Regions interest income increased 1.6% from the preceding quarter to $1.298 billion in the third quarter of 2026, supported by fixed-rate asset turnover, loan growth and higher hedging income. Results announced on October 16 showed a modest improvement in lending profitability despite lower average deposits and higher non-deposit funding costs.
Key Takeaways
- Net interest income rose 1.6% sequentially and 3.3% from a year earlier.
- Asset turnover, loan growth and deposit-cost discipline supported a wider interest margin.
- Average loans increased while average deposits declined, highlighting different trends on the bank’s balance sheet.
Table of Contents
- Regions interest income benefits from several growth drivers
- Business lending expands as deposits decline
- Stronger revenue accompanies lower credit losses
- Conclusion
Regions interest income benefits from several growth drivers
Regions’ third-quarter 2026 earnings announcement showed net interest income increasing by $21 million from the second quarter and $41 million from the year-earlier period. Net interest income measures the difference between interest earned on assets such as loans and securities and interest paid on funding.
The bank attributed the sequential increase primarily to fixed-rate asset turnover, average loan growth, higher hedging income, credit interest recoveries and one additional day in the quarter. Continued management of deposit costs also helped, while higher non-deposit funding costs partly offset those benefits.
The fully taxable-equivalent net interest margin widened two basis points from the second quarter to 3.68%. That improvement indicates that the income increase was not solely a result of having more loans or an extra day in the reporting period.
| Item | Details |
|---|---|
| Taxable-equivalent net interest income | $1.314 billion in Q3 2026, compared with $1.291 billion in Q2. |
| Interest-bearing deposit cost | 1.70% in Q3 2026. |
| Quarter-end loans | $99.827 billion, up 0.6% sequentially. |
| Allowance for credit losses | $1.609 billion, equivalent to 1.61% of loans. |
| Common Equity Tier 1 ratio | Estimated at 10.8%, compared with 10.7% at the end of Q2. |
Business lending expands as deposits decline
Average loans increased 0.5% sequentially to $99.183 billion. Business lending drove the expansion, with broad-based commercial and industrial growth, while average consumer lending declined slightly.
Average deposits fell 1.2% to $129.140 billion. Regions said the decline in corporate deposits primarily reflected a limited number of large commercial clients moving interest-bearing balances into off-balance-sheet investment products through the bank.
The deposit movement was not uniform: average non-interest-bearing balances edged higher. Together, rising loans and lower deposits make funding costs an important measure to follow alongside headline interest-income growth.
Stronger revenue accompanies lower credit losses
Total revenue increased 3.5% sequentially to $1.973 billion, with both net interest income and non-interest income contributing. Non-interest expense was nearly unchanged at $1.118 billion.
Credit performance also improved. Annualized net charge-offs fell to 0.29% of average loans from 0.42% in the second quarter, while the non-performing-loan ratio declined to 0.59% from 0.67%.
Net income available to common shareholders reached $611 million, or $0.71 per diluted share. These completed third-quarter results provide the operating benchmark for assessing subsequent income growth.
Conclusion
Regions entered the fourth quarter with higher interest income, a wider margin and lower loan losses. The next quarterly results will show whether asset repricing and lending growth continue to outweigh funding-cost pressures.
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