We’re just days away from Halloween, but regional banks may have already reached their share of scares for the month. From poor loan performance to fraud charges to mortgage bankruptcies, regional banks have been giving investors plenty of reasons to stay away.
But now with the third quarter earnings season underway, several regional banks have reported results that have calmed market jitters. One quarter is not a turnaround, and the headwinds for this sector continue to play out like a game of Whack-A-Mole.
However, optimism is creeping back into market sentiment, and the three regional areas we will focus on today have announced results that could shake up the sector.
Regional banks were desperate for good news
Investors in the banking sector are getting positive feedback about 2023 based on recent headlines in the press. Many concerns have arisen, incl Fraud and bankruptcy allegations The auto bank has Tricolor mortgage and parts supplier First Brands.
Many prominent large banks had significant exposure to these companies, but the fallout was more pronounced in regional areas such as Fifth Third Bancorp. NASDAQ:FITP and Zion Bancorp Nasdaq: Zionthe latter received $50 million in fees due to loans affected by the fraud. There have been two quick successive bankruptcies, even at small-cap companies like Tricolor and First Brands, making investors worry about the potential for contagion.
If a regional bank has already suffered a $50 million loss, how much of the carnage has yet to be uncovered?
Other factors that spooked investors this month include:
- “Wall of maturity” – Commercial real estate (CRE) has been a major concern for bank investors since the pandemic. An estimated $1 trillion in CRE loans are scheduled to mature by the end of the year, and continued high interest rates have made refinancing these loans difficult. Calculate CRE’s loans about 44% From the assets of regional banks’ portfolios.
- Interest rates and regulatory uncertainty The Federal Reserve may have begun lowering interest rates, but the pace of future cuts is still hotly debated within the central bank’s walls. In addition, Federal Reserve Governor Michael Barr He expressed his concerns About potential regulatory rollbacks, such as reductions in capital requirements and less stringent stress tests. While larger banks are most affected by these rules, smaller banks still have to deal with an uncertain regulatory environment.
- Western alliance lawsuit – Earlier this month, Western Alliance Bancorp New York Stock Exchange: Wall Announce Fraud lawsuit v. Cantor Group V LLC, sending WAL shares down 10%. While this news may have been insignificant in quiet periods, the timing of the lawsuit accelerated a potentially combustible situation.
While these factors gave the market plenty to worry about, regional banks – especially these three – proved remarkably resilient in the third quarter.
3 banks rose above earnings estimates
The third quarter earnings season could mark a turning point for the regional banking industry. The sector has lagged the broader market for most of 2025, but recent earnings success may turn that stubborn tide.
Here are three companies to watch the regional banking recovery.
US Bancorp: Multi-pronged plan that produces record revenues
United States Bancorp Today
US Bancorp
- 52 week range
- $35.18
▼
$53.98
- Dividend yield
- 4.30%
- P/E ratio
- 11.08
- Price target
- $54.55
With a market capitalization approaching $75 billion, US Bancorp New York Stock Exchange:USB It may even surpass its status as a regional bank.
The bank generates more than $40 billion in annual sales and pays a 4.35% dividend yield, but its latest earnings report is the real catalyst. USB reported record third-quarter revenue, beating both top and bottom line estimates.
USB’s net interest income (NII) jumped more than 2% year over year (YOY), and non-interest income grew nearly 10% thanks to expansion in wealth management fees.
USB shares enter a critical level. Despite the underlying fundamental winds, the stock remains stuck between its 50-day and 200-day simple moving averages (SMA). The Relative Strength Index (RSI) showed a return in momentum after an oversold signal, but the stock likely won’t need much support to break above the 50-day SMA again.
PNC Financial: Strong earnings can’t stem doubts about stocks
PNC Financial Services Group Today
PNC Financial Services Group
- 52 week range
- $145.12
▼
$216.26
- Dividend yield
- 3.64%
- P/E ratio
- 12.07
- Price target
- $218.47
If you look at PNC Financial Services Group Inc.’s past earnings. New York Stock Exchange: PNCyou’ll find a consistent record of earnings per share and revenue increases, and last quarter was no different.
Like USB, PNC Financial reported better-than-expected earnings results for the third quarter of 2025, including a 7% year-over-year increase in NII to $3.6 billion. Credit losses also fell sharply year-on-year, from $243 million to $167 million.
Despite the strong quarter, investors remain uncertain about PNC’s trajectory. The stock received a brief post-earnings rally before pulling back, and it took an oversold RSI to finally stop the decline. If PNC stock wants to turn these gains into a sustainable rally, surpassing the 200-day simple moving average would be the first step.
Capital One Financial: Insulated from most regional headwinds
Capital One Financial today
Capital One Financial
- 52 week range
- $143.22
▼
$232.45
- Dividend yield
- 1.06%
- P/E ratio
- 95.31
- Price target
- $260.79
Capital One Financial Company shares New York Stock Exchange: COF It has held up remarkably well into 2025, advancing quietly while broader volatility has hit the financial sector
The stock has risen 23% since the beginning of the year, significantly outperforming most of its peers in the region. The reason behind the bank’s success is the large moat it has built in the face of the broader sector’s problems.
Capital One reported 23% sequential revenue growth in its third-quarter 2025 earnings statement, with national insurance at about $12.4 billion and interest margins expanding to 8.3%. Credit losses also came in below expectations, as the bank’s consumer and commercial lending mix kept it insulated from the real estate commission and bad loan concerns that have plagued the industry.
COF is also one of the first large regional bank stocks to reclaim the 50-day simple moving average this month, a classic bullish signal that suggests the next phase of the rally is about to begin.
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