?
A:Customers, particularly in investment-grade credits within real estate, energy, and financial services, are attracted by lower costs of capital and better terms available in the capital markets. This activity was more pronounced in 2025 due to market conditions.
Q:What is the outlook for credit quality and higher-risk portfolios?
A:Credit quality is improving, with nonperforming loans and criticized loans decreasing. Charge-offs are expected to decline, and the allowance for loan losses is trending down. Higher-risk portfolios like trucking and transportation are improving but still face challenges.
Q:What is the company's approach to capital allocation and buybacks?
A:The company generates about 40 basis points of capital per quarter, with 18 basis points allocated to dividends. They prioritize investing in loan growth and use excess capital for share buybacks when loan growth opportunities are limited.
Q:What is the company's stance on M&A?
A:Depository M&A is not part of the company's strategy. They are focused on executing their current plan and transforming their core deposit system over the next 15 to 18 months.
Q:How is the company addressing competition in banking?
A:The company views competition as an opportunity to grow, focusing on strong markets, brand recognition, and customer service. They are leveraging their expertise and hiring additional bankers to support growth in priority markets.
Q:What is the progress and benefit of the core deposit system modernization?
A:The company is in the user testing phase and expects to complete the modernization by late 2027. Benefits include speed to market, flexibility, enhanced customer experience, and improved data organization for AI initiatives.
Q:What is the expense outlook given headcount increases and tech investments?
A:The company aims to manage expenses effectively, with a history of 2.8% compound annual growth in expenses. They plan to fund tech investments and headcount increases through efficiency improvements and reallocation of resources.
Q:What is the pace of hiring and its impact on loan growth?
A:The company plans to hire 120 bankers over two years, with 50 hired in 2025. This represents an uptick in hiring compared to previous years and is expected to support loan growth, particularly in priority markets.
Q:What is the leverage to recovery in commercial real estate?
A:The company expects growth in commercial real estate, particularly in multifamily, as rates decline and market conditions improve. They have strong real estate banking teams and a portfolio of products to meet customer needs.
Q:What are the trends in consumer checking account growth?
A:The company is seeing growth in consumer checking accounts, focusing on core customers with direct deposits and active account usage. Digital originations are increasing, supported by enhancements to their mobile banking platform.
Q:What is the net interest margin (NIM) outlook?
A:The NIM is expected to start at 3.70% in the first quarter of 2026, inching up throughout the year to the low-to-mid 3.70% range, assuming mid-30% beta expectations and low single-digit loan growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the potential impact of the Supreme Court's decision on customer sentiment and borrowing plans, stating that customers have enough clarity to move forward with their plans. Additionally, they did not provide precise figures for the expected expense ratio changes due to tech investments and headcount adjustments, emphasizing effective expense management instead.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI transformation
Anil perspective
Anil understanding
App Store
CFO Anil
CFOs space
Full level
Instructions EVP
Investor Relations
Loan advantage
Regions Full
Regions associate
Regions decision
Regions period
Regions vision
Store capability
Treasury product
advantage financing
agenda technology
app star
approach Regions
approach bank
asset funding
associate dedication
associate purpose
auditing finance
authentication governance
experience
foundation
industry
moment
momentum
progress
share basis
value
work
RF Transcript
Regions Financial Corporation (RF) Q4 2025 Earnings Call Transcript
Unknown1-16
The earnings call presents a mixed outlook. Positive factors include expected growth in net interest margin, loan growth, and deposit balances, along with a focus on tech modernization and capital allocation. However, concerns arise from stable loan growth in 2025, elevated charge-offs, and management's unclear responses on certain issues. The Q&A section highlights improvements in credit quality and a focus on managing expenses. Overall, the mixed signals result in a neutral sentiment, suggesting minor stock price fluctuations over the next two weeks.
Regions Financial Corporation (RF) Presents at Goldman Sachs 2025 U.S. Financial Services Conference Transcript
Neutral12-10
Regions Financial Corporation (RF) Presents at Citi's 14th Annual FinTech Conference Transcript
Neutral11-19
Regions Financial Corporation (RF) Presents at The BancAnalysts Association of Boston Conference Transcript
Neutral11-7
RF Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
