Regions Bank 2009 Annual Report Download

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ANNUAL REPORT TO SHAREHOLDERS

Table of contents

  • Page 1
    ANNUAL REPORT TO SHAREHOLDERS

  • Page 2

  • Page 3
    ... challenging economic and banking environment in 2009, which led to disappointing financial results. However, during the year we took important steps to manage those things within our control - helping to mitigate the impact of the tough market and ultimately positioning us well for the economic...

  • Page 4
    ...to define the implications of the Troubled Asset Relief Program. And, regulators took steps to ensure that the largest banks - Regions included - had sufficient capital to withstand larger than expected losses. and protect the financial needs of our customers. Ultimately, we recognize that it is...

  • Page 5
    ... in deposits and checking. We grew customer deposits by $12.6 billion over the last 18 months and opened more than 1 million new checking accounts in 2009. We now have more than 4 million checking accounts at Regions and 400,000 investment accounts at Morgan Keegan. Checking production in 2009 was...

  • Page 6
    ... ratios are comparable to our peers. This capital reinforces our ability to continue to be a safe harbor to customers and their deposits. 2009 FINANCIAL RESULTS While I am not pleased with Regions' loss in 2009 of $1.3 billion, or $1.27 per share, these results were heavily impacted by credit...

  • Page 7
    ... STRONG LEADERSHIP TEAM, TALENTED ASSOCIATES WILL MOVE REGIONS FORWARD In December 2009, I announced that I would retire as Chairman and CEO effective March 31, 2010. Over my 40-year career, this company has grown from a local, small-town bank to one of the nation's largest financial institutions...

  • Page 8
    ... rigorously manage expenses and enhance operating efficiency. We remain firmly committed to building value for all our customers by providing valuable products and services to meet all the financial needs of our customers within Regions Bank, Morgan Keegan, Regions Mortgage and Regions Insurance...

  • Page 9
    ...an unmatched customer experience. Thank you for investing in our company and for your support as we emerge from a difficult economic environment and move forward to a brighter future with new opportunities. O.B. Grayson Hall Jr. President and Chief Operating Officer REGIONS 2009 ANNUAL REPORT 7

  • Page 10

  • Page 11
    ... North, Birmingham, Alabama 35203 Registrant's telephone number, including area code: (205) 326-5807 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.01 par value New York Stock Exchange 8.875% Trust Preferred...

  • Page 12

  • Page 13
    ... about Market Risk ...Item 7. Financial Statements and Supplementary Data ...Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...Item 8A. Controls and Procedures ...Item 8B. Other Information ...PART III Item 9. Directors, Executive Officers and Corporate...

  • Page 14

  • Page 15
    ...the financial and real estate markets, including possible continued deterioration in property values. Regions' ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support Regions' business. Regions...

  • Page 16
    ... commercial bank that is a member of the Federal Reserve System. At December 31, 2009, Regions operated approximately 2,300 ATMs and 1,895 banking offices in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina...

  • Page 17
    ... 320 offices located in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Missouri, New York, North Carolina, South Carolina, Tennessee, Texas and Virginia. Regions Insurance Group, Inc., a subsidiary of Regions Financial Corporation...

  • Page 18
    ... of securities dealing, underwriting and market making, insurance underwriting and agency activities, merchant banking and insurance company portfolio investments. A financial holding company also may engage in any activity that the Federal Reserve determines by rule or order to be financial in...

  • Page 19
    ... or other violations of law. Various consumer laws and regulations also affect the operations of Regions Bank. In addition, commercial banks are affected significantly by the actions of the Federal Reserve as it attempts to control money and credit availability in order to influence the economy. 5

  • Page 20
    ... accounts maintained at Regions Bank are insured in full by the FDIC until June 30, 2010, regardless of the standard maximum deposit insurance amounts. Although the transaction account guarantee program was originally scheduled to expire on December 31, 2009, the FDIC implemented a final rule...

  • Page 21
    ... fund new consumer loans, small business loans and commercial mortgage asset-backed securities issuances, (iii) a public-private investment fund intended to leverage public and private capital with public financing to purchase up to $500 billion to $1 trillion of legacy "toxic assets" from financial...

  • Page 22
    ... by the Federal Reserve: a risk-based measure and a leverage measure. The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in credit and market risk profiles among banks and financial holding companies, to account for off-balance...

  • Page 23
    ... the allowance for loan losses. Non-cumulative perpetual preferred stock, trust preferred securities and other so-called "restricted core capital elements" are currently limited to 25% of Tier 1 Capital. On January 28, 2010, the U.S. bank regulatory agencies announced a final rule that, among other...

  • Page 24
    ... federal supervisor to determine that application of the rule would not be appropriate in light of the bank's asset size, level of complexity, risk profile or scope of operations. Regions Bank is currently not required to comply with Basel II. In July 2008, the U.S. bank regulatory agencies issued...

  • Page 25
    ... Federal Deposit Insurance Act (the "FDIA") requires the federal bank regulatory agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset...

  • Page 26
    ... increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except in accordance with an accepted capital restoration plan or with the approval of the FDIC. In addition, the appropriate federal banking agency is given authority with...

