Regions’ Loan Growth Slowed After Second-Quarter Pickup

The Tip Desk · October 16, 2026 · 3 min read

Regions’ average loans rose 0.5% QoQ to $99.183 billion in the third quarter, while a margin recovery and higher capital markets income supported earnings.

Regions Financial (RF), the consumer and commercial bank serving the South, Midwest and Texas, lost some of its lending momentum in the third quarter. Average loans rose 0.5% QoQ to $99.183 billion, following growth of 2.4% in the second quarter and 1% in the first. Loan growth decelerated but remained positive, with business lending continuing to expand while consumer balances contracted.

The margin trajectory turned in the other direction. Net interest margin recovered 2 bps to 3.68% after slipping from 3.67% in the first quarter to 3.66% in the second. Net interest income totaled $1.298 billion. Regions attributed the sequential income improvement to fixed-rate asset turnover, loan growth, higher hedging income, credit interest recoveries and deposit-cost management, alongside an additional day in the quarter. Higher non-deposit funding costs partly offset those benefits.

Commercial and industrial lending remained the principal source of balance growth, with average balances of $51.910 billion. Regions identified government and public sector, wholesale and financial services among the contributing categories. Average investor real estate loans totaled $9.992 billion. The bank said increased multifamily bridge-financing activity supported that portfolio because elevated long-term interest rates had slowed permanent financing. Investment-grade credits represented more than half of new loan balances, according to Regions.

Fees provided another source of revenue. Capital markets income reached $107 million against $84 million in the second quarter, with Regions reporting a record excluding customer derivative valuation adjustments. The bank attributed the increase to mergers and acquisitions advisory work, underwriting and placement fees, commercial swaps and syndication revenue. Adjusted non-interest income totaled $690 million; reported results included $15 million of securities repositioning losses.

Treasury Management also delivered record income, contributing to deposit service charges of $171 million. Commercial credit fee income totaled $35 million, with Regions citing standby letter of credit income and commercial unused fees. Wealth management income was $146 million. The bank attributed its decline from a record second quarter primarily to lower production volumes.

Funding balances moved against the lending expansion. Average deposits fell 1.2% QoQ to $129.140 billion from $130.691 billion. Regions attributed the corporate deposit decline primarily to a limited number of large commercial customers moving interest-bearing balances into off-balance-sheet products through its institutional investment services group. Interest-bearing deposit costs were 1.70%, while average non-interest-bearing balances stood at $39.776 billion.

Consumer Bank accounted for $80.116 billion of average deposits, Corporate Bank for $39.505 billion and Wealth Management for $7.484 billion. Beyond those balance-sheet deposits, Regions said it managed approximately $16 billion of excess commercial client balances through liquid investment solutions.

Expenses totaled $1.118 billion, and the adjusted efficiency ratio was 55.8%. Regions said technology and infrastructure investments contributed to software costs, while higher legal settlement costs affected professional, legal and regulatory spending. Employee benefit valuation movements largely offset increases in base salaries and revenue-based incentives. Earnings available to common shareholders were $611 million, or $0.71 a share.

Credit losses continued their retreat in the third quarter. Annualized net charge-offs fell to 29 bps of average loans from 42 bps in the second quarter and 54 bps in the first. Third-quarter net charge-offs were $72 million, while the provision for credit losses was $68 million.

The remaining problem-loan measures also pointed to a smaller troubled book: nonperforming loans excluding loans held for sale were 0.59% of net loans, and business services criticized loans were 4.71% of total business loans. Business services comprised commercial and investor real estate loans. The allowance for credit losses stood at 275% of nonperforming loans excluding loans held for sale. Regions said commercial customer feedback remained constructive, but it continued to monitor economic uncertainty and portfolios with heightened risk or interest-rate sensitivity.

Source: Regions Financial quarterly earnings releases.