Regions Financial Corporation RF is scheduled to report first-quarter 2025 results on April 17, before the opening bell. Quarterly earnings and revenues are expected to have registered year-over-year growth in the to-be-reported quarter.

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This Birmingham, AL-based player’s fourth-quarter 2024 earnings beat the Zacks Consensus Estimate, driven by a decline in expenses and an increase in non-interest income. However, a decrease in net interest income (NII) was a spoilsport.

Regions Financial has a decent earnings surprise history. Its earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 4.15%.

Regions Financial Corporation Price and EPS Surprise

Regions Financial Corporation price-eps-surprise | Regions Financial Corporation Quote

The Zacks Consensus Estimate for first-quarter earnings of 51 cents per share has been unchanged in the past seven days. The figure indicates a 15.9% rise from the year-ago reported number.

The consensus estimate for revenues is pegged at $1.82 billion, indicating a 4.4% increase from the prior-year reported figure.

Key Factors & Estimates for RF's Q1

NII & Loans: In the first quarter, the Federal Reserve kept interest rates unchanged at 4.25-4.5%. As such, Regions Financial’s NII might not have witnessed significant growth, given the relatively higher rates.

Management expects NII to decline modestly in the first quarter of 2024 from the fourth-quarter 2024 reported level. The Zacks Consensus Estimate is pegged at $1.29 billion, indicating a decrease of 1.8% on a sequential basis.

The lending scenario was not very impressive as Trump’s tariff plan resulted in uncertainty across the markets. Per the Fed’s latest data, the demand for commercial and industrial loans was modestly down from the previous quarter, while consumer loans were solid in the first quarter.

Given RF’s significant exposure to commercial loans, this is likely to have negatively impacted the company’s average interest-earning assets in the first quarter of 2025 to some extent. The Zacks Consensus Estimate of $1.39 billion for average earning assets indicates a marginal sequential increase. 

Non-Interest Income: Global merger and acquisition (M&A) activities in the first quarter of 2025 witnessed modest growth, driven mainly by the Asia Pacific region. The initial optimism of robust IB performance on the back of the Trump administration being business-friendly, and the likelihood of tax cuts and deregulations quickly faded amid trade tensions and tariff uncertainties. This led to significant market volatility and economic uncertainty. As a result, companies became more cautious about pursuing M&A despite stabilizing rates and ample capital.

Regions Financial expects capital markets revenues of $80-$90 million for the first quarter. The Zacks Consensus Estimate for capital markets income is pegged at $85.3 million, indicating a sequential decline of 12.1%.

Despite the central bank's interest rate cuts last year, mortgage rates did not decline significantly. Mortgage rates in the first quarter of 2025 were close to 7%. As a result, refinancing activities and origination volumes did not experience significant growth. This might have limited the company's mortgage revenue growth in the quarter to be reported.

The Zacks Consensus Estimate for mortgage income is pegged at $33.1 million, indicating a 5.5% decrease from the prior quarter’s reported figure. 

The Zacks Consensus Estimate for card and ATM fees of $109.2 million implies a 10.9% marginal decline.

The consensus estimate for revenues of $156 million from service charges on deposit accounts for Regions Financial indicates a marginal sequential increase.

The Zacks Consensus Estimate for wealth management income is pegged at $128.9 million, implying a 2.3% increase from the prior quarter’s reported number.

Overall, the Zacks Consensus Estimate for total non-interest income is pinned at $615.1 million, indicating a 5.1% sequential rise.

Expenses: RF’s expenses are expected to have been high in the quarter under discussion due to an increase in salaries, employee benefit expenses and other expenses. Although the company is implementing expense management actions, its ongoing investment in technology advancement and franchise strengthening is likely to have kept the expense base elevated.

Asset Quality: Region Financial is likely to have set aside a substantial amount of money for potential bad loans, given the expectations of a higher-for-longer interest rate backdrop and tariff-related uncertainty.

The Zacks Consensus Estimate for non-performing assets is pegged at $959.2 million, indicating a 1.8% rise from the prior quarter's reported figure.

What Our Quantitative Model Predicts for RF

Our proven model does not predict an earnings beat for Regions Financial this time. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. That is not the case here.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Regions Financial has an Earnings ESP of -0.34%.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post earnings beat this time around.

The Earnings ESP for U.S. Bancorp USB is +0.94% and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2025 results on April 16.

Over the past seven days, the Zacks Consensus Estimate for U.S. Bancorp’s quarterly earnings has been unchanged at 99 cents.

First Horizon FHN is scheduled to announce quarterly numbers on April 16. The company has a Zacks Rank #3 and an Earnings ESP of +3.80% at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quarterly earnings estimates for First Horizon have been unchanged at 40 cents over the past week.

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Regions Financial Corporation (RF) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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