  • Page 27
    ... 2010, the payment of dividends by Regions and the dividend rate are subject to management review and approval by Regions' Board of Directors on a quarterly basis. In the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review...

  • Page 28
    ... ratings and financial ratios. Regulatory ratings reflect the applicable bank regulatory agency's evaluation of the financial institution's capital, asset quality, management, earnings, liquidity and sensitivity to risk. On February 27, 2009, the FDIC issued a final rule (the "New Assessments Rule...

  • Page 29
    ... in 2009, thereby exhausting the credit. For more information, see the "Bank Regulatory Capital Requirements" section of Item 6. "Management's Discussion and Analysis of Financial Condition and Results of Operation" of this Annual Report on Form 10-K. In addition, the Deposit Insurance Funds Act...

  • Page 30
    .... In addition, Morgan Keegan's business may be materially affected by new rules and regulations issued by the SEC or SROs as well as any changes in the enforcement of existing laws and rules that affect its securities business. Regulation of Insurers and Insurance Brokers. Regions' operations in the...

  • Page 31
    ... as that shown on consumer credit reports and asset and income information from applications. Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or...

  • Page 32
    ... intermediaries, such as savings and loan associations, credit unions, consumer finance companies, brokerage firms, insurance companies, investment companies, mutual funds, mortgage companies and financial service operations of major commercial and retail corporations. Regions expects competition to...

  • Page 33
    ... markets in which we do business could have one or more of the following adverse effects on our business A decrease in the demand for loans and other products and services offered by us; A decrease in the value of our loans held for sale or other assets secured by consumer or commercial real estate...

  • Page 34
    ... "Credit Ratings" section of Item 6. "Management's Discussion and Analysis of Financial Condition and Results of Operation" of this Annual Report on Form 10-K. The value of our deferred tax assets could adversely affect our operating results and capital ratios. As of December 31, 2009, Regions had...

  • Page 35
    ... impact our operating results and financial position. Further disruptions in the residential real estate market could adversely affect our performance. As of December 31, 2009, residential homebuilder loans, home equity loans secured by second liens in Florida and condominium loans represented...

  • Page 36
    ... Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas and Virginia. The local economic conditions in these areas have a significant impact on Regions Bank's commercial, real estate and construction...

  • Page 37
    ...") and federal banking regulators have implemented a number of programs under this legislation and otherwise to address capital and liquidity issues in the banking system, including the Capital Purchase Program ("CPP"). On November 14, 2008, we issued and sold 3,500,000 shares of Regions' Fixed Rate...

  • Page 38
    ... under the "Capital Ratios" section of Item 6. "Management's Discussion and Analysis of Financial Condition and Results of Operation" of this Annual Report on Form 10-K. Increases in FDIC insurance premiums may adversely affect our earnings. During 2008 and 2009, higher levels of bank failures have...

  • Page 39
    ...credit risk associated with the underlying securitization. Other recent initiatives also include: • • the Federal Reserve's proposed guidance on incentive compensation policies at banking organizations and the FDIC's proposed rules tying employee compensation to assessments for deposit insurance...

  • Page 40
    ... by Regions Bank to us, as well as by us to our stockholders. Regulations of both the Federal Reserve and the State of Alabama affect the ability of Regions Bank to pay dividends and other distributions to us and to make loans to us. Due in large part to the significant loss recorded at Regions Bank...

  • Page 41
    ... to our operating results and financial position. For further discussion, see Notes 1 and 9, "Summary of Significant Accounting Policies" and "Intangible Assets", to the Consolidated Financial Statements included in Item 7. of this Annual Report on Form 10-K. Rapid and significant changes in market...

  • Page 42
    ... Federal Reserve. The instruments of monetary policy employed by the Federal Reserve include open-market operations in U.S. government securities, changes in the discount rate or the federal funds rate on bank borrowings, and changes in reserve requirements against bank deposits. In view of changing...

  • Page 43
    ... or be successful in marketing these products and services to our customers. We are subject to a variety of operational risks, including reputational risk, legal risk and compliance risk, and the risk of fraud or theft by employees or outsiders, which may adversely affect our business and results of...

  • Page 44
    ... the Financial Accounting Standards Board and SEC change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations...

  • Page 45
    ... equity dilution; Changes in the credit, mortgage and real estate markets, including the markets for mortgage-related securities; and Changes in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity, credit or asset...

  • Page 46
    ..."Supervision and Regulation," of this Annual Report on Form 10-K, a bank holding company must obtain the prior approval of the Federal Reserve before, among other things, acquiring direct or indirect ownership or control of more than 5% of the voting shares of any bank, including Regions Bank. There...

  • Page 47
    ... Item 1. "Business" of this Annual Report on Form 10-K for a list of the states in which Regions Bank branches and Morgan Keegan's offices are located. Item 3. Legal Proceedings Reference is made to Note 24 "Commitments, Contingencies and Guarantees," to the consolidated financial statements under...

  • Page 48
    ... of operations. In July 2009, Morgan Keegan & Company, Inc. ("Morgan Keegan"), a wholly-owned subsidiary of Regions, Morgan Asset Management, Inc. and three employees each received a Wells notice from the Staff of the Atlanta Regional Office of the Securities and Exchange Commission ("SEC") stating...

