Regions Financial Corporation

05/07/2026 | Press release | Distributed by Public on 05/07/2026 09:54

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
The following discussion and analysis is part of Regions Financial Corporation's ("Regions" or the "Company") Quarterly Report on Form 10-Q filed with the SEC and should be read in conjunction with the consolidated financial statements and the related notes that appear in Part I, Item 1 of this report. In addition, this discussion and analysis updates the Annual Report on Form 10-K for the year ended December 31, 2025, which was previously filed with the SEC. This financial information is presented to aid in understanding Regions' financial position and results of operations and should be read together with the financial information contained in Regions' Annual Report on Form 10-K. See Note 1 "Basis of Presentation" and Note 13 "Recent Accounting Pronouncements" to those consolidated financial statements for further detail. The emphasis of this discussion will be on the three months ended March 31, 2026 compared to the three months ended March 31, 2025 for the consolidated statements of income. For the consolidated balance sheets, the emphasis of this discussion will be on the balances as of March 31, 2026 compared to December 31, 2025.
This discussion and analysis contains statements that may be considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. See pages 6 through 8 for additional information regarding forward-looking statements.
CORPORATE PROFILE
Regions is a financial holding company headquartered in Birmingham, Alabama operating in the South, Midwest and Texas. In addition, Regions operates several offices delivering specialty capabilities in New York, Washington D.C., Chicago, Salt Lake City, and other locations nationwide. Regions provides financial solutions for a wide range of clients including retail and mortgage banking services, commercial banking services and wealth and investment services. Further, Regions and its subsidiaries deliver other specialty capabilities including merger and acquisition advisory services, capital markets solutions, home improvement lending, investment advisory services, equipment financing for commercial clients and small business customers, low income housing tax credit corporate fund syndication and asset management, financing to CRA-qualified customers, investment and insurance products, broker-dealer services to commercial clients, and others.
Regions conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank that is a member of the Federal Reserve System. At March 31, 2026, Regions operated 1,246 total branch outlets. Regions carries out its strategies and derives its profitability from three reportable business segments: Corporate Bank, Consumer Bank, and Wealth Management, with the remainder in Other. See Note 11 "Business Segment Information" to the consolidated financial statements for more information regarding Regions' segment reporting structure.
Regions' business strategy is focused on providing a competitive mix of products and services, delivering quality customer service, and continuing to develop and optimize distribution channels that include a branch distribution network with offices in convenient locations, as well as electronic and mobile banking.
Regions' profitability, like that of many other financial institutions, is dependent on its ability to generate revenue from net interest income as well as non-interest income sources. Net interest income is primarily the difference between the interest income Regions receives on interest-earning assets, such as loans, leases, investment securities and cash balances held at the Federal Reserve Bank, and the interest expense Regions pays on interest-bearing liabilities, principally deposits and borrowings. Regions' net interest income is impacted by the size and mix of its balance sheet components and the interest rate spread between interest earned on its assets and interest paid on its liabilities. Non-interest income includes fees from service charges on deposit accounts, card and ATM fees, mortgage servicing and secondary marketing, investment management and trust activities, capital markets and other customer services which Regions provides. Results of operations are also affected by the provision for credit losses and non-interest expenses such as salaries and employee benefits, equipment and software expenses, occupancy, professional, legal and regulatory expenses, FDIC insurance assessments, and other operating expenses, as well as income taxes.
Economic conditions, competition, new legislation and related rules impacting regulation of the financial services industry and the monetary and fiscal policies of the Federal government significantly affect most, if not all, financial institutions, including Regions. Lending and deposit activities and fee income generation are influenced by levels of business spending and investment, consumer income, consumer spending and savings, capital market activities, and competition among financial institutions, as well as customer preferences, interest rate conditions, inflation and prevailing market rates on competing products in Regions' market areas.
FIRST QUARTER OVERVIEW
Economic Environment in Regions' Banking Markets
Regions utilized its internal March baseline forecast to calculate the ACL as of March 31, 2026. Refer to the "Economic forecast and qualitative adjustments" discussion in the "Allowance" section for further detail.
First Quarter Results
Regions reported net income available to common shareholders of $539 million or $0.62 per diluted share in the first quarter of 2026 compared to net income available to common shareholders of $465 million or $0.51 per diluted share in the first quarter of 2025.
Net interest income (taxable-equivalent basis) totaled $1.3 billion in the first quarter of 2026, which increased $55 million compared to the first quarter of 2025. The net interest margin (taxable-equivalent basis) was 3.67 percent in the first quarter of 2026, reflecting a 15 basis point increase from the same period in 2025. The increases in net interest income and margin were driven primarily by lower total funding costs which more than offset modest loan yield declines supported by hedges. Additionally, net interest income and margin benefited from fixed-rate asset turnover and securities repositioning executed in prior periods. Refer to the related discussion below Table 17 "Consolidated Average Daily Balances and Yield/Rate Analysis" for further detail.
The provision for credit losses totaled $91 million in the first quarter of 2026 compared to $124 million in the first quarter of 2025. Net charge-offs totaled $130 million, or 0.54 percent of average loans, in the first quarter of 2026, compared to $123 million, or 0.52 percent of average loans, in the first quarter of 2025. This increase reflected charge-offs that were already reserved for related to previously identified portfolios of interest. The allowance as a percent of total loans, net, decreased to 1.68 percent at March 31, 2026, compared to 1.76 percent at December 31, 2025 due to asset quality improvement. Refer to the "Allowance" section for further detail.
Non-interest income was $625 million in the first quarter of 2026 compared to $590 million in the first quarter of 2025 primarily driven by a decline in securities losses associated with repositioning activity between the two periods. Additionally, investment management and trust fee income, capital markets income, bank-owned life insurance, and investment services income increased. See Table 22 "Non-Interest Income" for further details.
Non-interest expense was $1.1 billion in the first quarter of 2026 which increased $29 million compared to the first quarter of 2025. The increase was primarily driven by an increase in salaries and benefits, equipment and software, and professional, legal and regulatory expenses. These increases were partially offset by a decline in Visa class B shares expense and other miscellaneous expenses. See Table 23 "Non-Interest Expense" for further details.
Regions' effective tax rate was 21.6 percent in the first quarter of 2026 compared to 21.1 percent in the first quarter of 2025. See the "Income Taxes" section for further details.
Capital
Regions and Regions Bank are required to comply with regulatory capital requirements established by Federal and State banking agencies, which include quantitative requirements including the CET1 ratio. At March 31, 2026, Regions' CET1 ratio was estimated to be 10.7 percent. For additional information on Regions' regulatory capital requirements see the "Regulatory Requirements" section.
Regions is subject to supervisory stress testing conducted by the Federal Reserve and its SCB is currently floored at 2.5 percent. See Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to the consolidated financial statements for further details.
The Board has authorized the repurchase of up to $3.0 billion of the Company's common stock through the fourth quarter of 2027. See Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" for more information.
BALANCE SHEET ANALYSIS
The following sections provide expanded discussion of significant changes in certain line items in asset, liability, and shareholders' equity categories.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents increased approximately $236 million from year-end 2025 to March 31, 2026 primarily due to an increase in borrowed funds and, to a lesser degree, an increase in deposits. The increases were partially offset by an increase in loans. See the "Borrowed Funds", "Liquidity","Deposits" and "Loans" sections for more information.
DEBT SECURITIES
The following table details the carrying values of debt securities, including both held to maturity and available for sale:
Table 1-Debt Securities
March 31, 2026 December 31, 2025
(In millions)
U.S. Treasury securities $ 2,345 $ 2,276
Federal agency securities 537 543
Obligations of states and political subdivisions 1 2
Mortgage-backed securities:
Residential agency 22,763 23,624
Commercial agency 6,645 6,198
Commercial non-agency 82 82
Corporate and other debt securities 480 441
$ 32,853 $ 33,166
Debt securities, which comprise approximately 23 percent of earning assets, are an important tool used to manage interest rate sensitivity and provide a primary source of liquidity for the Company, as much of the portfolio is highly liquid. Additionally, some of the debt securities portfolio is eligible to be used as collateral for funding of various types of borrowings. See the "Liquidity" and "Market Risk-Interest Rate Risk" sections for more information on these arrangements. See also Note 3 "Debt Securities" to the consolidated financial statements for additional information.
As of March 31, 2026, debt securities held to maturity and debt securities available for sale represented 17 percent and 83 percent, respectively, of the total debt securities portfolio.
Debt securities decreased $313 million from December 31, 2025 to March 31, 2026 due to the timing of securities purchases and less favorable market valuation adjustments resulting from changes in interest rates.
The average life of the debt securities portfolio at both March 31, 2026 and December 31, 2025 was estimated to be 5.9 years, with a duration of approximately 3.9 years, inclusive of fair value hedges (see Table 19).
Subsequent to March 31, 2026, the Company executed a debt securities repositioning involving the sale of shorter-duration commercial agency MBS and U.S. Treasuries and replacement with longer-duration commercial and residential agency MBS and U.S. Treasuries with higher market yields. In total the Company sold approximately $900 million of debt securities available for sale and realized approximately $40 million in pre-tax losses.
LOANS HELD FOR SALE
The following table presents Regions' loans held for sale by type:
Table 2-Loans Held for Sale
March 31, 2026 December 31, 2025
(In millions)
Commercial $ 135 $ 245
Residential first mortgage 328 266
Non-performing 1 -
$ 464 $ 511
Commercial loans held for sale include commercial mortgage loans originated for sale to third parties and commercial loans originally recorded as held for investment when management has the intent to sell. Levels of commercial loans held for sale fluctuate based on timing of sale to third parties. The levels of residential first mortgage loans held for sale that are part of the Company's mortgage originations fluctuate depending on the timing of origination and sale to third parties.
LOANS
GENERAL
Loans, net of unearned income, represented 70 percent of interest-earning assets as of March 31, 2026. The following table presents the distribution of Regions' loan portfolio by segment and class, net of unearned income:
Table 3-Loan Portfolio
March 31, 2026 December 31, 2025
(In millions, net of unearned income)
Commercial and industrial $ 50,824 $ 48,790
Commercial real estate mortgage-owner-occupied 5,004 4,845
Commercial real estate construction-owner-occupied 261 263
Total commercial 56,089 53,898
Commercial investor real estate mortgage 7,706 7,172
Commercial investor real estate construction 1,938 1,934
Total investor real estate 9,644 9,106
Residential first mortgage 19,621 19,765
Home equity lines 3,210 3,232
Home equity loans 2,287 2,324
Consumer credit card 1,472 1,519
Other consumer 5,603 5,793
Total consumer 32,193 32,633
$ 97,926 $ 95,637
PORTFOLIO CHARACTERISTICS
Loans, net of unearned income, increased $2.3 billion from year-end 2025 due to an increase across almost all commercial and investor real estate loan classes as discussed below. These increases were partially offset by a slight decline in consumer loans. Regions manages loan growth with a focus on risk management and risk-adjusted return on capital.
