Commercial Lending Rescues Regional Banks From Consumer Slowdown

This week’s regional bank earnings sent a pointed message about where the growth is coming from.

First-quarter earnings from PNC, KeyCorp, U.S. Bancorp, Truist, Fifth Third and Regions show commercial lending gaining momentum, fee-based businesses carrying more weight and technology investments beginning to reshape how banks compete for client relationships. Corporate clients are borrowing more actively and drawing further down on existing credit lines. The consumer picture is real, but not the one driving results.

Commercial Activity: Utilization Signals a Turn

The clearest change across the group is in commercial lending behavior. Borrowers are not only taking out new loans but also drawing more heavily on existing lines.

At Regions, executives pointed directly to that shift. “Approximately half [of loan growth] was driven by higher line utilization, with the remainder from new loan originations, primarily to existing clients,” Anil Chadha, CFO, told analysts on the conference call. That distinction underscores a return to activity among established corporate relationships.

Fifth Third executives described a similar trend. CEO Timothy Spence said on the earnings call that “line utilization … demonstrates increased client activity,” noting that utilization rose to 40.7% alongside 6% growth in commercial and industrial lending.

Truist also reported commercial-led growth. Chairman and CEO William Rogers said “average loans held for investment rose $2.3 billion … driven by 1.8% growth in commercial loans,” even as consumer balances declined.

Payments and Fees: A Larger Share of the Mix

As lending recovers gradually, fee-based businesses are playing a larger role in overall performance.

U.S. Bancorp highlighted sustained fee-based growth tied to merchant services, small business cards and embedded payment tools.

KeyCorp also pointed to fee-driven expansion, reporting a 12% increase in priority fee-based businesses, including commercial payments and investment banking. That growth reflects continued demand for treasury and advisory services.

At Fifth Third, commercial payment fees reached $218 million, with management noting increased adoption of managed services solutions among clients.

Regions presented a more mixed picture. Card and ATM fees declined during the quarter, reflecting seasonal factors, though treasury management and wealth management revenues increased.

Digital and Platform Strategy: Competing for Engagement

Banks are increasingly competing on how effectively they integrate services into digital platforms.

Truist provided one of the more direct indicators of that shift. Digital share of new-to-bank clients rose to 45%, the company said, adding that Gen Z and millennial customers accounted for more than half of that growth. The implication is that digital acquisition is becoming the primary entry point for new relationships.

U.S. Bancorp is taking a platform approach. Executives pointed to embedded digital capabilities” across spend management, payroll and bill pay, designed to integrate banking into everyday business operations.

Regions is investing along similar lines. Management said it is advancing “core transformation and technology initiatives,” including a small business digital origination platform and core system upgrades.

Artificial Intelligence: Incremental Gains in Efficiency

Artificial intelligence is beginning to influence operations, though its role remains focused on efficiency.

At Truist, Rogers said the bank is using AI for “personalized financial guidance, digital routine service requests and call summarization to enhance productivity.” These applications are designed to improve service and reduce operational friction.

Consumer activity remains less consistent than corporate behavior.

Regions reported declines in card and ATM fees, down 5%, reflecting seasonal patterns and softer transaction volumes. Truist noted a decline in consumer loan balances even as commercial lending increased.

Fifth Third offered a somewhat stronger view, with growth in consumer and small business lending, up 7%, driven by auto and home equity products.

The divergence suggests that households remain cautious, while businesses are beginning to re-engage with credit.

Regional bank earnings do not point to a single dominant trend, but among the growth drivers, commercial lending and payments and fee businesses may carry sustained tailwinds.

As Regions executives put it, the bank is operating with generally constructive sentiment across businesses and consumers, a description that captures the broader tone across the sector.