  • Page 49
    ..., consolidated financial position or results of operations. In April 2009, Regions, Regions Financing Trust III (the "Trust") and certain of Regions' current and former directors, were named in a purported class-action lawsuit filed in the U.S. District Court for the Southern District of New York on...

  • Page 50
    ... Financial Corporation). Restrictions on the ability of Regions Bank to transfer funds to Regions at December 31, 2009, are set forth in Note 14 "Regulatory Capital Requirements and Restrictions" to the consolidated financial statements, which are included in Item 7. of this Annual Report on Form...

  • Page 51
    ...increase its quarterly dividend above such level for the foreseeable future. Also, Regions is a bank holding company, and its ability to declare and pay dividends is dependent on certain federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and...

  • Page 52
    ... 128.15 90.79 $27.47 80.74 57.50 $ 18.84 102.11 53.63 The information required by Item 5. is set forth in Table 1 "Financial Highlights" of "Management's Discussion and Analysis of Financial Condition and Results of Operation", which is included in Item 6. of this Annual Report on Form 10-K. 38

  • Page 53
    ... service charges on deposit accounts, brokerage, investment banking, capital markets, and trust activities, mortgage servicing and secondary marketing, insurance activities, and other customer services which Regions provides. Results of operations are also affected by the provision for loan losses...

  • Page 54
    ... commercial, retail and mortgage banking services to its customers. Regions' banking subsidiary, Regions Bank, operates as an Alabama state-chartered bank with branch offices in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina...

  • Page 55
    ...investment firms based in the South. Morgan Keegan contributed approximately $90 million of income in 2009. Its lines of business include private client, retail brokerage services, fixed-income capital markets, equity capital markets, trust, and asset management. Insurance Regions provides insurance...

  • Page 56
    ....67 Shareholders of record at year-end (actual) ...81,166 83,600 85,060 84,877 72,140 Weighted-average number of common shares outstanding Basic ...989 695 708 502 461 Diluted ...989 695 713 507 466 Note: Periods prior to November 4, 2006 do not include the effect of Regions' acquisition of AmSouth...

  • Page 57
    ... of the housing sector. During 2009, the portion of the Company's loan portfolio secured by income-producing commercial real estate, including retail and multi-family properties, also showed signs of credit pressure. As a result of these factors, Regions reported a net loss available to common...

  • Page 58
    ... money market funds and low certificate of deposit balances. On May 7, 2009, the final results of the Federal Reserve's Supervisory Capital Assessment Program ("SCAP") were released requiring Regions to submit a capital plan to its regulators detailing the steps to be utilized to increase total Tier...

  • Page 59
    ...management believes they may assist investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Traditionally, the Federal Reserve and other banking regulators have assessed a bank's capital adequacy based on Tier 1 capital, the calculation...

  • Page 60
    ... accrues directly to stockholders (i.e., merger and goodwill impairment charges are a reduction to earnings and stockholders' equity). See Table 2 "GAAP to Non-GAAP Reconciliation" below which provides: 1) reconciliations of GAAP net income (loss) available to common shareholders and earnings...

  • Page 61
    ...Non-GAAP Reconciliation 2009 For Years Ended December 31 2008 2007 2006 (In millions, except per share data) 2005 INCOME (LOSS) Income (loss) from continuing operations (GAAP) ...Preferred dividends (GAAP) ...Income (loss) from continuing operations available to common shareholders (GAAP) ...Income...

  • Page 62
    ... assets), mortgage servicing rights and income taxes, and are summarized in the following discussion and in the notes to the consolidated financial statements. Allowance for Credit Losses The allowance for credit losses ("allowance") consists of the allowance for loan losses and the reserve...

  • Page 63
    ... (loss). These include trading account assets, securities available for sale, mortgage loans held for sale, mortgage servicing rights and derivatives (net). From time to time, the estimation of fair value also affects other loans held for sale, which are recorded at the lower of cost or fair value...

  • Page 64
    ...flows are discounted using cost of capital metrics for Regions' peer group or a build-up approach (such as the capital asset pricing model). The market approach applies a market multiple, based on observed purchase transactions and/or price/earnings of Regions' peer group for each reporting unit, to...

  • Page 65
    ...As a result, Regions stratifies its mortgage servicing portfolio on the basis of certain risk characteristics, including loan type and contractual note rate, and values its mortgage servicing rights using discounted cash flow modeling techniques. These techniques require management to make estimates...

  • Page 66
    ... Regions reported a net loss available to common shareholders of $1.3 billion in 2009, compared to a net loss available to common shareholders of $5.6 billion in 2008. The loss in 2009 was primarily reflective of credit quality deterioration within the Company's loan portfolio and the associated...

  • Page 67
    ... Discontinued Operations 2009 Average Income/ Yield/ Balance Expense Rate 2008 Average Income/ Yield/ Balance Expense Rate 2007 Average Income/ Yield/ Balance Expense Rate (Dollars in millions; yields on taxable-equivalent basis) Assets Interest-earning assets: Federal funds sold and securities...

  • Page 68
    ......Loans held for sale-divestitures ...Loans, net of unearned income ...Other interest-earning assets ...Total interest-earning assets ...Interest expense on: Savings accounts ...Interest-bearing transaction accounts ...Money market accounts ...Money market accounts-foreign ...Time deposits-customer...