The following sections describe the composition of the portfolio segments and classes disclosed in Table 3, explain changes in balances from year-end 2025 and highlight the related risk characteristics. Regions believes that its loan portfolio is well diversified by product, client, and geography throughout its footprint. However, the loan portfolio may be exposed to certain concentrations of credit risk which exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries, and certain loan products. See Note 4 "Loans and the Allowance for Credit Losses" to the consolidated financial statements for additional discussion.
Commercial
Over half of the Company's total loans are included in the commercial portfolio segment. These balances are spread across numerous industries, as noted in Table 4. The Company manages the related risks to this portfolio by setting certain lending limits for each significant industry. The commercial portfolio segment includes commercial and industrial loans for use in customers' normal business operations to finance working capital needs, equipment purchases, expansion projects and acquisitions. See the "Portfolio Characteristics" section in Regions' Annual Report on Form 10-K for the year ended December 31, 2025 for more information on details surrounding the commercial portfolio segment and underwriting criteria.
Commercial and industrial loans increased $2.0 billion since year-end 2025 and was driven primarily by power and utilities, manufacturing, healthcare and asset-based lending. Approximately half of the growth came from higher line utilization while the remainder was driven by new loans, primarily with existing clients. Throughout the first quarter 2026, the increase in commercial and industrial loans was broad-based as shown in Table 4.
The commercial portfolio also includes owner-occupied commercial real estate mortgage loans to operating businesses, which are loans for long-term financing on real estate assets, and are repaid by cash generated by business operations. Owner-occupied commercial real estate construction loans are made to commercial businesses for the development of land or construction of a building where the repayment is derived from revenues generated from the business of the borrower. These owner-occupied real estate and real estate construction loans generally mature within a 10 year period and with amortization periods reflecting the longer life of the underlying collateral. Typical structure is an amortizing term loan, though construction loans are short-term, monitored, non-revolving draw facilities. These loans frequently have a covenant package combination consistent with the underwriting of commercial loans, inclusive of applicable debt service coverage, leverage, and liquidity measurements.
Underwriting for owner-occupied real estate and real estate construction loans is consistent with the underwriting of commercial loans, with particular attention to the enhancement provided by the underlying real estate collateral.
Real estate appraisals, for both commercial and IRE loans, are performed in accordance with regulatory guidelines. In some cases, reports from automated valuation services are used or internal evaluations are performed. An appraisal is ordered and reviewed prior to loan closing, and a new appraisal or evaluation is generally ordered when market conditions indicate a potential decline in the value of the collateral, or when the loan is either modified, renewed, or deteriorates to a certain level of credit weaknesses.
Investor Real Estate
Loans for real estate development are repaid through cash flows related to the operation, sale or refinance of the property. This portfolio segment includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of real estate or income generated from the real estate collateral. A portion of Regions' IRE portfolio segment consists of loans secured by residential product types (land, single-family and condominium loans) within Regions' markets. Additionally, this category includes loans made to finance income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers. Total IRE loans increased $538 million in comparison to year-end 2025 balances due to increases in fundings to previously approved projects and new term loans for apartments and data centers. See the "Investor Real Estate" section in Regions' Annual Report on Form 10-K for the year ended December 31, 2025 for more information on details surrounding the investor real estate portfolio segment and underwriting criteria.
The following tables provide detail of Regions' commercial and IRE lending balances in selected industries.
Table 4-Commercial and Investor Real Estate Industry Exposure
March 31, 2026
December 31, 2025 (3)
Loans Unfunded Commitments Total Exposure
Percent of Balance
Loans Unfunded Commitments Total Exposure
Percent of Balance
(In millions) (In millions)
Commercial:
Administrative, support, waste and repair $ 1,173 $ 772 $ 1,945 1.8 % $ 1,150 $ 790 $ 1,940 1.8 %
Agriculture 178 131 309 0.4 % 190 119 309 0.4 %
Educational services 3,041 737 3,778 3.5 % 3,055 649 3,704 3.5 %
Energy 1,676 4,074 5,750 5.3 % 1,389 4,129 5,518 5.2 %
Financial services 8,969 10,292 19,261 17.9 % 8,499 9,811 18,310 17.3 %
Government and public sector 3,499 465 3,964 3.7 % 3,427 500 3,927 3.7 %
Healthcare 3,659 2,781 6,440 6.0 % 3,077 2,664 5,741 5.4 %
Information 1,761 1,199 2,960 2.7 % 1,857 1,275 3,132 3.0 %
Manufacturing 5,076 4,983 10,059 9.3 % 4,897 5,328 10,225 9.7 %
Professional, scientific and technical services 1,860 1,614 3,474 3.2 % 1,730 1,742 3,472 3.3 %
Real estate (1)
9,094 9,385 18,479 17.2 % 8,883 9,393 18,276 17.3 %
Religious, leisure, personal and non-profit services 1,802 1,029 2,831 2.6 % 1,703 1,068 2,771 2.6 %
Restaurant, accommodation and lodging 1,235 315 1,550 1.4 % 1,235 351 1,586 1.5 %
Retail trade 2,254 2,123 4,377 4.1 % 2,237 2,216 4,453 4.2 %
Transportation and warehousing 3,459 2,078 5,537 5.1 % 3,497 1,813 5,310 5.0 %
Utilities 2,388 3,728 6,116 5.7 % 2,290 3,800 6,090 5.8 %
Wholesale goods 4,618 3,497 8,115 7.5 % 4,529 3,551 8,080 7.6 %
Other (2)
347 2,457 2,804 2.6 % 253 2,608 2,861 2.7 %
Total commercial $ 56,089 $ 51,660 $ 107,749 100.0 % $ 53,898 $ 51,807 $ 105,705 100.0 %
Investor real estate:
Hotel $ 143 $ 3 $ 146 1.1 % $ 151 $ 8 $ 159 1.3 %
Industrial 857 234 1,091 8.4 % 910 183 1,093 8.9 %
Land 120 21 141 1.1 % 114 13 127 1.0 %
Multi-family 4,393 1,444 5,837 44.8 % 4,103 1,435 5,538 45.3 %
Office 1,046 29 1,075 8.2 % 1,008 29 1,037 8.5 %
Retail 338 58 396 3.0 % 289 66 355 2.9 %
Single-family/condo 658 481 1,139 8.7 % 617 506 1,123 9.2 %
Data center 453 352 805 6.2 % 421 312 733 6.0 %
Self storage
3 - 3 - % 41 3 44 0.4 %
Medical office building 325 165 490 3.8 % 183 142 325 2.7 %
Other (2)
1,308 609 1,917 14.7 % 1,269 413 1,682 13.8 %
Total investor real estate $ 9,644 $ 3,396 $ 13,040 100.0 % $ 9,106 $ 3,110 $ 12,216 100.0 %
_______
(1)"Real estate" includes REITs, which are unsecured commercial and industrial products that are real estate related. This portfolio is well diversified, generally has low leverage with strong access to liquidity, and the REITs included in this portfolio are primarily investment or near investment grade.
(2)"Other" contains balances related to non-classifiable and invalid business industry codes offset by payments in process and fee accounts that are not available at the loan level.
(3)As customers' businesses evolve (e.g. up or down the vertical manufacturing chain), Regions may need to change the assigned business industry code used to define the customer relationship. When these changes occur, Regions does not recast the customer history for prior periods into the new classification because the business industry code used in the prior period was deemed appropriate. As a result, year over year changes may be impacted.
The Company's total non-owner-occupied commercial real estate lending consists of both unsecured commercial and industrial loans that are real estate related (including REITs) and investor real estate loans and are considered to be well diversified across property types. The following tables provide detail of these loans:
Table 5- Unsecured Commercial Real Estate and Investor Real Estate Exposure
March 31, 2026 December 31, 2025
Loan Balance
Percent of Total (1)
Loan Balance
Percent of Total (1)
(In millions)
Residential homebuilders $ 1,222 7.4 % $ 1,066 6.8 %
Apartments 4,961 30.1 % 4,682 29.7 %
Industrial 1,747 10.6 % 2,347 14.9 %
Data center 577 3.5 % 502 3.2 %
Diversified 2,158 13.1 % 1,831 11.6 %
Business offices 907 5.5 % 1,020 6.4 %
Residential land 76 0.5 % 70 0.4 %
Retail 1,297 7.9 % 1,188 7.5 %
Healthcare 1,240 7.5 % 1,086 6.9 %
Hotel 743 4.5 % 737 4.7 %
Commercial land 44 0.3 % 44 0.3 %
Self Storage
261 1.6 % 310 2.0 %
Medical office building 526 3.2 % 207 1.3 %
Other
706 4.3 % 679 4.3 %
Total (2)
$ 16,465 100.0 % $ 15,769 100.0 %
_______
(1)Amounts calculated based on whole dollar values.
(2)Owner-occupied commercial real estate is not included as the principal source of repayment is individual businesses, which more closely aligns with the commercial portfolio credit performance.
Portfolios that are experiencing higher risk due to conditions such as inflationary pressures, higher interest rates, and adverse underlying market fundamentals (identified as portfolios of interest) include business offices and trucking (included within transportation and warehousing) at March 31, 2026 within Table 4 above.
While business offices portfolio remains a portfolio of interest, credit quality is improving. The office portfolio totaled $907 million and represented 0.9 percent of total loans at March 31, 2026, declining from $1.0 billion and 1.1 percent of loans at December 31, 2025. The office portfolio included non-performing loans of $98 million and had associated charge-offs of $1 million in the three months ended March 31, 2026. Approximately 97 percent of the office portfolio was secured, with approximately 61 percent of secured balances located in the South region of the U.S, of which 87 percent were Class A properties. Approximately 56 percent of the office portfolio will mature in the next 12 months. Additionally, the IRE office portfolio had a weighted-average LTV of approximately 64 percent at March 31, 2026, based upon appraisal at origination or most recent received, and a stressed weighted-average LTV of approximately 88 percent as of April 7, 2026, based upon GreenStreet's Commercial Property Price Index. While the office portfolio remains stressed, well-located, highly amenitized properties are observing improvements to property fundamentals. No new loan originations are being contemplated in this portfolio.
