Higher NII & Fee Income to Support Regions Financial's Q2 Earnings

Core Viewpoint - Regions Financial Corporation (RF) is expected to report year-over-year growth in earnings and revenues for the second quarter of 2025, with earnings estimated at 56 cents per share, reflecting a 7.7% increase from the previous year [1][3][10]. Financial Performance - The Zacks Consensus Estimate for second-quarter revenues is $1.85 billion, indicating a 7.1% increase from the prior year [3]. - The company has a strong earnings surprise history, surpassing estimates in the last four quarters with an average surprise of 6.71% [2]. Key Factors Influencing Performance - Net Interest Income (NII) is projected to grow approximately 3% from the first quarter of 2025, with a consensus estimate of $1.2 billion [5]. - Loan demand remained strong, particularly for commercial and industrial loans, despite a challenging macroeconomic environment [5]. - Average interest-earning assets are expected to see a marginal sequential increase, with a consensus estimate of $1.39 billion [6]. Non-Interest Income - Non-interest income is forecasted to rise 5.3% sequentially, driven by card fees and service charges [10]. - Capital markets revenues are expected to improve modestly, with a consensus estimate of $80.1 million, although still below the previous year's levels [8]. - Mortgage income is estimated at $39.6 million, reflecting a nearly 1% decline from the prior quarter [11]. Expenses and Asset Quality - Expenses are anticipated to be high due to increased salaries and technology investments, despite ongoing expense management efforts [13]. - The company is likely to have set aside a significant amount for potential bad loans, with non-performing assets estimated at $899.1 million, a 1.7% rise from the previous quarter [14]. Earnings Prediction - The model predicts an earnings beat for Regions Financial, supported by a positive Earnings ESP of +0.23% and a Zacks Rank of 2 (Buy) [15][16].