  • Page 69
    ... identify and address loan portfolio pressure, as well as continued deterioration in the residential homebuilder, condominium and home equity portfolios. Income-producing commercial real estate, including multi-family and retail, also contributed to the increased level of non-performing loans, which...

  • Page 70
    ... income in 2009. Table 5-Non-Interest Income Year Ended December 31 2009 2008 2007 (In millions) Service charges on deposit accounts ...Brokerage, investment banking and capital markets ...Mortgage income ...Trust department income ...Securities gains (losses), net ...Insurance commissions and...

  • Page 71
    ... pressure within the credit markets and general upheaval in domestic and foreign markets, as well as a reluctance of retail investors to make investment decisions, due to declining property values and declining personal wealth. Customer and trust assets under management were approximately $75...

  • Page 72
    ...7-Morgan Keegan Revenue by Division Fixed-Income Capital Markets Year Ended December 31 Equity Capital Regions Asset Markets MK Trust Management (Dollars in millions) Private Client Interest and Other 2009 Gross revenue ...Percent of gross revenue ...2008 Gross revenue ...Percent of gross revenue...

  • Page 73
    ... were serviced for third parties. Securities Gains (Losses), Net Regions reported net gains of $69 million from the sale of securities available for sale in 2009, as compared to net gains of $92 million in 2008. During the year, the company significantly reduced its exposure in non-agency investment...

  • Page 74
    ... due to lower crediting rates caused by declines in the financial markets. NON-INTEREST EXPENSE The following section contains a discussion of non-interest expense from continuing operations. The largest components of non-interest expense are salaries and employee benefits, net occupancy expense...

  • Page 75
    ... 2007 (In millions) Salaries and employee benefits ...Net occupancy expense ...Furniture and equipment expense ...Professional and legal fees ...Amortization of core deposit intangibles ...Other real estate owned expense ...Marketing ...Other-than-temporary impairments ...Mortgage servicing rights...

  • Page 76
    ... benefits in 2009 as compared to 2008. See Note 18 "Pension and Other Employee Benefit Plans" to the consolidated financial statements for further details. There are various incentive plans in place in many of Regions' lines of business that are tied to the performance levels of employees. At Morgan...

  • Page 77
    ... on January 1, 2009. The bank regulatory agencies' ratings, comprised of Regions Bank's capital, asset quality, management, earnings, liquidity and sensitivity to risk, along with its long-term debt issuer ratings and financial ratios are the primary factors in determining FDIC insurance premiums...

  • Page 78
    Under existing federal regulations, every FDIC-insured institution will pay some level of deposit insurance assessments regardless of the level of designated reserve ratio. Regions incurred a $64 million special assessment in 2009 to help replenish the Deposit Insurance Fund. Additionally, the FDIC ...

  • Page 79
    ... commercial and investor real estate balances, as well as a decrease in interestbearing deposits in other banks. Offsetting these decreases were increases in securities available for sale. Due to continued lower loan demand, combined with liquidity available to the Company, Regions' earning assets...

  • Page 80
    ... on risk management and risk adjusted return on capital. Regions is continuing to make credit available to consumers, small businesses and commercial companies as intended by Treasury and the Congress in establishing the government investment in banks (See "Stockholders' Equity" section found later...

  • Page 81
    ... loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases or other expansion projects. Commercial also includes owner-occupied commercial real estate loans to operating businesses. Owner-occupied commercial real estate mortgage loans...

  • Page 82
    ... customers to borrow against the equity in their home. Real estate market values as of the time the loan or line is secured directly affect the amount of credit extended and, in addition, changes in these values impact the depth of potential losses. The vast majority of Regions' home equity lending...

  • Page 83
    ... was largely the result of securities purchased as a part of Regions' risk management activities. In addition, since deposit growth outpaced loan demand throughout 2009, Regions added to its securities portfolio, targeting short duration assets with agency guarantees, as a means to increase interest...

  • Page 84
    ...losses. Equity securities consists predominantly of Federal Home Loan Bank stock and Federal Reserve stock. Regions evaluates securities in a loss position for other-than-temporary impairment, considering such factors as the length of time and the extent to which the market value has been below cost...

  • Page 85
    ...value with changes in market value reflected in the consolidated statements of operations. Table 14 "Trading Account Assets" provides a detail by type of security. Table 14-Trading Account Assets December 31 2009 2008 (In millions) Trading account assets: U.S. Treasury and Federal agency securities...

  • Page 86
    ... market accounts and time deposits. Regions continues to grow customer households, commercial and small business relationships and deposits by deepening and retaining existing customer relationships as well as developing new relationships through client acquisition, new checking products and money...

  • Page 87
    ...-interest bearing deposits from commercial and small businesses. Regions was aided by its decision to opt into the FDIC's Transaction Account Guarantee Program ("TAGP"), in which all non-interest bearing deposits are fully guaranteed by the FDIC. This program is scheduled to expire in June 2010 and...