The trucking portfolio remains a portfolio of interest as trucking companies have been working through one of the most prolonged downturns in the U.S. domestic freight market. While 2026 began with positive indicators including stable freight volumes and a constructive pricing environment, the conflict in the Middle East has created uncertainty related to operating costs, supply chain disruptions, and supply and demand dynamics. The trucking portfolio totaled $1.1 billion and represented 1.2 percent of total loans at March 31, 2026, declining from $1.2 billion and 1.3 percent of loans at December 31, 2025. The trucking portfolio included non-performing loans of $51 million and had associated charge-offs of $22 million in the three months ended March 31, 2026. New originations in the sector have been curtailed and those that occur are either secured or targeted towards larger companies.
Residential First Mortgage
Residential first mortgage loans represent loans to consumers to finance a residence. These loans are typically financed over a 15 to 30 year term and, in most cases, are extended to borrowers to finance their primary residence. Total residential first mortgage loans decreased $144 million in comparison to year-end 2025 balances as payoffs and paydowns outpaced production.
Home Equity Lines
Home equity lines are secured by a first or second mortgage on the borrower's residence and allow customers to borrow against the equity in their homes. Substantially all of this portfolio was originated through Regions' branch network.
Since December 2016, home equity lines of credit are originated with a 10-year draw period and a 20-year repayment term. During the 10-year draw period customers do not have an interest-only payment option, except on a very limited basis. From May 2009 to December 2016, home equity lines of credit had a 10-year draw period and a 10-year repayment term. Prior to May 2009, the predominant structure was a 20-year draw period with a balloon payment upon maturity, which means there are no principal payments required until the balloon payment is due for interest-only lines of credit.
The following table presents information regarding the future principal payment reset dates for the Company's home equity lines of credit as of March 31, 2026. The balances presented are based on maturity date for lines with a balloon payment and draw period expiration date for lines that convert to a repayment period.
Table 6-Home Equity Lines of Credit - Future Principal Payment Resets
First Lien % of Total Second Lien % of Total Total
(Dollars in millions)
2026 $ 66 2.06 % $ 71 2.20 % $ 137
2027 212 6.59 % 180 5.61 % 392
2028 211 6.58 % 138 4.28 % 349
2029 93 2.89 % 62 1.95 % 155
2030 93 2.87 % 69 2.16 % 162
2031-2035 605 18.85 % 1,197 37.29 % 1,802
2036-2040 47 1.47 % 56 1.75 % 103
Thereafter
9 0.29 % 7 0.22 % 16
Revolving Loans Converted to Amortizing 53 1.67 % 41 1.27 % 94
Total $ 1,389 43.27 % $ 1,821 56.73 % $ 3,210
Home Equity Loans
Home equity loans are also secured by a first or second mortgage on the borrower's residence, are primarily originated as amortizing loans, and allow customers to borrow against the equity in their homes. Substantially all of this portfolio was originated through Regions' branch network.
Consumer Credit Quality Data
The Company calculates an estimate of the current value of property secured as collateral for both residential first mortgage and home equity lending products ("current LTV"). The estimate is based on home price indices compiled by a third party that is updated typically every three months. The third party data indicates trends for MSAs. Regions uses the third party valuation trends from the MSAs in the Company's footprint in its estimate. The trend data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area.
The following table presents current LTV data for components of the residential first mortgage, home equity lines and home equity loans classes of the consumer portfolio segment. Current LTV data for some loans in the portfolio is not available due to mergers and systems integrations. The amounts in the table represent the entire loan balance. For purposes of the table below, if the loan balance exceeds the current estimated collateral the entire balance is included in the "Above 100%" category, regardless of the amount of collateral available to partially offset the shortfall.
Table 7-Estimated Current Loan to Value Ranges
March 31, 2026 December 31, 2025
Residential
First Mortgage 		Home Equity Lines of Credit Home Equity Loans Residential
First Mortgage 		Home Equity Lines of Credit Home Equity Loans
1st Lien 2nd Lien 1st Lien 2nd Lien 1st Lien 2nd Lien 1st Lien 2nd Lien
(In millions) (In millions)
Estimated current LTV:
Above 100% $ 123 $ 4 $ - $ 1 $ - $ 114 $ 2 $ 1 $ - $ 1 $ 1
Above 80% - 100% 1,989 2 15 12 20 1,985 3 2 11 10 17
80% and below 17,165 1,373 1,794 1,693 559 17,327 3 1,396 1,799 1,739 555
Data not available 344 10 12 2 - 339 3 11 12 1 -
$ 19,621 $ 1,389 $ 1,821 $ 1,708 $ 579 $ 19,765 $ 1,410 $ 1,822 $ 1,751 $ 573
Consumer Credit Card
Consumer credit card lending represents primarily open-ended variable interest rate consumer credit card loans.
Other Consumer
Other consumer loans primarily include indirect and direct consumer loans, overdrafts and other revolving loans. Other consumer loans decreased $190 million from year-end 2025 driven by a decline in consumer home improvement lending due to seasonality.
Regions considers factors such as periodic updates of FICO scores, accrual status, DPD status, unemployment rates, home prices, and geography as credit quality indicators for the consumer loan portfolio. FICO scores are obtained at origination and refreshed FICO scores are obtained by the Company quarterly for most consumer loans. For more information on credit quality indicators refer to Note 4 "Loans and the Allowance for Credit Losses".
ALLOWANCE
The allowance represents management's best estimate of expected losses over the life of the loan and credit commitment portfolios and consists of two components: the allowance for loan losses and the reserve for unfunded credit commitments. Unfunded credit commitments includes items such as letters of credit, financial guarantees and binding unfunded loan commitments. The allowance totaled $1.6 billion at March 31, 2026 and $1.7 billion at December 31, 2025.
Regions' allowance estimation process utilizes loss forecasting models for pooled loans, specific reserves for significant individually evaluated non-performing loans, and qualitative adjustments for items not captured by the models including specific adjustments and general imprecision. Key inputs to Regions' loss forecasting models include, but are not limited to, loan risk ratings (commercial and investor real estate loans), maturity date, days past due and FICO scores (consumer loans), collateral values securing loans, and Regions' internally prepared baseline economic forecast. Changes in any of these factors, assumptions, or the availability of new information, could require the allowance to be adjusted in future periods, perhaps materially. Outputs from the loss forecasting models, in combination with Regions' qualitative framework and other analyses, inform management in its estimation of Regions' expected credit losses to ensure the overall allowance estimate is appropriate from both a bottom-up and top-down perspective. Current prevailing economic uncertainty and the potential for further disruption could influence future levels of the allowance. Actual losses could vary, perhaps materially, from management's estimates. See Note 1 "Summary of Significant Accounting Policies" in the Annual Report on Form 10-K for the year ended December 31, 2025 for more information.
Management reviews the allowance on a quarterly basis using updated information, including changes to economic conditions, the loan portfolio and credit information. The following table provides an analysis of the changes in the allowance for the three months ended March 31, 2026:
Table 8-Allowance Analysis
Three Months Ended March 31, 2026
(In millions)
Balance at beginning of period
$ 1,686
Economic/ Qualitative changes
17
Specific reserve changes
(25)
Portfolio changes
(31)
Balance at end of period
$ 1,647
Economic forecast and qualitative adjustments
Regions' internally-developed March baseline forecast anticipates steadier real GDP, with growth of 2.5 percent for 2026 supported by tax legislation enacted in 2025 expected to boost after-tax personal income and improve cash flows for businesses. Inflation as measured by CPI is expected to remain above the FOMC's 2.0 percent target rate into 2027. The Federal funds rate is approaching what many consider to be a "neutral" rate, which limits the room for rate cuts in 2026. Significant softening in labor market conditions would support further rate cuts, but persistent inflation pressures could preclude further cuts. Labor supply growth is expected to remain weak and unemployment is expected to average 4.4 percent in 2026. Regions' March 2026 baseline forecast remained stable compared to the December 2025 baseline forecast, which resulted in minimal impact to the allowance. However, events in the Middle East and the related impact on energy prices cast uncertainty on the March 2026 forecast, which is captured in the general imprecision component discussed below.
Table 9 below reflects a range of macroeconomic factors utilized in the baseline economic forecast over the two-year R&S forecast period as of March 31, 2026. The unemployment rate is the most significant macroeconomic factor among the allowance models and was expected to remain relatively consistent over the forecast period.
Table 9-Macroeconomic Factors in the Forecast
Pre-R&S Period Baseline R&S Forecast
March 31, 2026
1Q2026 2Q2026 3Q2026 4Q2026 1Q2027 2Q2027 3Q2027 4Q2027 1Q2028
Unemployment rate 4.4 % 4.4 % 4.4 % 4.3 % 4.3 % 4.2 % 4.2 % 4.1 % 4.1 %
Real GDP, annualized % change 2.8 % 1.9 % 2.1 % 2.6 % 2.3 % 2.1 % 2.1 % 2.0 % 2.1 %
HPI, year-over-year % change 0.5 % - % (0.1) % (0.1) % 0.6 % 1.6 % 2.1 % 2.3 % 2.3 %
CPI, year-over-year % change 2.8 % 4.0 % 3.4 % 3.2 % 2.8 % 1.8 % 2.1 % 2.2 % 2.2 %
While it is the intent of Regions' quantitative allowance methodologies to reflect all risk factors, including incremental risk in portfolios identified as under stress, any estimate involves assumptions and uncertainties resulting in some level of imprecision. Regions' qualitative framework has a general imprecision component which is meant to acknowledge that model and forecast errors are inherent in any modeling estimate. At March 31, 2026, the general imprecision component increased compared to December 31, 2025 driven by crude oil price volatility and the unknown duration of the conflict in the Middle East.
The qualitative framework also has specific adjustment components which are reserves meant to capture specific issues or events that management believes are not adequately captured in the model outcomes. Specific qualitative adjustments at March 31, 2026 were relatively stable compared to December 31, 2025.
Portfolio, credit metrics, and specific reserves
In the three months ended March 31, 2026, overall asset quality continued to improve. The ratio of net charge-offs to average loans decreased 5 basis points for the three months ended March 31, 2026 compared to the three months ended December 31, 2025 with the majority of business services charge-offs related to previously identified portfolios of interest for which specific reserves had already been established. While commercial and investor real estate criticized balances increased approximately $42 million from December 31, 2025 to March 31, 2026, the percentage as a total of business loans declined 16 basis points. See Table 10 for more details on business criticized loans and net charge-offs. Non-performing loans, excluding held for sale, decreased approximately $6 million from December 31, 2025 to March 31, 2026. See Table 12 for more details regarding non-performing assets. The combination of credit quality improvements and specific reserve releases due to charge-offs resulted in a decrease in the allowance at March 31, 2026 compared to December 31, 2025.
