Regions Financial (RF)
We’re cautious of Regions Financial. Its sluggish sales growth shows demand is soft, a worrisome sign for investors in high-quality stocks.― StockStory Analyst Team
1. News
2. Summary
Why We Think Regions Financial Will Underperform
Tracing its roots back to 1971 and operating in a region known as the "heart of Dixie," Regions Financial (NYSE:RF) is a financial holding company that provides banking services, wealth management, and specialty financial solutions across the South, Midwest, and Texas.
- 5.4% annual net interest income growth over the last five years was slower than its banking peers
- 4.3% annual revenue growth over the last five years was slower than its banking peers
- The good news is that its incremental sales significantly boosted profitability as its annual earnings per share growth of 23.8% over the last five years outstripped its revenue performance
Regions Financial is in the penalty box. We’d rather invest in businesses with stronger moats.
Why There Are Better Opportunities Than Regions Financial
At $26.16 per share, Regions Financial trades at 1.2x forward P/B. We acknowledge that the current valuation is justified, but we’re passing on this stock for the time being.
There are stocks out there similarly priced with better business quality. We prefer owning these.
3. Regions Financial (RF) Research Report: Q3 CY2025 Update
Regional banking company Regions Financial (NYSE:RF) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 7% year on year to $1.92 billion. Its non-GAAP profit of $0.63 per share was 5.8% above analysts’ consensus estimates.
Regions Financial (RF) Q3 CY2025 Highlights:
- Net Interest Income: $1.27 billion vs analyst estimates of $1.28 billion (4.2% year-on-year growth, 0.7% miss)
- Net Interest Margin: 3.6% vs analyst estimates of 3.6% (4.1 basis point miss)
- Revenue: $1.92 billion vs analyst estimates of $1.92 billion (7% year-on-year growth, in line)
- Efficiency Ratio: 57.2% vs analyst estimates of 56.5% (66.9 basis point miss)
- Adjusted EPS: $0.63 vs analyst estimates of $0.60 (5.8% beat)
- Tangible Book Value per Share: $13.49 vs analyst estimates of $13.18 (11.2% year-on-year growth, 2.4% beat)
- Market Capitalization: $20.84 billion
Company Overview
Tracing its roots back to 1971 and operating in a region known as the "heart of Dixie," Regions Financial (NYSE:RF) is a financial holding company that provides banking services, wealth management, and specialty financial solutions across the South, Midwest, and Texas.
Regions operates primarily through its subsidiary Regions Bank, offering a comprehensive suite of financial products and services. The bank's business is organized into three main segments: Corporate Bank, Consumer Bank, and Wealth Management.
The Corporate Bank segment serves businesses of various sizes, from middle-market companies to large corporations. It provides commercial and industrial loans, commercial real estate financing, equipment leasing, and capital markets services including underwriting, loan syndication, and advisory services. For example, a regional healthcare system might work with Regions to finance a new medical facility through its commercial real estate division.
In its Consumer Bank segment, Regions delivers banking services through branch locations, digital channels, and contact centers. Products include residential mortgages, home equity lines of credit, credit cards, and personal loans. The segment also manages consumer deposit accounts, which form a significant portion of the bank's funding base.
The Wealth Management segment offers investment management, trust services, retirement planning, and estate planning for individuals and institutions. This division helps clients build, preserve, and transfer wealth through personalized financial strategies.
As a financial holding company, Regions operates under extensive regulatory oversight from the Federal Reserve, FDIC, Consumer Financial Protection Bureau, and state banking authorities. This regulatory framework governs everything from capital requirements to lending practices and consumer protection measures. The bank's deposits are FDIC-insured up to applicable limits, providing security for its customers.
4. Regional Banks
Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.
Regions Financial competes with other regional banks like Truist Financial (NYSE:TFC), Fifth Third Bancorp (NASDAQ:FITB), and PNC Financial Services (NYSE:PNC), as well as national banks including Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) in its operating territories.
5. Sales Growth
In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Unfortunately, Regions Financial’s 4.1% annualized revenue growth over the last five years was mediocre. This was below our standard for the banking sector and is a poor baseline for our analysis.
We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Regions Financial’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.3% annually. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Regions Financial grew its revenue by 7% year on year, and its $1.92 billion of revenue was in line with Wall Street’s estimates.
Net interest income made up 66% of the company’s total revenue during the last five years, meaning lending operations are Regions Financial’s largest source of revenue.
While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.
6. Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Regions Financial’s EPS grew at an astounding 23.8% compounded annual growth rate over the last five years, higher than its 4.1% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Regions Financial, EPS didn’t budge over the last two years, a regression from its five-year trend. We hope it can revert to earnings growth in the coming years.
In Q3, Regions Financial reported adjusted EPS of $0.63, up from $0.57 in the same quarter last year. This print beat analysts’ estimates by 5.8%. Over the next 12 months, Wall Street expects Regions Financial’s full-year EPS of $2.36 to grow 5.8%.
7. Tangible Book Value Per Share (TBVPS)
Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.
Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.
Regions Financial’s TBVPS grew at a tepid 3.5% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 22.1% annually over the last two years from $9.05 to $13.49 per share.
Over the next 12 months, Consensus estimates call for Regions Financial’s TBVPS to grow by 8.2% to $14.59, decent growth rate.
8. Balance Sheet Assessment
Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.
Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.
This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.
New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.
Over the last two years, Regions Financial has averaged a Tier 1 capital ratio of 10.6%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.
9. Return on Equity
Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.
Over the last five years, Regions Financial has averaged an ROE of 12.6%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Regions Financial.
10. Key Takeaways from Regions Financial’s Q3 Results
It was encouraging to see Regions Financial beat analysts’ tangible book value per share expectations this quarter. On the other hand, its net interest income slightly missed. Zooming out, we think this was a mixed quarter. The stock remained flat at $23.55 immediately after reporting.
11. Is Now The Time To Buy Regions Financial?
Updated: December 3, 2025 at 11:33 PM EST
Before investing in or passing on Regions Financial, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.
Regions Financial isn’t a terrible business, but it doesn’t pass our quality test. To kick things off, its revenue growth was weak over the last five years, and analysts don’t see anything changing over the next 12 months. And while its astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its declining net interest margin shows its loan book is becoming less profitable. On top of that, its net interest income growth was weak over the last five years.
Regions Financial’s P/B ratio based on the next 12 months is 1.2x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are superior stocks to buy right now.
Wall Street analysts have a consensus one-year price target of $28.53 on the company (compared to the current share price of $26.16).