  • Page 88
    ...893 $12,714 SHORT-TERM BORROWINGS Regions' short-term borrowings consist primarily of federal funds purchased, securities sold under agreements to repurchase and Federal Home Loan Bank ("FHLB") advances. See Note 12 "Short-Term Borrowings" to the consolidated financial statements for further detail...

  • Page 89
    ... consumer loans as discount window collateral. See Note 5 "Loans" to the consolidated financial statements further detail and discussion of loans pledged to the Federal Reserve Bank at December 31, 2009 and 2008. Regions maintains a liability for its brokerage customer position through Morgan Keegan...

  • Page 90
    ... 2010, which have an interest rate of 2.75%. None of the senior notes are redeemable prior to maturity. During 2009, the Company issued 33 million common shares in exchange for $202 million of outstanding 6.625% trust preferred securities issued by Regions Financing Trust II ("the Trust"). The trust...

  • Page 91
    ... securities and preferred shares in privately negotiated or open market transactions for cash or common shares. Regions would obtain concurrence from its banking regulators before any such retirements. RATINGS Table 18 "Credit Ratings" reflects the debt ratings of Regions Financial Corporation...

  • Page 92
    ... of increasing industry risk, a worsening economic backdrop, and, specific to Regions, its exposure to commercial real estate. During the year, Regions Financial Corporation and Regions Bank received downgrades from each of the ratings agencies, citing concerns regarding Regions' credit quality and...

  • Page 93
    ... notes. The increase in shareholders' equity related to the debt for common share exchange was approximately $135 million, net of issuance costs and income taxes. These public offerings along with other capital raising efforts resulted in Regions fully meeting the Tier 1 common equity capital...

  • Page 94
    ... allowance for loan losses. The sum of Tier 1 Capital and Tier 2 Capital is "total risk-based capital" or total capital. The banking regulatory agencies also have adopted regulations that supplement the risk-based guidelines to include a minimum ratio of 3% of Tier 1 Capital to average assets less...

  • Page 95
    ..., associated with reserves recorded for off-balance sheet credit exposures, including derivatives. See Note 14 "Regulatory Capital Requirements and Restrictions" to the consolidated financial statements for further details. As of December 31, 2009, Regions Bank had the requisite capital levels to...

  • Page 96
    ... risk associated with Morgan Keegan and counterparty risk. Credit risk represents the possibility that borrowers may not be able to repay loans. Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates...

  • Page 97
    ... Chief Risk Officer (CRO) oversees an independent risk assessment and reporting program. To ensure that risks within the company are presented and appropriately addressed, the Board has designated a Risk Committee of outside directors. The Risk Committee's focus is on Regions' overall risk profile...

  • Page 98
    ... $ 390 278 174 (85) $157 123 97 (44) Instantaneous Change in Interest Rates Estimated Percentage Change in Annual Net Interest Income as of December 31, 2009 Impact of Short-Term Derivatives Remaining Maturing September 2010 Assets / Liabilities Total + 300 basis points + 200 basis points + 100...

  • Page 99
    ...to fixed-rate. Regions also uses derivatives to manage interest rate and pricing risk associated with its mortgage origination business. In the period of time that elapses between the origination and sale of mortgage loans, changes in interest rates have the potential to cause a decline in the value...

  • Page 100
    ...hedge the market risk and minimize volatility associated with this portfolio. Instruments used to service customers are held in the trading account, with changes in value recorded in the consolidated statements of operations. On January 1, 2009, Regions began accounting for mortgage servicing rights...

  • Page 101
    ... Table 11 "Selected Loan Maturities"). At December 31, 2009, commercial loans and investor real estate mortgage and construction loans with an aggregate balance of $20.0 billion, as well as securities of $47 million, were due to mature in one year or less. Additional funds are provided from payments...

  • Page 102
    ... held for investment, expose it to market risk. Morgan Keegan trades for its own account in corporate and tax-exempt securities and U.S. Government agency and Government-sponsored securities. Most of these transactions are entered into to facilitate the execution of customers' orders to buy or sell...

  • Page 103
    ...including treasury, capital markets, finance, the mortgage division and lines of business. To manage counterparty risk, Regions has a centralized approach to approval, management and monitoring of exposure. To that end, Regions has a dedicated counterparty credit group and credit officer, as well as...

  • Page 104
    ... the review and approval of new business and ongoing assessments of existing loans in the portfolio. Independent commercial and consumer credit risk management provides for more accurate risk ratings and the timely identification of problem credits, as well as oversight for the Chief Risk Officer on...

  • Page 105
    ...loans to small and mid-sized commercial and large corporate customers with business operations in Regions' geographic footprint. Loans in this portfolio are generally underwritten individually and are usually secured with the assets of the company and/or the personal guarantee of the business owners...

  • Page 106
    ... geographic diversity of Regions' exposure. The Company expects continued credit pressure on loans secured by income-producing commercial real estate during 2010. Credit risk for these loan types is directly correlated with such factors as the level of unemployment, vacancy rates and rental income...