Overall allowance
Based upon the factors discussed above, the March 31, 2026 allowance decreased $39 million compared to December 31, 2025. The allowance reduction resulted from overall credit quality improvement in the portfolio and meaningful progress in resolving loans within previously identified portfolios of interest, partially offset by an allowance increase for qualitative adjustments due to economic uncertainty.
Details regarding the allowance and net charge-offs activity are summarized as follows:
Table 10-Allowance Roll-forward
Three Months Ended
March 31, 2026 December 31, 2025 March 31, 2025
(Dollars in millions)
Beginning allowance for loan losses $ 1,556 $ 1,581 $ 1,613
Loans charged-off:
Commercial and industrial 88 92 57
Commercial real estate mortgage-owner-occupied - 1 2
Commercial investor real estate mortgage - 4 22
Home equity lines 1 - -
Home equity loans - 1 -
Consumer credit card 18 17 17
Other consumer 44 52 47
151 167 145
Three Months Ended
March 31, 2026 December 31, 2025 March 31, 2025
Recoveries of loans previously charged-off:
Commercial and industrial 9 11 11
Commercial real estate mortgage-owner-occupied - - -
Commercial real estate construction-owner-occupied - - 1
Commercial investor real estate mortgage - 1 -
Residential first mortgage - 1 -
Home equity lines 1 1 -
Home equity loans - 1 -
Consumer credit card 3 2 3
Other consumer 8 8 7
21 25 22
Net charge-offs (recoveries):
Commercial and industrial 79 81 46
Commercial real estate mortgage-owner-occupied - 1 2
Commercial real estate construction-owner-occupied - - (1)
Commercial investor real estate mortgage - 3 22
Residential first mortgage - (1) -
Home equity lines - (1) -
Consumer credit card 15 15 14
Other consumer 36 44 40
130 142 123
Provision for loan losses 101 117 123
Ending allowance for loan losses 1,527 1,556 1,613
Beginning reserve for unfunded credit commitments 130 132 116
Provision for (benefit from) unfunded credit losses (10) (2) 1
Ending reserve for unfunded credit commitments 120 130 117
Allowance for credit losses at period end $ 1,647 $ 1,686 $ 1,730
Loans, net of unearned income, outstanding at end of period $ 97,926 $ 95,637 $ 95,733
Average loans, net of unearned income, outstanding for the period $ 96,423 $ 95,651 $ 96,122
Net loan charge-offs (recoveries) as a % of average loans, annualized (1):
Commercial and industrial 0.65 % 0.66 % 0.38 %
Commercial real estate mortgage-owner-occupied (0.03) % 0.02 % 0.14 %
Commercial real estate construction-owner-occupied (0.05) % (0.07) % (0.84) %
Total commercial 0.58 % 0.60 % 0.35 %
Commercial investor real estate mortgage 0.02 % 0.15 % 1.38 %
Total investor real estate 0.02 % 0.12 % 1.02 %
Home equity lines (0.01) % (0.10) % (0.04) %
Home equity loans (0.02) % - % (0.01) %
Consumer credit card 4.17 % 4.08 % 4.18 %
Other consumer 2.51 % 2.97 % 2.68 %
Total consumer 0.63 % 0.70 % 0.66 %
Total 0.54 % 0.59 % 0.52 %
Criticized loans-business (2)
$ 3,384 $ 3,342 $ 4,918
Ratios (1):
Allowance for credit losses at end of period to loans, net of unearned income 1.68 % 1.76 % 1.81 %
Allowance for credit losses at end of period to non-performing loans, excluding loans held for sale 238 % 242 % 205 %
Business criticized loans to total business loans (2)
5.15 % 5.31 % 7.82 %
_______
(1)Amounts have been calculated using whole dollar values.
(2)Business represents the combined total of commercial and investor real estate loans.
Net charge-offs increased $7 million for the three months ended March 31, 2026 compared to the same period in 2025. Economic and qualitative trends such as interest rates, unemployment, volatility in commodity prices, collateral valuations and inflationary pressure will impact the future levels of net charge-offs and may result in volatility of certain credit metrics for 2026 and beyond.
The following table summarizes the allocation of the allowance by portfolio segment and class:
Table 11-Allowance Allocation
March 31, 2026 December 31, 2025
Loan Balance Allowance Allocation
Allowance to Loans %(1)
Loan Balance Allowance Allocation
Allowance to Loans %(1)
(Dollars in millions) (Dollars in millions)
Commercial and industrial $ 50,824 $ 755 1.48 % $ 48,790 $ 743 1.52 %
Commercial real estate mortgage-owner-occupied 5,004 107 2.15 % 4,845 101 2.09 %
Commercial real estate construction-owner-occupied 261 6 2.32 % 263 6 2.29 %
Total commercial 56,089 868 1.55 % 53,898 850 1.58 %
Commercial investor real estate mortgage 7,706 96 1.24 % 7,172 107 1.49 %
Commercial investor real estate construction 1,938 26 1.36 % 1,934 28 1.44 %
Total investor real estate 9,644 122 1.27 % 9,106 135 1.48 %
Residential first mortgage 19,621 115 0.59 % 19,765 112 0.57 %
Home equity lines 3,210 101 3.16 % 3,232 100 3.09 %
Home equity loans 2,287 29 1.28 % 2,324 30 1.27 %
Consumer credit card 1,472 126 8.55 % 1,519 129 8.50 %
Other consumer 5,603 286 5.09 % 5,793 330 5.70 %
Total consumer 32,193 657 2.04 % 32,633 701 2.15 %
Total $ 97,926 $ 1,647 1.68 % $ 95,637 $ 1,686 1.76 %
_____
(1)Amounts have been calculated using whole dollar values.
NON-PERFORMING ASSETS
The following table presents non-performing assets as of March 31, 2026 and December 31, 2025 :
Table 12-Non-Performing Assets
March 31, 2026 December 31, 2025
(Dollars in millions)
Non-performing loans:
Commercial and industrial $ 471 $ 474
Commercial real estate mortgage-owner-occupied 53 45
Commercial real estate construction-owner-occupied 2 2
Total commercial 526 521
Commercial investor real estate mortgage 103 121
Total investor real estate 103 121
Residential first mortgage 30 25
Home equity lines 25 24
Home equity loans 8 7
Total consumer 63 56
Total non-performing loans, excluding loans held for sale 692 698
Non-performing loans held for sale 1 -
Total non-performing loans(1)
693 698
Foreclosed properties 20 17
Total non-performing assets(1)
$ 713 $ 715
Accruing loans 90+ days past due:
Commercial and industrial $ 5 $ 6
Commercial real estate mortgage-owner-occupied 1 -
Total commercial 6 6
Residential first mortgage(2)
100 105
Home equity lines 14 15
Home equity loans 8 8
Consumer credit card 22 22
Other consumer 20 24
Total consumer 164 174
Total accruing loans 90+ days past due $ 170 $ 180
Non-performing loans(1) to loans and non-performing loans held for sale
0.71 % 0.73 %
Non-performing loans, excluding loans held for sale(1) to loans
0.71 % 0.73 %
Non-performing assets(1) to loans, foreclosed properties and non-performing loans held for sale
0.73 % 0.75 %
_________
(1)Excludes accruing loans 90+ days past due.
(2)Excludes residential first mortgage loans that are 100% guaranteed by the FHA and all guaranteed loans sold to Ginnie Mae where Regions has the right but not the obligation to repurchase; however, includes Ginnie Mae repurchased loans with partial guarantees. Total 90+ days or more past due guaranteed loans excluded were $94 million at March 31, 2026 and $79 million at December 31, 2025.
Non-performing loans (excluding loans held for sale) at March 31, 2026 decreased $6 million as compared to year-end 2025. The same economic trends that impact net charge-offs, as discussed above, will impact the future level of non-performing loans. Circumstances related to individually large credits could also result in volatility.
The following table provide an analysis of non-accrual loans (excluding loans held for sale) by portfolio segment:
Table 13- Analysis of Non-Accrual Loans
Non-Accrual Loans, Excluding Loans Held for Sale for the Three Months Ended
March 31, 2026
March 31, 2025
Commercial Investor
Real Estate
Consumer(1)
Total Commercial Investor
Real Estate
Consumer(1)
Total
(In millions) (In millions)
Balance at beginning of year $ 521 $ 121 $ 56 $ 698 $ 450 $ 423 $ 55 $ 928
Additions 159 8 - 167 119 16 - 135
Net payments/other activity (58) (26) 8 (76) (42) (53) 2 (93)
Return to accrual (3) - - (3) (4) - - (4)
Charge-offs on non-accrual loans(2)
(86) - - (86) (55) (22) - (77)
Transfers to held for sale(3)
(1) - (1) (2) (9) (17) - (26)
Net loan sales (6) - - (6) - (20) - (20)
Balance at end of year $ 526 $ 103 $ 63 $ 692 $ 459 $ 327 $ 57 $ 843
________
(1)All net activity within the consumer portfolio segment other than sales and transfers to held for sale (including related charge-offs) is included as a single net number within the net payments/other activity line.
(2)Includes charge-offs on loans on non-accrual status and charge-offs taken upon sale and transfer of non-accrual loans to held for sale.
(3)Transfers to held for sale are shown net of charge-offs recorded upon transfer.
GOODWILL
Goodwill totaled $5.7 billion at both March 31, 2026 and December 31, 2025. Refer to Note 1 "Summary of Significant Accounting Policies" and Note 9 "Goodwill and Other Intangible Assets" to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2025 for the methodologies and assumptions used in the goodwill impairment analysis.
DEPOSITS
Regions competes with other banking and financial services companies for a share of the deposit market. Regions' ability to compete in the deposit market depends heavily on the pricing of its deposits and how effectively the Company meets customers' needs. Regions employs various means to meet those needs and enhance competitiveness, such as providing a high level of customer service, competitive pricing and convenient branch locations for its customers. Regions also serves customers through providing centralized, high-quality banking services through the Company's digital channels and contact center.
