Regions' Q2 2026 EPS rose 8% to $0.64 on flat $1.91B revenue as net charge-offs fell to 0.42% and a smaller loan-loss provision offset a $40M bond-repositioning loss and 4.5% expense growth.
Net interest income
$1.3B
+1.4% YoY
Net interest margin
3.66%
Net income
$549M
+2.8% YoY
Diluted EPS
$0.64
+8.5% YoY
Efficiency ratio
58.3%
Net charge-off ratio
0.42%
CET1 capital ratio
10.7%
Return on tangible common equity
19.0%
Net interest margin (NIM): what a bank earns on its loans and securities minus what it pays for deposits and borrowing, as a share of those assets. Efficiency ratio: operating costs per dollar of revenue (lower is better). Net charge-off (NCO) ratio: loans written off as unrecoverable, net of recoveries, as a share of average loans. CET1: the bank's core capital cushion against losses, as a share of risk-weighted assets.
Regions earns $0.64 a share, up 8%: fewer shares, lower credit costs, and a margin held at 3.66%
Regions Financial reported second-quarter 2026 net income available to common shareholders of $549 million, or $0.64 per diluted share, compared with $534 million and $0.59 a year earlier. Total revenue was essentially flat at $1.907 billion (+0.1%), so the EPS gain didn't come from selling more. It came from three places: a much smaller provision for loan losses ($68 million vs. $126 million), a lower share count after buybacks, and net interest income that inched up 1.4%.
The reported numbers also include a deliberate one-off hit. Regions sold about $900 million of lower-yielding bonds at a ~$40 million pre-tax loss and reinvested the money at higher current yields. It also booked a $5 million branch-consolidation charge. Excluding those, adjusted EPS was $0.68 (+13% year over year) and adjusted revenue grew 2%.
Key figures
Metric
2Q 2026
2Q 2025
YoY Change
Total revenue
$1,907M
$1,905M
+0.1%
Net interest income
$1,277M
$1,259M
+1.4%
Net interest margin (FTE)
3.66%
3.65%
+1 bp
Non-interest (fee) income
Read 0 community reports on Regions Financial Corporation, or write your own.Write a report
Net income here is income available to common shareholders (after $21 million of preferred dividends); total net income was $570 million vs. $563 million. NIM is on a fully taxable-equivalent (FTE) basis, the only basis Regions reports it on.
Lending income: holding the margin while rates drift lower
A bank's core business is borrowing money cheaply (mostly customer deposits) and lending it out at higher rates. Net interest income is the dollar gap between the two. Net interest margin (NIM) is that gap as a percentage of the bank's interest-earning assets, so it tells you how profitable each dollar of lending and investing is.
Regions' NIM was 3.66%, up 1 basis point (0.01 percentage point) from a year ago and down 1 bp from the first quarter. The 10-Q says the increase in net interest income and margin was "driven primarily by lower total funding costs that overcame a modest decline in loan yields, which were also protected by the Company's hedging program," with additional help from fixed-rate asset turnover and the bond repositionings done in 2025 and 2026. Put simply, Regions is paying depositors less, and that has more than offset earning a bit less on its loans. Its interest-rate hedges cushioned the drop in loan yields. The release puts the average cost of interest-bearing deposits at 1.69%.
Quarter on quarter, NII rose 2.3% to $1,277 million. Management credits average loan growth, turnover of fixed-rate assets, one extra day in the quarter, and deposit pricing. It also notes that loan growth and the extra day, "while [they] benefit net interest income, ... reduce the net interest margin", which is why NII rose while NIM slipped a basis point.
Loans: business lending is doing all the growing
Average loans reached $98.7 billion, up 2.4% from 1Q and 2.8% from a year ago. The mix matters:
Average balances ($M)
2Q26
2Q25
YoY
Commercial & industrial
51,504
49,033
+5.0%
Investor real estate
9,789
9,009
+8.7%
Business lending total
66,635
63,212
+5.4%
Residential first mortgage
19,551
19,992
−2.2%
Other consumer
5,566
5,951
−6.5%
Consumer lending total
32,087
32,865
−2.4%
The release says C&I growth came from "power and utilities, manufacturing, government and public sector and retail trade," and that investor real estate growth came from "increased bridge-financing activity within the multifamily sector, as elevated long-term interest rates have slowed permanent financing." More than half of new balances were to investment-grade borrowers. Consumer balances are shrinking, mostly in mortgages and the "other consumer" book, which includes the home-improvement financing portfolio.
Deposits are flat. Average deposits rose 1.0% year on year to $130.7 billion, but period-end deposits fell 0.9% from March to $130.7 billion. Loans grew while deposits didn't, so the loan-to-deposit ratio climbed to 75.9% from 73.9% a year ago.
Fees and expenses: the reason the efficiency ratio slipped
The efficiency ratio is the share of revenue that goes to operating costs, so lower is better. At 58.3%, Regions spent about 58 cents to earn each dollar of revenue, up from 56.0% a year ago. Two effects stack here:
Revenue was depressed by the one-off bond loss. Fee income fell 2.5% to $630 million, with net securities losses of $41 million against $1 million a year ago and mortgage income down 31% to $33 million. The underlying fee lines grew. Wealth management income hit a record $150 million (+12.8%, "attributable primarily to higher production and favorable market conditions"), and deposit service charges rose 10.6% to $167 million. Adjusted non-interest income rose 3.7% to $670 million.