  • Page 107
    ... 64.4 62.6 73.7 50.7 66.4% $ 888 703 896 312 69 $2,868 Notes: 1 Central consists of Alabama, Georgia and South Carolina 2 Midsouth consists of North Carolina, Virginia, Tennessee, Indiana, Illinois, Missouri, Iowa and Kentucky 3 Southwest consists of Louisiana, Mississippi, Texas and Arkansas 93

  • Page 108
    ... $4,402 Notes: 1 Central consists of Alabama, Georgia and South Carolina 2 Midsouth consists of North Carolina, Virginia and Tennessee 3 Midwest consists of Arkansas, Illinois, Indiana, Iowa, Kentucky, Missouri and Texas 4 Southwest consists of Louisiana and Mississippi Property value declines also...

  • Page 109
    unemployment and housing, caused the significant increase in loss rate. Florida real estate markets have been particularly affected. Slightly more than one-third of Regions' home equity portfolio is located in Florida and has suffered losses reflective of the falling property values and demand in ...

  • Page 110
    ... as Florida, Georgia, North Carolina and South Carolina), Regions obtains updated valuations on a semi-annual basis. Credit Review, Commercial and Consumer Credit Risk Management, and Special Assets are all involved in the credit risk management process to assess the accuracy of risk ratings, the...

  • Page 111
    ..., a subset of the commercial investor real estate mortgage and commercial investor real estate construction loan portfolios, Significant action in the management of the home equity portfolio has also been taken. The Company has a strong Customer Assistance Program in place, designed to educate...

  • Page 112
    ... 1 ...Loans charged-off: Commercial and industrial ...Commercial real estate mortgage-owner occupied ...Commercial real estate construction-owner occupied ...Commercial investor real estate mortgage ...Commercial investor real estate construction ...Residential first mortgage ...Equity ...Indirect...

  • Page 113
    ...of residential first mortgage not available for 2005 due to the AmSouth merger; residential first mortgage is included in commercial real estate for 2005. (3) During the fourth quarter of 2006, Regions transferred the portion of the allowance for loan losses related to unfunded credit commitments to...

  • Page 114
    ...-owner occupied ...Total commercial ...Commercial investor real estate mortgage ...Commercial investor real estate construction ...Total investor real estate ...Residential first mortgage ...Home equity ...Indirect ...Other consumer ... $ 638 328 37 1,003 929 536 1,465 213 374 26 33 $3,114 2007...

  • Page 115
    ... TDRs for the years ended December 31, 2009 and 2008: Table 28-Troubled Debt Restructurings 2009 2008 (In millions) Accruing: Commercial and industrial ...Residential first mortgage ...Home equity ...Other consumer ...Non-accrual status or 90 days past due: Commercial and industrial ...Residential...

  • Page 116
    ...of the recorded investment in the loan or fair value less the estimated cost to sell. Table 29 "Non-Performing Assets" presents information on non-performing loans and foreclosed properties acquired in settlement of loans. Changes in economic conditions and real estate demand in Regions' markets are...

  • Page 117
    ...Total commercial ...Commercial investor real estate mortgage ...Commercial investor real estate construction ...Total investor real estate ...Residential first mortgage ...Home equity ...Total non-performing loans ...Foreclosed properties ...Total non-performing assets* excluding loans held for sale...

  • Page 118
    2007 2006 2005 (In millions) Non-performing loans: Commercial and industrial ...Commercial real estate(1) ...Construction(1) ...Residential first mortgage ...Home equity ...Total non-performing loans ...Foreclosed properties ...Total non-performing assets* ...Non-performing loans* to loans, net of...

  • Page 119
    ... nearly all asset classes, including loans and securities. The property value declines, which began in late 2007, continued to build throughout 2008. The Company's exposure to the residential housing sector, primarily within its commercial real estate and construction loan portfolios, pressured its...

  • Page 120
    ... brokerage and equity capital markets revenue streams were affected by declining market activity and transaction flow. In addition in 2008, Regions recorded $63 million of other income due to proceeds from a sale of Class B common stock ownership interest in Visa. Service charges on deposit accounts...

  • Page 121
    ...the consolidated financial statements for further detail. During the third quarter of 2007, Regions also exited the wholesale mortgage warehouse lending business as a result of risk and return considerations. Regions reported net gains of $92 million from the sale of securities available for sale in...

  • Page 122
    ...percent in 2007. The increase in non-performing assets was primarily driven by construction and commercial real estate loans, including the residential homebuilder portfolio, due to the widespread decline in residential property values. During 2008, Regions disposed of or designated as held for sale...

  • Page 123
    ...$(6,244) $ 26 $(6,244) $ 90 $ 206 $ 337 79 $ 206 $ 337 Earnings (loss) per share from continuing operations available to common shareholders: Basic ...$ (0.51) $ (0.37) $ (0.28) $ 0.04 $ (8.97) $ 0.13...0.38 25.84 17.90 Note: Quarterly amounts may not add to year-to-date amounts due to rounding. 109

  • Page 124
    .... Regions' independent registered public accounting firm has issued an audit report on the effectiveness of the Company's internal control over financial reporting. This report appears on the following page. REGIONS FINANCIAL CORPORATION by /s/ C. DOWD RITTER C. Dowd Ritter Chief Executive Officer...

  • Page 125
    ... statements of operations, changes in stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009 of Regions Financial Corporation and our report dated February 22, 2010, expressed an unqualified opinion thereon. Birmingham, Alabama February 22, 2010...