Deposits are Regions' primary source of funds, providing funding for over 90 percent of average earning assets at both March 31, 2026 and December 31, 2025. The following table summarizes deposits by category and by segment:
Table 14-Deposits by Category and by Segment
March 31, 2026 December 31, 2025
(In millions)
Non-interest-bearing deposits $ 40,062 $ 39,530
Interest-bearing checking 25,017 25,677
Savings 12,405 11,914
Money market-domestic 41,288 40,119
Time deposits 13,108 13,888
$ 131,880 $ 131,128
Consumer Bank segment $ 81,271 $ 80,193
Corporate Bank segment 40,574 40,449
Wealth Management segment 7,750 8,344
Other(1)
2,285 2,142
$ 131,880 $ 131,128
____
(1) Other deposits represent non-customer balances primarily consisting of wholesale funding (for example, selected deposits and brokered time deposits). Other deposits include brokered deposits totaling $1.5 billion at March 31, 2026 and $1.3 billion at December 31, 2025.
Total deposits at March 31, 2026 increased approximately $752 million compared to year-end 2025 levels. Growth was driven by a significant increase in money market accounts and, to a lesser degree, savings and non-interest-bearing deposits partially offset by a decline in time deposits and interest-bearing checking. Deliberate product management resulted in a shift from time deposits into money market accounts. Growth in consumer deposits reflects normal seasonal patterns related to tax refunds and payments. The mix of non-interest-bearing deposits at March 31, 2026 was approximately 30 percent of total deposits at March 31, 2026, which remained stable in comparison to December 31, 2025.
See the "Liquidity" and "Market Risk-Interest Rate Risk" sections for further discussion on liquidity and interest rates.
BORROWED FUNDS
Short-Term Borrowings
Short-term borrowings totaled $3.2 billion at March 31, 2026, consisting of federal funds purchased of $1.2 billion and FHLB advances of $2.0 billion. At December 31, 2025, short-term borrowing totaled $750 million comprised entirely of FHLB advances. The levels of these borrowings can fluctuate depending on the Company's funding needs and the sources utilized. See the "Liquidity" section for further discussion and detail of Regions' borrowing capacity with the FHLB.
Table 15-Long-Term Borrowings
March 31, 2026 December 31, 2025
(In millions)
Regions Financial Corporation (Parent):
1.80% senior notes due August 2028 $ 648 $ 648
5.722% senior notes due June 2030(1)
747 747
5.502% senior notes due September 2035(2)
995 995
7.375% subordinated notes due December 2037 299 299
Valuation adjustments on hedged long-term debt (50) (52)
2,639 2,637
Regions Bank:
FHLB advances - 1,000
6.45% subordinated notes due June 2037 497 497
Other long-term debt 1 -
498 1,497
Total consolidated $ 3,137 $ 4,134
____
(1) On June 6, 2029, the Notes will bear floating rate interest equal to Compounded SOFR plus 1.49%.
(2) On September 6, 2034, the Notes will bear floating rate interest equal to Compounded SOFR plus 2.06%.
Long-term borrowings decreased by approximately $1.0 billion from year-end 2025 reflecting the repayment of FHLB advances.
Funding from the FHLB and Federal Reserve Bank is secured by pledged assets, primarily certain loan portfolios which are also subject to blanket lien arrangements with the FHLB and Federal Reserve Bank. As of March 31, 2026, Regions' blanket lien arrangements with these entities covered a total loan balance of approximately $94.5 billion and included loans from various loan portfolios. However, borrowing capacity with the FHLB and Federal Reserve Bank is contingent on a subset of the blanket lien portfolios which are eligible and pledged according to the parameters for each counterparty.
REGULATORY REQUIREMENTS
Regions and Regions Bank are required to comply with regulatory capital requirements established by Federal and State banking agencies. These regulatory capital requirements involve quantitative measures of the Company's assets, liabilities and selected off-balance sheet items, and also qualitative judgments by the regulators. Failure to meet minimum capital requirements can subject the Company to a series of increasingly restrictive regulatory actions. Under the Basel III Rules, Regions is designated as a standardized approach bank. Regions is a "Category IV" institution under the Federal Reserve's Tailoring Rules.
Regions is subject to supervisory stress testing conducted by the Federal Reserve and its SCB is currently floored at 2.5 percent. See Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to the consolidated financial statements for further details regarding CCAR results.
The following table summarizes the applicable holding company and bank regulatory requirements:
Table 16-Regulatory Capital Requirements
March 31, 2026 Ratio(1)
December 31, 2025 Ratio Minimum Requirement
Minimum Requirement plus SCB (2)
To Be Well
Capitalized
Common equity Tier 1 capital:
Regions Financial Corporation 10.68 % 10.89 % 4.50 % 7.00 % N/A
Regions Bank 11.70 11.72 4.50 7.00 6.50 %
Tier 1 capital:
Regions Financial Corporation 11.77 % 11.99 % 6.00 % 8.50 % 6.00 %
Regions Bank 11.70 11.72 6.00 8.50 8.00
Total capital:
Regions Financial Corporation 13.65 % 13.89 % 8.00 % 10.50 % 10.00 %
Regions Bank 13.35 13.37 8.00 10.50 10.00
Leverage capital:
Regions Financial Corporation 9.61 % 9.68 % 4.00 % 4.00 % N/A
Regions Bank 9.58 9.48 4.00 4.00 5.00
___
(1) The current quarter Basel III CET1 capital, Tier 1 capital, Total capital, and Leverage capital ratios are estimated.
(2) Reflects Regions' SCB of 2.5 percent. SCB does not apply to leverage capital ratios.
In the third quarter of 2023, proposals were issued by the U.S federal banking regulators that, if adopted, would impact the Company related to long-term debt requirements and U.S. implementation of capital requirements under Basel IV rules, more recently referred to as the Basel III Endgame. Following extensive feedback, the regulators issued a new capital requirements proposal on March 19, 2026. The updated proposal continues to include the addition of AOCI in CET1 and a recalibration for risk weights within the standardized calculation. Additionally, the Company now has the option to opt into the expanded risk based approach, which was previously required under the initial proposal. The Company continues to monitor developments around the new proposal and evaluate its potential impact. Additional discussion of the Basel III Rules, their applicability to Regions, recent proposals and final rules issued by the federal banking agencies and recent laws enacted that impact regulatory requirements is included in the "Supervision and Regulation" subsection of the "Business" section in Regions' Annual Report on Form 10-K for the year ended December 31, 2025.
SHAREHOLDERS' AND TOTAL EQUITY
Shareholders' equity was $18.8 billion at March 31, 2026 as compared to $19.0 billion at December 31, 2025. During the first three months of 2026, net income increased shareholders' equity by $559 million, dividends on common stock reduced shareholders' equity by $227 million, and dividends on preferred stock reduced shareholders' equity by $20 million. Changes in OCI decreased shareholders' equity by $183 million, primarily due to available for sale securities and derivative instruments as a result of changes in market interest rates during the three months ended March 31, 2026. Common stock repurchased during the first three months of 2026 decreased shareholders' equity by $401 million. These shares were immediately retired upon repurchase and therefore were not included in treasury stock.
Total equity included noncontrolling interest of $65 million and $60 million at March 31, 2026 and December 31, 2025, respectively. The noncontrolling interest represents the unowned portion of a low income housing tax credit fund syndication, an unconsolidated VIE of which Regions held a significant interest at March 31, 2026 and December 31, 2025.
Subsequent to March 31, 2026, the Company purchased 1.4 million shares for approximately $40 million through May 6, 2026. These shares were immediately retired upon repurchase and therefore were not included in treasury stock.
See Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" section for additional information.
Table 17 "Consolidated Average Daily Balances and Yield/Rate Analysis" presents a detail of net interest income (on a taxable-equivalent basis), the net interest margin, and the net interest spread.
Table 17-Consolidated Average Daily Balances and Yield/Rate Analysis
Three Months Ended March 31
2026 2025
Average
Balance 		Income/
Expense
Yield/
Rate(1)
Average
Balance 		Income/
Expense
Yield/
Rate(1)
(Dollars in millions; yields on taxable-equivalent basis)
Assets
Earning assets:
Federal funds sold and securities purchased under agreements to resell $ - $ - - % $ 1 $ - 4.44 %
Debt securities (2)(3)
33,530 298 3.56 32,280 266 3.30
Loans held for sale 579 8 5.48 441 8 7.27
Loans, net of unearned income (4)(5)
96,423 1,326 5.51 96,122 1,354 5.64
Interest-bearing deposits in other banks 7,415 69 3.79 8,537 94 4.45
Other earning assets 1,481 14 3.72 1,483 15 4.19
Total earning assets 139,428 1,715 4.93 138,864 1,737 5.01
Unrealized gains/(losses) on securities available for sale, net (2)
(580) (1,716)
Allowance for loan losses (1,552) (1,625)
Cash and due from banks 3,275 2,957
Other non-earning assets 18,716 18,396
$ 159,287 $ 156,876
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Savings $ 12,075 4 0.13 $ 12,177 4 0.13
Interest-bearing checking 25,245 71 1.15 25,033 89 1.44
Money market 40,366 207 2.08 35,625 204 2.32
Time deposits 13,388 103 3.12 15,799 145 3.73
Total interest-bearing deposits (6)
91,074 385 1.72 88,634 442 2.02
Federal funds purchased and securities sold under agreements to repurchase 655 7 3.66 39 - 4.39
Other short-term borrowings 1,077 10 3.80 339 4 4.57
Long-term borrowings 3,750 52 5.56 6,001 85 5.65
Total interest-bearing liabilities 96,556 454 1.91 95,013 531 2.27
Non-interest-bearing deposits(6)
39,160 - - 39,053 - -
Total funding sources 135,716 454 1.35 134,066 531 1.60
Net interest spread (2)
3.02 2.75
Other liabilities 4,435 4,652
Shareholders' equity 19,077 18,127
Noncontrolling interest 59 31
$ 159,287 $ 156,876
Net interest income/margin on a taxable-equivalent basis (7)
$ 1,261 3.67 % $ 1,206 3.52 %
_______
(1)Amounts have been calculated using whole dollar values and the prevailing interest accrual methodology.
(2)Debt securities are included on an amortized cost basis with yield and net interest margin calculated accordingly.
(3)Interest income on debt securities includes hedging income of $1 million and $2 million for the three months ended March 31, 2026 and 2025, respectively.
(4)Loans, net of unearned income include non-accrual loans for all periods presented.
(5)Interest income on loans, net of unearned income, includes hedging expense of $36 million and $67 million for the three months ended March 31, 2026, and 2025, respectively. Interest income on loans, net of unearned income, also includes net loan fees of $28 million and $29 million for the three months ended March 31, 2026 and 2025, respectively.