Expenses grew faster than underlying revenue. Non-interest expense rose 4.5% to $1,121 million ($1,116 million adjusted, +4.0%). The main driver was salaries and benefits, up $39 million to $697 million. About $8 million of that increase comes from mark-to-market on deferred-compensation liabilities, which is offset by a matching gain in fee income. Excluding it, salaries rose 4.8%. Outside services rose 20.5% to $47 million, which the company attributes to "the timing and volume of services performed."
Even on the adjusted basis, the efficiency ratio worsened from 56.0% to 56.9%. Adjusted expenses grew 4.0% while adjusted revenue grew 2.2%.
Credit: losses falling, and reserves being released
Credit is where the year-over-year improvement is clearest. Net charge-offs (loans written off as uncollectable, net of recoveries) were $102 million, or an annualized 0.42% of average loans. That compares with 0.47% a year ago and 0.54% in 1Q26. The 10-Q attributes the decline to "continued progress on previously identified portfolios of interest that were already reserved for." Other credit measures also improved:
Non-performing loans fell to 0.67% of loans from 0.80% a year ago.
Business criticized loans (loans on the bank's internal watch list) fell to 5.01% of business loans from 7.22%, or $3.37 billion from $4.61 billion.
The allowance for credit losses fell to 1.63% of loans from 1.80%.
Because charge-offs ($102 million) exceeded the provision ($68 million), Regions drew down its loss reserve by $34 million this quarter, and by $73 million over the first half. That reserve release accounts for a meaningful part of the EPS gain. The provision alone was $58 million lower than in 2Q25, which is roughly $0.07 per share pre-tax, or about $0.05 after tax, on ~860 million diluted shares. Profit from reserve releases doesn't repeat indefinitely: once reserves reach a steady level, the provision has to track charge-offs again.
Capital and shareholder returns
The CET1 ratio (common equity tier 1) measures a bank's highest-quality capital, mainly common shareholders' equity, as a share of its risk-weighted assets. It is the regulators' main gauge of how much loss a bank can absorb. Regions' CET1 was an estimated 10.7%, down slightly from 10.8% a year ago. Including unrealized losses on its bond portfolio (AOCI), which the headline ratio excludes, it was 9.5%, up from 9.3%. In 2Q, Regions bought back about 2.1 million shares for $59 million and declared $226 million of common dividends. On July 15 the board raised the quarterly dividend 13% to $0.30. Tangible book value per share rose 7% to $13.78.
Takeaway: Regions' 8% EPS growth came almost entirely from below the revenue line: a $58 million smaller loan-loss provision and a lower share count. Total revenue was flat and expenses grew 4.5%, so the underlying business is growing more slowly than earnings suggest. Credit is genuinely improving, with charge-offs at 0.42% and criticized business loans down 27% in a year. But the reserve releases helping EPS can't continue indefinitely. From here, earnings growth has to come from net interest income and fees growing faster than expenses.
Outlook: what management guided to, and what it implies
In investor materials furnished on August 7, 2026 (8-K, Item 7.01), management guided:
3Q26 NII up ~2% vs. 2Q26, with NIM "stable to modestly higher," exiting 2026 at approximately 3.70%.
FY2026 NII up 2.5–4% vs. 2025's $4,991 million, assuming a mostly stable yield curve with a 10-year yield of 4–4.75%.
Adjusted non-interest income up 3–5% (vs. $2,585 million), "toward the lower end."
Adjusted non-interest expense up 1.5–3.5% (vs. $4,331 million), and positive adjusted operating leverage for the full year, meaning revenue growing faster than costs.
Net charge-offs of 0.40–0.50%, average loans and deposits up low single digits, and an effective tax rate of 20.5–21.5%.
Capital markets revenue of $90–105 million a quarter, near the low end in 3Q (2Q was $84 million). CET1 including AOCI managed near the 9.5% midpoint of its 9.25–9.75% range.
Our read: The NII guide looks achievable. First-half NII was $2,525 million. The full-year range implies second-half NII of roughly $2,591–2,666 million, or about $1,296–1,333 million a quarter, and a 2% rise on 2Q's $1,277 million gives about $1,303 million in 3Q. That lands in the lower half of the range. The expense side is tighter. First-half adjusted expenses were $2,184 million, so the full-year guide leaves roughly $1,106–1,150 million a quarter for the second half, while 2Q ran at $1,116 million. That requires cost discipline at a time when salaries are growing about 5% a year. Deposit growth is the variable to watch. Loans are growing and period-end deposits are not. If that continues, Regions will need to fund growth with more expensive borrowing, which would pressure the 3.70% exit-NIM target.
Source: Regions Financial Q2 2026 Form 10-Q (filed August 6, 2026); prior-year ratios, the 2Q26 earnings release and financial supplement (8-K Exhibits 99.1/99.2, July 17, 2026); guidance from investor meeting materials (8-K, August 7, 2026). Adjusted figures are Regions' own non-GAAP measures.