  • Page 126
    ... ACCOUNTING FIRM THE BOARD OF DIRECTORS AND SHAREHOLDERS OF REGIONS FINANCIAL CORPORATION We have audited the accompanying consolidated balance sheets of Regions Financial Corporation and subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of operations, changes...

  • Page 127
    ... except share data) Assets Cash and due from banks ...Interest-bearing deposits in other banks ...Federal funds sold and securities purchased under agreements to resell ...Trading account assets ...Securities available for sale ...Securities held to maturity (estimated fair value of $31 in 2009 and...

  • Page 128
    ... loan losses ...Non-interest income: Service charges on deposit accounts ...Brokerage, investment banking and capital markets ...Mortgage income ...Trust department income ...Securities gains (losses), net ...Other ...Total non-interest income ...Non-interest expense: Salaries and employee benefits...

  • Page 129
    REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Accumulated Retained Treasury Other Preferred Stock Common Stock Additional Paid-In Earnings Stock, Comprehensive Shares Amount Shares Amount Capital (Deficit) At Cost Income (Loss) (In millions...

  • Page 130
    REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY-Continued Accumulated Other Preferred Stock Common Stock Additional Retained Treasury Paid-In Earnings Stock, Comprehensive Shares Amount Shares Amount Capital (Deficit) At Cost Income (Loss) (...

  • Page 131
    ......Impairment of mortgage servicing rights ...Provision for losses on other real estate, net ...Net amortization (accretion) of securities ...Net amortization of loans and other assets ...Net accretion of deposits and borrowings ...Net securities (gains) losses ...Net loss (gain) on sale of premises...

  • Page 132
    ... services to individual and corporate customers through its subsidiaries and branch offices located primarily in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas and Virginia. The Company...

  • Page 133
    ...Trading account assets, which are primarily held for the purpose of selling at a profit, consist of debt and marketable equity securities and are carried at estimated fair value. Gains and losses, both realized and unrealized, are included in brokerage, investment banking and capital markets income...

  • Page 134
    ... underwritten. Residential real estate mortgage loans not designated as held for sale are retained based on available liquidity, interest rate risk management and other business purposes. Regions elected the fair value option for residential real estate mortgage loans held for sale originated after...

  • Page 135
    ... risks of the asset. In calculating prepayment rates, Regions utilizes a variety of prepayment models depending on the loan type and specific transaction requirements. The models used by Regions include the constant prepayment rate model (CPR) and the Bond Market Trade Association's Mortgaged Asset...

  • Page 136
    ... equates the asset's discounted cash flows to its market price. The fair value of mortgage servicing rights is calculated using various assumptions including future cash flows, market discount rates, expected prepayment rates, servicing costs and other factors. A significant change in prepayments...

  • Page 137
    ... for each reporting date. As of December 31, 2009 General Banking/ Investment Banking/ Treasury Brokerage/Trust Insurance Discount rate used in income approach ...Public company method market multiplier(a) ...Public company method control premium ...Transaction method market multiplier(a) ... 18...

  • Page 138
    As of December 31, 2008 General Banking/ Investment Banking/ Treasury Brokerage/Trust Insurance Discount rate used in income approach ...Public company method market multiplier(a) ...Public company method control premium ...Transaction method market multiplier(b) ... 21% 0.6x 30% 0.8x 11% n/a 30...

  • Page 139
    ... transaction will not occur by the end of the specified time period, the derivative will continue to be recorded in the consolidated balance sheets at its estimated fair value, with changes in fair value recognized currently in brokerage, investment banking and capital markets income. Any asset...

  • Page 140
    ... tax rates currently in effect to its cumulative temporary differences. Temporary differences are differences between financial statement carrying amounts and the corresponding tax bases of assets and liabilities. From time to time, for certain business plans enacted by Regions, management bases...

  • Page 141
    ... as of January 1, 2009. Refer to Note 22, "Fair Value Measurements" for additional information about the impact of the adoption of the Fair Value Topic. In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), "Business Combinations", codified in the...

  • Page 142
    ... in the "Compensation - Retirement Benefits" Topic of the ASC. The guidance requires annual disclosures about assets held in an employer's defined benefit pension or other postretirement plan. These provisions are generally effective for fiscal years ending after December 15, 2009. See Note 18 for...

  • Page 143
    ... evaluated as well as whether that date is the date that the financial statements were issued or were available to be issued. Regions adopted the Subsequent Events Topic during the second quarter of 2009. In August 2009, the FASB issued ASU 2009-05 "Measuring Liabilities at Fair Value". ASU 2009-05...

  • Page 144
    ... Federal Reserve Board has indicated that such trust preferred securities will continue to constitute Tier 1 Capital until further notice. Regions periodically invests in various limited partnerships that sponsor affordable housing projects, which are funded through a combination of debt and equity...

  • Page 145
    ... 31, 2009 and 2008, respectively. The funded portion is classified as commercial and industrial loans on the consolidated balance sheets. NOTE 3. DISCONTINUED OPERATIONS On March 30, 2007, Regions sold EquiFirst Corporation ("EquiFirst"), a wholly owned non-conforming mortgage origination subsidiary...

