Loan Growth, Rise in NII to Aid Regions Financial's Q4 Earnings

Regions Financial Corporation RF is scheduled to report fourth-quarter and 2025 results on Jan. 16, 2026, before the opening bell. Quarterly earnings and revenues are expected to register year-over-year growth in the to-be-reported quarter.

This Birmingham, AL-based player’s third-quarter 2025 results were driven by an increase in non-interest income and net interest income (NII). However, a lower loan balance and higher non-interest expenses are concerning.

Regions Financial has an impressive earnings surprise history. Its earnings have surpassed estimates in the trailing four quarters, with an average surprise of 6.32%.

Regions Financial Corporation Price and EPS Surprise

Regions Financial Corporation price-eps-surprise | Regions Financial Corporation Quote

The Zacks Consensus Estimate for fourth-quarter earnings of 61 cents per share has been unchanged over the past seven days. The figure indicates a 3.4% rise from the year-ago reported number.

The consensus estimate for revenues is pegged at $1.93 billion, indicating a 6.2% increase from the prior-year reported figure.

Key Factors & Estimates for RF's Q4

NII & Loans: The Federal Reserve reduced interest rates twice in the fourth quarter, following a 25-basis-point rate cut in September. With this, the Fed funds rate now stands at 3.50-3.75%. This is likely to have aided RF’s NII in the fourth quarter, given stabilizing funding/deposit costs.

Management expects NII is expected to rebound modestly from the third-quarter 2025 reported level, supported by fixed-rate asset turnover, additional securities repositioning, and lower deposit pricing. The Zacks Consensus Estimate is pegged at $1.28 billion, indicating a 1.2% increase on a sequential basis.

In the fourth quarter, the loan demand was impressive. Per the Fed’s latest data, the demand for commercial and industrial loans and consumer loans was robust in the quarter.

Given this, the company is likely to have witnessed improvement in average interest-earning assets in the fourth quarter of 2025. The Zacks Consensus Estimate of $1.41 billion for average earning assets indicates a marginal increase on a sequential basis.

Non-Interest Income: Global mergers and acquisitions (M&As) in the fourth quarter of 2025 surged impressively from the lows witnessed in April and May following President Trump’s announcement of ‘Liberation Day’ tariff plans. Improved visibility on trade policy, a narrowing of buyer-seller valuation expectations, lower funding costs, and a focus on scale and AI integration supported a pickup in deal-making activity. This is anticipated to have supported the company’s capital markets revenues.

Regions Financial expects fourth-quarter capital markets revenues of $95-$105 million, whereas it reported $104 million in the third quarter. The Zacks Consensus Estimate for capital markets income is pegged at $91.5 million.

Mortgage rates declined notably in the fourth quarter from the levels observed at the start of 2025 and remained within a low-6% range. This was mainly driven by the Fed’s monetary policy easing. However, refinancing activity and origination volumes have not witnessed significant growth. As a result, Regions Financial’s mortgage banking fees are expected to have been affected to some extent. 

The consensus estimate for mortgage income is pegged at $37.3 million, indicating a 1.8% decline from the prior quarter’s reported figure.

The Zacks Consensus Estimate for card and ATM fees of $119 million implies a 2.4% decline on a sequential basis.

The consensus estimate for revenues from service charges on deposit accounts of $158.9 million indicates a marginal sequential decrease.

The Zacks Consensus Estimate for wealth management income is pegged at $140.1 million, indicating a marginal increase from the prior quarter’s reported number.

Overall, the consensus estimate for total non-interest income is pinned at $648.9 million, indicating a 1.5% sequential fall.

Expenses: RF’s expenses are expected to have been high in the quarter under discussion due to increases in salaries, employee benefit expenses and other expenses. Although the company has been implementing expense management actions, its ongoing investment in technology advancement and franchise strengthening is likely to have kept the expense base elevated.

Asset Quality: We expect the company to keep a decent reserve this time, given a slowdown in job growth, which could pressure consumer demand and lead to higher delinquencies.

The Zacks Consensus Estimate for non-performing assets is pegged at $810.9 million, indicating a 2.9% rise from the prior quarter's reported figure.

What Our Quantitative Model Predicts for RF

Our proven model predicts an earnings beat for Regions Financial this time. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Regions Financial has an Earnings ESP of +0.36%.

Zacks Rank: The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Bank Stocks to Consider

Here are a couple of other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:

KeyCorp KEY is slated to report fourth-quarter 2025 results on Jan. 20. The company has a Zacks Rank #2 at present and an Earnings ESP of +1.20%.

Quarterly earnings estimates for KEYCorp have been unchanged at 38 cents over the past week.

The Earnings ESP for Northern Trust Corporation NTRS is +0.36% and it carries a Zacks Rank #3 at present. The company is slated to report fourth-quarter 2025 results on Jan. 22.

Over the past seven days, the Zacks Consensus Estimate for Northern Trust’s quarterly earnings has been revised upward to $2.37.

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This article originally published on Zacks Investment Research (zacks.com).

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