Regional Banks: 3Q25 Earnings Round-Up
Peter Simon, CFA - Co-Head of U.S. Financials, CreditSights
Iris Shi, CFA - Analyst, Banks, CreditSights
George Milonopoulos - Analyst, Banks, CreditSights
30 October 2025
Insights into Regional Banks: 3Q25 Earnings Round-Up, including:
- Strong Earnings Performance: Regional Banks 3Q25 Earnings demonstrated solid fundamentals with revenue growth driven by net interest income tailwinds, lower funding costs, fixed-rate asset repricing, and robust fee income across capital markets and wealth management operations.
- Resilient Credit Quality: Despite isolated credit events at select institutions, the sector reported stable-to-improving asset quality metrics with sequential improvements in net charge-offs, declining nonperforming loan ratios, and continued CRE portfolio stabilization.
- Robust Capital Positions: Regional banks maintained strong capitalization with CET1 ratios stable or improving, reflecting conservative balance sheet management, solid earnings generation, and excess capital buffers providing flexibility for growth initiatives and shareholder returns.
- Strategic Capital Deployment: With expectations for manageable capital regulations, regional banks are positioned to increase share repurchases, support organic business growth, and potentially pursue M&A opportunities, particularly in asset & wealth management and technology platforms.
- Margin Expansion Trajectory: Net interest margins showed positive trends across the sector despite Federal Reserve rate cuts, with benefits from moderating deposit costs, improved loan growth, and favorable asset repricing dynamics supporting multi-year NII expansion outlook.
Executive Summary
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Regional banks reported solid earnings trends for 3Q25 last week, with results further supporting our bullish view of fundamentals. Revenue trends benefited from net interest income tailwinds (lower funding costs, fixed-rate asset re-pricing, moderate loan growth) while fee income lines were driven higher along with market conditions.
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Recent credit loss events at select regional banks have sparked market volatility, but we view these as isolated events rather than signs of broader systemic weakness in the sector’s asset quality. The regional banks’ 3Q25 credit performance remained strong and resilient, with the majority reporting sequential improvements in net charge-offs and nonperforming loan ratios. CRE performance continued to improve, and the office books remain well reserved for.
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The regional banks’ capitalization remains robust, with 3Q25 reported CET1 ratios staying relatively stable or slightly improved, indicating conservatively managed balance sheets. The trends reflected solid earnings generation partially offset by shareholder distributions and RWA growth. With strong excess capitalization, the banks have a higher degree of flexibility in capital deployment toward growth initiatives and shareholder rewards. On the latter, we would not be surprised to see moderate ramp-up of buybacks in the future.
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