(6)Total deposit costs may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest-bearing deposits and equaled 1.20% and 1.40% for the three months ended March 31, 2026 and 2025, respectively.
(7)The computation of taxable-equivalent net interest income is based on the statutory federal income tax rate of 21%, adjusted for applicable state income taxes net of the related federal tax benefit.
Net interest income is Regions' principal source of income and is one of the most important elements of Regions' ability to meet its overall performance goals. Both net interest income and net interest margin are influenced by both long-term and short-term market interest rates.
Net interest income (taxable-equivalent basis) increased by $55 million and net interest margin increased by 15 basis points to 3.67 percent in three months ended March 31, 2026 compared to the same period in 2025. The increases in net interest income and net interest margin were driven primarily by lower funding costs, which includes deposits and wholesale borrowings. Funding costs declined to 1.35 percent compared to 1.60 percent in three months ended March 31, 2025, driven by deposit cost reductions in a declining rate environment. Deposit balance growth and remixing, as certain time deposits matured and were replaced with lower cost product types, also created a more optimal funding mix. Additionally, while loan yields decreased in the declining rate environment, the decrease was modest, reflecting the rate protection provided by the Company's hedging program. Also benefiting net interest income and net interest margin was the turnover of fixed-rate loans and securities and multiple, distinct debt securities repositioning transactions in prior periods, which resulted in new loans and securities at higher rates.
MARKET RISK-INTEREST RATE RISK
Regions' primary market risk is interest rate risk. This includes uncertainty with respect to absolute interest rate levels as well as relative interest rate levels, which are impacted by both the shape and the slope of the various yield curves that affect the financial products and services that the Company offers. As its primary tool to analyze this risk, Regions measures the change in its net interest income in various interest rate scenarios compared to a base case scenario. Net interest income sensitivity to market rate movements is a useful short-term indicator of Regions' interest rate risk.
In addition to net interest income simulations, Regions also utilizes an EVE analysis as a measurement tool to estimate risk exposure over a longer-term horizon. EVE measures the extent to which the economic value of assets, liabilities and derivative instruments may change in response to fluctuations in interest rates. Importantly, EVE values only the current balance sheet, excluding the growth assumptions used in net interest income sensitivity analyses. Additionally, the results are highly dependent on assumptions for products with embedded prepay optionality and indeterminate maturities. The uncertainty surrounding important assumptions used in EVE analysis may limit its efficacy.
Sensitivity Measurement-Financial simulation models are Regions' primary tools used to measure interest rate exposure. Using a wide range of sophisticated simulation techniques provides management with extensive information on the potential impact to net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Regions' balance sheet. Assumptions are made about the direction and magnitude of interest rate movements, the slope of the yield curve, and the changing composition of the balance sheet that results from both strategic plans and customer behavior. Among the assumptions are expectations of balance sheet growth and composition, the pricing and maturity characteristics of existing business and the characteristics of future business. Interest rate-related risks are expressly considered, such as pricing spreads, the pricing of deposit accounts, prepayments and other option risks. Regions considers these factors, as well as the degree of certainty or uncertainty surrounding their future behavior.
The primary objective of asset/liability management at Regions is to coordinate balance sheet composition with interest rate risk management to sustain reasonable and stable net interest income throughout various interest rate cycles. In computing interest rate sensitivity, Regions compares a set of alternative interest rate scenarios to the results of a base case scenario derived using "market forward rates." The set of alternative interest rate scenarios includes instantaneous parallel rate shifts of various magnitudes. In addition to parallel rate shifts, multiple curve steepening and flattening scenarios are contemplated. Regions includes simulations of gradual interest rate movements phased in over a six-month period that may more realistically mimic the speed of potential interest rate changes.
Exposure to Interest Rate Movements-Regions' balance sheet is naturally asset sensitive, with net interest income increasing with higher interest rates, and decreasing with lower interest rates. This is the result of approximately half of the loan portfolio floating contractually with market rate indices, and funding from a large, mostly stable retail deposit portfolio. Importantly, the stability and rate sensitivity of Regions' deposit portfolio has been proven over multiple interest rate cycles. With this natural balance sheet profile, the ability to utilize discretionary asset duration strategies within the investment portfolio and through derivatives is critical in mitigating the Bank's natural exposure to rates.
As of March 31, 2026, Regions evidenced a mostly balanced, or "neutral" asset/liability position, with asset duration of approximately 2.6 years and liability duration of approximately 2.7 years, using historically-informed approximations. Typically when the debt securities portfolio is recorded on the balance sheet at an unrealized loss, higher deposit values more than offset this loss. The additional value of deposits is realized in the form of lower-cost funding when compared with wholesale sources. While balance sheet analysis, particularly EVE analysis, does contemplate the economic value of deposits, the estimated fair value of deposits is equal to their carrying value for certain financial statement footnote disclosures, consistent with industry practices. See Note 10 "Fair Value Measurements" to the consolidated financial statements for additional information.
Recently, pay-fixed fair value hedges and debt securities transfers from available for sale to held to maturity classification have been used to reduce AOCI volatility associated with unrealized securities gains and losses. Inclusive of these activities, the total debt securities portfolio duration is 3.9 years, the available for sale securities portfolio duration is 3.5 years, and the held to maturity securities portfolio duration is 5.9 years. As pay-fixed fair value hedges are further utilized to manage AOCI volatility, receive-fixed cash flow hedges may be entered into as an offset to preserve the interest rate sensitivity of Regions' entire balance sheet.
As of March 31, 2026, Regions' net interest income profile was mostly neutral to both gradual and instantaneous parallel yield curve shifts as compared to the base case for the 12-month measurement horizon ending March 2027. The estimated exposure associated with the rising and falling rate scenarios in Table 18 below reflects the combined impacts of movements in short-term and long-term interest rates. An increase or reduction in short-term interest rates (such as the Federal Funds rate, the interest rate on reserve balances, and SOFR) will drive the yield on assets and liabilities contractually tied to such rates higher or lower. In either scenario, it is expected that changes in funding costs and balance sheet hedging income will offset the change in asset yields, resulting in little change to net interest income.
Net interest income remains exposed to intermediate and long-term yield curve tenors, though exposure has been partially reduced by receive-fixed swaps designed to hedge a portion of the company's 2026 fixed-rate asset turnover. In the current higher interest rate environment, fixed-rate asset turnover represents a tailwind to net interest income growth. Elevated, or increasing intermediate and long-term interest rates (such as intermediate to longer-term U.S. Treasuries, swaps and mortgage rates) will drive yields higher on certain fixed-rate, newly originated or renewed loans, and increase prospective yields on certain investment portfolio purchases. The opposite is true in an environment where intermediate and long-term interest rates fall. Additionally, shifts in the long end of the yield curve will impact securities prepayments and alter the amount of discount accretion and premium amortization in any given period.
The interest rate sensitivity analysis presented below in Table 18 is informed by a variety of assumptions and estimates regarding the progression of the balance sheet in both the baseline scenario as well as the scenarios of instantaneous and gradual shifts in the yield curve. Though there are many assumptions which affect the estimates for net interest income, those pertaining to deposit pricing, deposit mix and overall balance sheet composition are particularly impactful. Given the uncertainties associated with monetary policy on industry liquidity levels and the cost of that liquidity, management evaluates the impacts from these key assumptions through sensitivity analysis. Sensitivity calculations are hypothetical and should not be considered predictive of future results.
The Company's baseline balance sheet assumptions include management's best estimate for balance sheet changes in the coming 12 months. A reduction in deposit balances of $1 billion when compared to the base case estimate would reduce net interest income by $18 million over 12 months in the parallel, instantaneous +100 basis point scenario in Table 18. Conversely, if an additional $1 billion are added, a positive benefit of $18 million would be expected over 12 months in the parallel, instantaneous +100 basis point scenario in Table 18.
In rising rate scenarios only, management assumes that the mix of deposits will change versus the base case as informed by analyses of prior rate cycles. Currently, however, much of the anticipated mix shift has already occurred or is expected to occur within the baseline scenario, mitigating the amount of additional remixing in higher rate scenarios. The magnitude of the remixing shift is rate dependent and equates to an approximate $1.2 billion shift from non-interest bearing deposits into time deposits over 12 months in the parallel, instantaneous +100 basis point scenario in Table 18. Furthermore, over the 12 month horizon, an increase of $1 billion in deposit remixing would decrease net interest income by approximately $20 million, and a decrease of $1 billion in deposit remixing would increase net interest income by $20 million in the parallel, instantaneous +100 basis point scenario.
The interest-bearing deposit beta is calibrated using the experience from prior rate cycles and is dynamic across both interest rate level and time. The parallel, instantaneous +100 basis point and -100 basis point shock scenarios in Table 18 both incorporate an incremental beta between 35 and 40 percent when compared to the base case scenario. Incremental deposit pricing outperformance or underperformance of 5 percent in a parallel, instantaneous 100 basis point shock would increase or decrease net interest income by approximately $46 million.
The table below summarizes Regions' positioning over the next 12 months in various parallel yield curve shifts (i.e., all yield curve tenors move by the same magnitude). The scenarios are inclusive of all interest rate hedging activities. More information regarding hedges is disclosed in Table 19 and its accompanying description.
Table 18-Interest Rate Sensitivity
Estimated Annual Change
in Net Interest Income
March 31, 2026(1)(2)
(In millions)
Gradual Change in Interest Rates
+ 200 basis points $ 113
+ 100 basis points 60
- 100 basis points (55)
- 200 basis points
(95)
Instantaneous Change in Interest Rates
+ 200 basis points $ 35
+ 100 basis points 26
- 100 basis points (36)
- 200 basis points
(43)
________
(1)Disclosed interest rate sensitivity levels represent the 12-month forward looking net interest income changes as compared to market forward rate cases and include expected balance sheet growth and remixing.
(2)Active hedges, including forward starting hedges, are included in the sensitivity analysis to the extent that they fall within the measurement horizon.
While not depicted in the table above, interest rate movements may also have an impact on the value of Regions' securities portfolio, which can directly impact the carrying value of shareholders' equity.
Derivatives-Regions uses financial derivative instruments for management of interest rate sensitivity and AOCI volatility management. ALCO, which consists of members of Regions' senior management team, in its oversight role for the management of interest rate sensitivity, approves the use of derivatives in balance sheet hedging strategies. Derivatives are also used to offset the risks associated with customer derivatives, which include interest rate, credit, and foreign exchange risks. The most common derivatives Regions employs are forward rate contracts, forward sale commitments, futures contracts, interest rate swaps, interest rate options (caps, floors and collars), and contracts with a combination of these instruments.
