Earnings Season and Regional Banks
Earnings season kicks off next week, beginning with major banks, followed by smaller regional institutions. Josh Brown and Sean Russo from CNBC penned a compelling piece about two regional banks that might see significant movement in 2026: PNC and Fifth Third Bancorp. I, for one, completely agree, and there’s definitely more ground to cover in this regard.
From a technical standpoint, the trend forming among local banks mirrors the broader market’s recovery pattern—declining in 2022, rebounding in 2023, and gearing up for a breakout rally in 2024. The SPDR S&P Regional Bank Index (KRE) has nearly bounced back from the bear market of 2022. However, despite last year’s strong results, regional banks still lag behind and are just starting to adjust after this year’s turmoil stemming from the Silicon Valley Bank collapse.
As we approach 2026, local dynamics are shifting. KRE offers a safer, more diversified way to engage with this sector. While the charts indicate it’s set for a breakout, I believe that identifying individual standout banks is where the real value lies. I’ve focused on Regions Financial (RF), headquartered in Birmingham, Alabama. It’s one of the top companies in the Southeast, which happens to be the fastest-growing region in the U.S. Notably, Regions has consistently exceeded earnings-per-share estimates for six quarters, benefiting from steady growth in net interest income and rising profits. Like the broader financial sector, these firms are experiencing favorable trends.
With decreased regulatory barriers and more merger and acquisition activity on the horizon, Regions, valued at $25 billion, could attract major banks looking to expand into the Southeast. From a technical perspective, the risk/reward scenario looks promising. On the one-year daily chart, the price recently broke through resistance at $27, reaching a new 52-week high. A pullback could happen as we head into next week’s earnings reports, but it will be telling to see if the old resistance levels turn into new support before the climb continues. Both the RSI and MACD indicators are trending upward, suggesting further upward movement might be possible. If earnings come in strong, we could see the price rise to $32 in the next quarter.
Now, let’s zoom out for a moment. Reflecting on the Great Financial Crisis from 2007 to 2009, it’s interesting to revisit how some large and regional banks have yet to recover to pre-crisis levels. Others are close, and Regions is one of those, as illustrated by 20-year monthly charts. It seems like the groundwork is being laid for a return to its previous highs. With a robust start to the year, the sector momentum is encouraging, and expectations for strong returns seem realistic. Overall, this could set up an upside target of $38 over the next year, with downside risks considerably smaller than the potential upside.
