What happened

Regions Financial (RF 0.89%) struggled this week as its stock price dropped 13.7%, as of Friday's opening bell, according to S&P Global Market Intelligence. The stock was trading at about $16.45 per share as of Friday morning's open, down 23.7% year to date.

The markets were all down this week, as the S&P 500 fell 2.6%, the Dow Jones Industrial Average 2.8%, and the Nasdaq Composite 2.1%, as of Friday at 9:30 a.m. ET.

So what

This was a difficult week for bank stocks across the board, particularly regional banks, as the fallout continued from the March banking crisis. On Monday, we learned about the failure of another bank, First Republic (FRCB), which was immediately sold off by federal regulators to JPMorgan Chase (JPM 1.44%). First Republic's is the second-largest bank failure in U.S. history, behind Washington Mutual's in 2008. At the end of 2022, it had $212 billion in assets, making it the 14th largest U.S. bank. 

Later in the week came the news that another big bank, Toronto-Dominion Bank (TD 0.61%), will no longer pursue the acquisition of First Horizon (FHN -0.20%). It was reported as a mutual decision, due to regulatory uncertainty, but the crisis facing regional banks may have played a role. 

If that wasn't enough, the Federal Reserve Board met this week and raised interest rates another 25 basis points. While the pace is slowing and hikes should be winding down, higher rates are expected to have a further drag on economic growth and could lead to a recession.

Now what

These external issues aside, Regions Financial is one of the best regional banks, with a strong deposit franchise and a sturdy capital base.

The bank reported revenue that was up 22% year over year (YOY) to $1.9 billion and net income that was up 12% YOY to $612 million in Q1. Net interest income was up 40% to $1.4 billion, and the net interest margin increased to 4.22% from 2.85% a year ago.

Deposits were down 7% to $129 billion, but liquidity remained solid as the common equity tier 1 ratio rose to 9.8% from 9.4% -- comfortably above regulatory minimums.

This is a good bank, one that outperformed all others last year. Unfortunately, its performance will likely be tied to the movements of other regional banks, so it could be a bumpy ride in the near term, especially if there is a recession. But it is cheap, with a price-to-earnings ratio of 7.8, and worth considering as a long-term holding.