Forward rate contracts are commitments to buy or sell financial instruments at a future date at a specified price or yield. Futures contracts subject Regions to market risk associated with changes in interest rates. Because futures contracts are cash settled daily, there is minimal credit risk associated with futures. Interest rate swaps are contractual agreements typically entered into to exchange fixed for variable (or vice versa) streams of interest payments. The notional principal is not exchanged but is used as a reference for the size of interest settlements. Interest rate options are contracts that allow the buyer to purchase or sell a financial instrument at a predetermined price and time. Forward sale commitments are contractual obligations to sell market instruments at a future date for an already agreed-upon price. Foreign currency contracts involve the exchange of one currency for another on a specified date and at a specified rate. These contracts are executed on behalf of the Company's customers and are used by customers to manage fluctuations in foreign exchange rates. The Company is subject to the credit risk that another party will fail to perform.
Regions has made use of interest rate swaps and options in balance sheet hedging strategies to effectively convert a portion of its fixed-rate funding position to a variable-rate position, to effectively convert a portion of its fixed-rate debt securities available for sale portfolio to a variable-rate position, and to effectively convert a portion of its floating-rate loan portfolios to fixed-rate. Regions also uses derivatives to economically manage interest rate and pricing risk associated with its mortgage origination business. In the period of time that elapses between the origination and sale of mortgage loans, changes in interest rates have the potential to cause a decline in the value of the loans in this held-for-sale portfolio. Futures contracts and forward sale commitments are used to protect the value of the loan pipeline and loans held for sale from changes in interest rates and pricing.
The following table presents additional information about hedging interest rate derivatives used by Regions to manage interest rate risk:
Table 19-Hedging Derivatives by Interest Rate Risk Management Strategy
March 31, 2026
Notional
Amount 		Weighted-Average
Maturity (Years) Receive Rate Pay Rate
(Dollars in millions)
Derivatives in cash flow hedging relationships:
Receive fixed/pay variable swaps - floating-rate loans(1)(2)(3)
$ 39,048 3.6 3.3 % 3.6 %
Interest rate options(4)
2,000 2.3
Derivatives in fair value hedging relationships:
Receive variable/pay fixed swaps - debt securities available for sale(1)(2)(3)
6,102 6.8 3.7 % 3.7 %
Receive fixed/pay variable swaps - borrowings(3)
2,400 5.1 2.9 % 3.7 %
Total derivatives designated as hedging instruments $ 49,550
_________
(1)Floating rates represent the most recent fixing for active derivatives and the first forward fixing for future starting derivatives.
(2)Includes forward starting notional with maturity relative to current quarter-end. For more information on notional by year, see Table 20.
(3)All floating rates are SOFR based and may include SOFR conversion spread.
(4)Interest rate options have an average cap strike of 6.22% and a floor of 1.86%.
In the three months ended March 31, 2026, the Company added $1.3 billion in forward-starting receive-fixed swaps with a receive rate of 3.5 percent, which will become active in the third and fourth quarters of 2026 with 5-year maturities, to partially hedge 2026 expected fixed-rate loan turnover. Additionally, fixed-rate loan turnover hedges of $1.5 billion were terminated, consistent with the timing of the fixed-rate loan production the swaps were intended to hedge.
In the three months ended March 31, 2026, the Company also added $1.0 billion in forward-starting receive-fixed swaps with an average pay rate of 3.6 percent, which become active in the first quarter of 2029 with a 3-year maturity to hedge short-term rates in future periods.
In the three months ended March 31, 2026, the Company also added $880 million in forward-starting pay-fixed swaps with a pay rate of 3.8%, with an average start date in 2030 and an average maturity in 2034 to reduce AOCI volatility in the available for sale securities portfolio. As an offset to the interest rate risk associated with these pay-fixed fair value hedges, the Company added $880 million in receive-fixed interest rate swaps (floating rate loan hedges) with a receive rate of 3.8%, with an average start date in 2030 and an average maturity in 2034.
Finally, in the three months ended March 31, 2026, the Company added $250 million in spot-starting receive-fixed swaps with a receive rate of 3.6% maturing in December 2026 and terminated $250 million pay-fixed swaps maturing in April 2028 to increase short-term rate protection.
The following table presents the average asset hedge notional amounts that are active during each of the remaining quarterly and annual periods.
Table 20-Schedule of Notional for Asset Hedging Derivatives
Average Active Notional Amount (1)
Three Months Ended Year Ended
6/30/2026 9/30/2026 12/31/2026 2026 2027 2028 2029 2030 2031
2032
2033
2034
2035
(In millions)
Asset Hedging Relationships:
Receive fixed/pay variable swaps $ 23,943 $ 24,788 $ 24,809 $ 24,089 $ 24,415 $ 22,371 $ 18,456 $ 17,773 $ 11,251 $ 4,493 $ 1,031 $ 847 $ 397
Receive variable/pay fixed swaps 4,245 4,285 4,286 4,298 4,286 4,255 4,333 4,874 4,982 3,447 1,966 1,432 484
Net receive fixed/pay variable swaps $ 19,698 $ 20,503 $ 20,523 $ 19,791 $ 20,129 $ 18,116 $ 14,123 $ 12,899 $ 6,269 $ 1,046 $ (935) $ (585) $ (87)
Interest rate options $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 999 $ 1 $ - $ - $ - $ - $ - $ -
_________
(1)Active hedges, including forward-starting hedges, are included in the sensitivity levels disclosed in Table 18 to the extent that they fall within the measurement horizon.
Regions manages the credit risk of these instruments in much the same way as it manages credit risk of the loan portfolios by establishing credit limits for each counterparty and through collateral agreements for dealer transactions. For non-dealer
transactions, the need for collateral is evaluated on an individual transaction basis and is primarily dependent on the financial strength of the counterparty. Credit risk is also reduced significantly by entering into legally enforceable master netting agreements. When there is more than one transaction with a counterparty and there is a legally enforceable master netting agreement in place, the exposure represents the net of the gain and loss positions with and collateral received from and/or posted to that counterparty. Most hedging interest rate swap derivatives traded by Regions are subject to mandatory clearing. The counterparty risk for cleared trades effectively moves from the executing broker to the clearinghouse allowing Regions to benefit from the risk mitigation controls in place at the respective clearinghouse. See the "Credit Risk" section in the 2025 Annual Report on Form 10-K for more information on the management of credit risk.
Regions also uses derivatives to meet the needs of its customers. Interest rate swaps, interest rate options and foreign exchange forwards are the most common derivatives sold to customers. Other derivative instruments with similar characteristics are used to hedge market risk and minimize volatility associated with this portfolio. Instruments used to service customers are held in the trading account, with changes in value recorded in the consolidated statements of income.
The primary objective of Regions' hedging strategies is to mitigate the impact of interest rate changes, from an economic perspective, on net interest income and other financing income and the net present value of its balance sheet. The overall effectiveness of these hedging strategies is subject to market conditions, the quality of Regions' execution, the accuracy of its valuation assumptions, counterparty credit risk and changes in interest rates.
See Note 9 "Derivative Financial Instruments and Hedging Activities" to the consolidated financial statements for a tabular summary of Regions' year-end derivatives positions and further discussion.
Regions accounts for residential MSRs at fair market value with any changes to fair value being recorded within mortgage income. Regions also accounts for non-DUS agency commercial MSRs at fair market value with changes to fair value recorded within capital markets income. Regions enters into derivative transactions to economically mitigate the impact of market value fluctuations related to MSRs at fair market value. Derivative instruments entered into in the future could be materially different from the current risk profile of Regions' current portfolio.
LIQUIDITY
Liquidity is an important factor in the financial condition of Regions and affects Regions' ability to meet the needs of the Company and its customers. Regions' goal in liquidity management is to maintain diverse liquidity sources and reserves sufficient to satisfy the cash flow requirements of depositors and borrowers, under normal and stressed conditions. Accordingly, Regions maintains a variety of liquidity sources to fund its obligations, as further described below. See also Note 12 "Commitments, Contingencies and Guarantees" to the consolidated financial statements for additional discussion of the Company's funding requirements. Furthermore, Regions performs specific procedures, including scenario analyses and stress testing to evaluate and maintain appropriate levels of available liquidity in alignment with liquidity risk.
Regions' operation of its business provides a generally balanced liquidity base which is comprised of customer assets, consisting principally of loans, and funding provided by customer deposits and borrowed funds. Maturities in the loan portfolio provide a steady flow of funds, and are supplemented by Regions' deposit base.
Cash reserves, liquid assets and secured borrowing capabilities aid in the management of liquidity in normal and stressed conditions, and/or meeting the need of contingent events such as obligations related to potential litigation. As part of its normal management practice, Regions maintains collateral and operational readiness to utilize secured funding sources such as the FHLB and the Federal Reserve Bank on a same-day basis (subject to any practical constraints affecting these market participants). While the securities portfolio is a primary source of liquidity, the secured borrowing capabilities, in addition to cash reserves on hand, assist in alleviating the Company's need to sell securities for funding purposes. Liquidity needs can also be met by borrowing funds in national money markets, though Regions does maintain limits on short-term unsecured funding due to the volatility that can affect such markets.
The following table summarizes the Company's available sources of liquidity as of March 31, 2026:
Table 21-Liquidity Sources
Availability as of March 31, 2026
(Dollars in billions)
Cash at the Federal Reserve Bank(1)
$ 7.5
Unencumbered investment securities(2)
25.6
FHLB borrowing availability 10.7
Federal Reserve Bank borrowing availability through the discount window 24.0
Total liquidity sources $ 67.8
____
(1) Includes small in transit items that may not yet be reflected in the Federal Reserve Bank master account closing balance.
(2) Unencumbered investment securities comprise securities that are eligible as collateral for secured transactions through market channels or are eligible to be pledged to the FHLB, the Federal Reserve discount window, or the Standing Repo Facility.
The balance with the Federal Reserve Bank is the primary component of the balance sheet line item "interest-bearing deposits in other banks." At March 31, 2026, Regions had approximately $7.5 billion in cash on deposit with the Federal Reserve Bank and other depository institutions. Refer to the "Cash and Cash Equivalents" section for more information.
The securities portfolio also serves as a primary source and storehouse of liquidity. Proceeds from maturities and principal and interest payments of securities provide a continual flow of funds available for cash needs (see Note 3 "Debt Securities" to the consolidated financial statements). Furthermore, the highly liquid nature of the available for sale securities portfolio (for example, the agency guaranteed MBS portfolio) can be readily used as a source of cash through various secured borrowing arrangements. Regions' securities portfolio consists of residential and commercial agency MBS, U.S. Treasury securities, federal agency securities, and corporate and other debt. In evaluating the liquidity within the securities portfolio, unencumbered investment securities are primarily comprised of U.S Treasury securities and residential and commercial agency MBS. Unencumbered investment securities also includes certain corporate bonds considered to be highly liquid and other securities.
Regions' financing arrangement with the FHLB adds additional flexibility in managing the Company's liquidity position. As of March 31, 2026, Regions had $2.0 billion in short-term FHLB borrowings as discussed in the "Borrowed Funds" section. Regions had borrowing capacity from the FHLB as shown in Table 21. FHLB borrowing capacity was determined based on eligible securities and loan amounts, as of March 31, 2026, that were pledged as collateral for future borrowing capacity. Additionally, investment in FHLB stock is required in relation to the level of outstanding borrowings. The FHLB has been and is expected to continue to be a reliable and economical source of funding.
Regions has additional borrowing availability with the Federal Reserve Bank through the discount window as shown in Table 21. Federal Reserve Bank borrowing capacity is determined based on eligible loan amounts that were pledged as collateral for future borrowing capacity. Also through the Federal Reserve Bank, Regions is an eligible Standing Repo Facility counterparty, which supplements Regions' available channels for monetizing unencumbered securities.
Regions maintains a shelf registration statement with the SEC that can be utilized by Regions to issue various debt and/or equity securities. Additionally, Regions' Board has authorized Regions Bank to issue up to $10 billion in aggregate principal amount of bank notes outstanding at any one time. Refer to Note 11 "Borrowed Funds" in the Annual Report on Form 10-K for the year ended December 31, 2025 for additional information.
Regions may, from time to time, consider opportunistically retiring outstanding issued securities, including subordinated debt in privately negotiated or open market transactions for cash or common shares. Regulatory approval would be required for retirement of some instruments. See Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to the consolidated financial statements for additional information.
Regions' maintains a liquidity management framework which establishes sustainable processes and tools to effectively identify, measure, mitigate, monitor, and report liquidity risks beginning with Regions' Liquidity Management Policy and the Liquidity Risk Appetite Statements approved by the Board. Processes within the liquidity management framework include, but are not limited to, liquidity risk governance, cash management, liquidity stress testing, liquidity risk limits, contingency funding plans, and collateral management. While the framework is designed to comply with liquidity regulations, the processes are further tailored to be commensurate with Regions' operating model and risk profile. The Company's liquidity policy requires the holding company to maintain cash sufficient to cover the greater of (1) 18 months of debt service and other cash needs or (2) a minimum cash balance of $500 million. Cash and cash equivalents at the holding company exceeded minimums and totaled $712 million at March 31, 2026. Overall liquidity risk limits are established by the Board through its Risk Appetite Statement and Liquidity Policy. The Company's Board, LROC and ALCO regularly review compliance with the established limits. Also, see the "Supervision and Regulation-Liquidity Requirements" subsection of the "Business" section and the "Risk Factors" section in the 2025 Annual Report on Form 10-K for additional information.
INFORMATION SECURITY RISK
Refer to Part 1 Item 1C. Cybersecurity in the Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of Regions' risk identification and assessment, risk management and governance of information security risk.
PROVISION FOR CREDIT LOSSES
The provision for credit losses is used to maintain the allowance for loan losses and the reserve for unfunded credit losses at a level that management determines is appropriate to absorb expected credit losses over the contractual life of the loan and credit commitment portfolio at the balance sheet date. In the three months ended March 31, 2026, net charge-offs exceeded provision by $39 million. In the three months ended March 31, 2025, provision exceeded net charge-offs by $1 million. Refer to the "Allowance" section for further detail.
NON-INTEREST INCOME
Table 22-Non-Interest Income
Three Months Ended March 31 Quarter-to-Date Change 3/31/2026 vs. 3/31/2025
2026 2025 Amount Percent
(Dollars in millions)
Service charges on deposit accounts $ 163 $ 161 $ 2 1.2 %
Card and ATM fees 117 117 - - %
Investment management and trust fee income 92 86 6 7.0 %
Capital markets income 84 80 4 5.0 %
Mortgage income 32 40 (8) (20.0) %
Investment services fee income 49 43 6 14.0 %
Commercial credit fee income 30 27 3 11.1 %
Bank-owned life insurance 30 23 7 30.4 %
Market value adjustments on employee benefit assets (5) (3) (2) (66.7) %
Securities gains (losses), net (3) (25) 22 88.0 %
Other miscellaneous income 36 41 (5) (12.2) %
$ 625 $ 590 $ 35 5.9 %
Service Charges on Deposit Accounts
Service charges on deposit accounts include overdraft fees, treasury management fees and other customer transaction-related service charges.
The Company continues to monitor and evaluate the potential impact of proposals to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction, which remain subject to ongoing litigation.
Mortgage Income
Mortgage income is generated through the origination and servicing of residential mortgage loans for long-term investors and sales of residential mortgage loans in the secondary market. The decrease in mortgage income for the three months ended March 31, 2026 compared to the same period in 2025 was due primarily to unfavorable valuation and net hedge performance related to mortgage servicing rights. The decrease was partially offset by improvement in pipeline valuation adjustments during the quarter.
Investment Services Fee Income
Investment services fee income represents income earned from investment advisory services. Investment services fee income increased in the three months ended March 31, 2026 compared to the same period in 2025 due primarily to improved advisor production, resulting in new accounts, asset inflows, and increases in advisory fees.
Bank-owned Life Insurance
Bank-owned life insurance income primarily represents income earned from the appreciation of the cash surrender value of insurance contracts held and the proceeds of insurance benefits. Bank-owned life insurance income increased during the three months ended March 31, 2026 compared to the same period in 2025 driven primarily by increased insurance claim income.
Securities Gains (Losses), Net
Net securities gains (losses) primarily result from the Company's asset/liability and capital management processes. In the three months ended March 31, 2025, the Company executed debt securities repositionings by selling debt securities and reinvesting the proceeds at higher current market yields. See Table 1 "Debt Securities" for more information on securities repositionings executed during 2026 and Table 5 "Debt Securities" in Regions' Annual Report on Form 10-K for the year ended December 31, 2025 for more information on securities repositionings executed in 2025.
Other Miscellaneous Income
Other miscellaneous income includes net revenue from affordable housing, income from SBIC investments, valuation adjustments to equity investments, commercial loan and leasing related income, fees from safe deposit boxes, check fees and other miscellaneous income including unusual gains. Net revenue from affordable housing includes actual gains and losses resulting from the sale of affordable housing investments, cash distributions from the investments and any related impairment charges. Other miscellaneous income decreased in the three months ended March 31, 2026 compared to the same period in 2025 due primarily to lower commercial lease income.
NON-INTEREST EXPENSE
Table 23-Non-Interest Expense
Three Months Ended March 31 Quarter-to-Date Change 3/31/2026 vs. 3/31/2025
2026 2025 Amount Percent
(Dollars in millions)
Salaries and employee benefits $ 659 $ 625 $ 34 5.4 %
Equipment and software expense 108 99 9 9.1 %
Net occupancy expense 72 70 2 2.9 %
Outside services 42 40 2 5.0 %
Marketing 29 30 (1) (3.3) %
Professional, legal and regulatory expenses 28 23 5 21.7 %
Credit/checkcard expenses 14 15 (1) (6.7) %
FDIC insurance assessments 19 20 (1) (5.0) %
Operational losses 10 13 (3) (23.1) %
Visa class B shares expense 1 7 (6) (85.7) %
Other miscellaneous expenses 86 97 (11) (11.3) %
$ 1,068 $ 1,039 $ 29 2.8 %
Salaries and Employee Benefits
Salaries and employee benefits consist of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and medical, life and disability insurance, as well as, expenses from liabilities held for employee benefit purposes. Salaries and employee benefits increased in the three months ended March 31, 2026 compared to the same period in 2025 primarily due to higher base salaries from annual merit increases, which also increased related insurance and taxes, an increase in severance and slightly higher production-based incentives. The increases were partially offset by a decline in market valuation adjustments for supplemental employee benefit liabilities. Full-time equivalent headcount increased to 19,910 at March 31, 2026 from 19,541 at March 31, 2025.
Equipment and Software Expense
Equipment and software expense includes depreciation, maintenance and repairs, rent, taxes, and other expenses of software and equipment utilized by Regions and its affiliates. Equipment and software expense increased in the three months ended March 31, 2026 compared to the same period in 2025 primarily due to an increase in depreciation expense from internally developed software and an increase in software rental expense.
Professional, Legal and Regulatory Expenses
Professional, legal, and regulatory expenses consist of amounts related to legal, consulting, other professional fees and regulatory charges. Professional, legal, and regulatory expenses increased in the three months ended March 31, 2026 compared to the same period in 2025 primarily due to an increase in accruals for legal matters and professional fees associated with core systems modernization.
Visa Class B Shares Expense
Visa class B shares expense is associated with previously sold shares. The Visa class B shares have restrictions tied to finalization of certain covered litigation. Visa class B shares expense decreased in the three months ended March 31, 2026 compared to the same period in 2025 due to lower escrow funding expense for the Company's proportionate share of ongoing covered litigation.
Other Miscellaneous Expenses
Other miscellaneous expenses include expenses related to communications, postage, supplies, certain credit-related costs, foreclosed property expenses, mortgage repurchase costs, and other costs (benefits) related to employee benefit plans. Other miscellaneous expenses decreased in the three months ended March 31, 2026 compared to the same period in 2025 primarily due to a decline in pension expense and a decline in licenses and taxes.
INCOME TAXES
The Company's income tax expense for the three months ended March 31, 2026 was $155 million compared to $131 million for the three months ended March 31, 2025, resulting in effective tax rates of 21.6% and 21.1%, respectively.
The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, the mix of income between various tax jurisdictions with differing tax rates, enacted tax legislation, net tax benefits related to affordable housing investments, bank-owned life insurance income, tax-exempt interest and nondeductible expenses. In addition, the effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as
the termination of certain leveraged leases, share-based payments, valuation allowance changes and changes to UTBs. Accordingly, the comparability of the effective tax rate between periods may be impacted.
At March 31, 2026, the Company reported a net deferred tax asset of $321 million compared to $244 million at December 31, 2025. The increase in the net deferred tax position primarily reflected the deferred tax effects associated with increases in unrealized losses on securities available for sale and derivative instruments recognized during the period.
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