  • Page 146
    ...Gains Losses (In millions) Estimated Fair Value December 31, 2009 Cost Securities available for sale: U.S. Treasury securities ...Federal agency securities ...Obligations of states and political subdivisions ...Mortgage-backed securities: Residential agency ...Residential non-agency ...Commercial...

  • Page 147
    ... non-agency residential mortgage backed securities for which other-than-temporary impairments had previously been recorded. All non-credit losses previously recorded in other comprehensive income (loss) had been recognized in the statement of operations as of December 31, 2009. The Company estimates...

  • Page 148
    ... Treasury securities and mortgage-backed securities. During the second half of 2009, the Company made efforts to significantly reduce the credit risk in the available for sale portfolio. Exposures in residential non-agency mortgage-backed securities, commercial non-agency mortgage-backed securities...

  • Page 149
    ... losses) in 2009, 2008 and 2007, respectively. As of December 31, 2009, Regions owned approximately $6.4 billion, $12.2 billion, and $3.7 billion in aggregate book value of Federal Home Loan Mortgage Corporation, Federal National Mortgage Association and Government National Mortgage Association...

  • Page 150
    ... within Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, Texas and Virginia. Beginning in 2008 and continuing into 2009, Regions considered its residential homebuilder, home equity loans secured by...

  • Page 151
    ... of commercial loans and $3.1 billion of other consumer loans held by Regions were pledged to the Federal Reserve Bank. Directors and executive officers of Regions and its principal subsidiaries, including the directors' and officers' families and affiliated companies, are loan and deposit customers...

  • Page 152
    ..., which could prevent the asset-backed commercial paper issuers from being able to issue commercial paper. Regions had no liquidity lines of credit supporting these conduit transactions at either December 31, 2009 or 2008. No gains or losses were recognized on commercial loans sold to third-party...

  • Page 153
    ... value of its mortgage servicing rights in the statement of operations. During the year ended December 31, 2009, Regions recognized a net $37 million gain associated with changes in mortgage servicing rights and the aforementioned derivatives and securities. The net gain is included in several line...

  • Page 154
    ...servicing assets were as follows for the years ended December 31: 2008 (In millions) Balance at beginning of year ...Release of impairment-sale of MSRs ...Impairment of mortgage servicing rights ...Balance at end of year ... $ 47 (12) 85 $120 Data and assumptions used in the fair value calculation...

  • Page 155
    ...293) $ 2,786 $ 2,668 NOTE 9. INTANGIBLE ASSETS GOODWILL Goodwill allocated to each reportable segment as of December 31 is presented as follows: 2009 2008 (In millions) General Banking/Treasury ...Investment Banking/Brokerage/Trust ...Insurance ...Balance at end of year ...A summary of goodwill...

  • Page 156
    ... Investment Banking/ Brokerage/Trust and Insurance reporting units as of December 31, 2009. The valuation methodologies of certain material financial assets and liabilities are discussed in Note 22, "Fair Value of Financial Instruments." OTHER INTANGIBLES A summary of core deposit intangible assets...

  • Page 157
    ...of short-term borrowings at December 31: 2009 2008 (In millions) Federal funds purchased ...Securities sold under agreements to repurchase ...Term Auction Facility ...Treasury, tax and loan notes ...Federal Home Loan Bank structured advances ...Short-sale liability ...Brokerage customer liabilities...

  • Page 158
    ..., home equity and other consumer loans as discount window collateral. See Note 5 for loans pledged to the Federal Reserve Bank at December 31, 2009 and 2008. See Note 13 to the consolidated financial statements for further discussion of Regions' borrowing capacity with the FHLB. The short-sale...

  • Page 159
    ... pledged to the FHLB. Regions has pledged certain residential first mortgage loans on one-to-four family dwellings and home equity lines of credit as collateral for the FHLB advances outstanding. See Note 5 for loans pledged to the FHLB at December 31, 2009 and 2008. Additionally, membership...

  • Page 160
    ...November 2009, Regions issued $700 million of senior notes (gross of discount) bearing an initial fixed rate of 7.75%, with a final maturity on November 10, 2014. Approximately $250 million of senior debt notes matured during the second quarter of 2009. In October 2008, the Federal Deposit Insurance...

  • Page 161
    ... 30 days to 15 years and subordinated notes with maturities from 5 years to 30 years. These notes are not deposits and they are not insured or guaranteed by the FDIC. On October 19, 2009, the Federal Reserve Bank released a new collateral margin table for loans and securities pledged to the discount...

  • Page 162
    ... two calendar years, less any required transfers to additional paid-in capital or to a fund for the retirement of preferred stock. As a result of the losses incurred by Regions Bank in 2009 and 2008, Regions Bank cannot, without approval from the Federal Reserve, declare or pay a dividend to...

  • Page 163
    .... Regions is also subject to various capital requirements by secondary market investors. NOTE 15. STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) On November 14, 2008, Regions completed the sale of 3.5 million shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value...

  • Page 164
    ...stock purchases through open market transactions during 2009 or 2008. Regions' ability to repurchase shares is limited under the terms of the CPP mentioned above. Regions stock maintained within trust or brokerage accounts related to Company deferred compensation plans was recorded in treasury stock...

  • Page 165
    ... on derivative instruments ...Net actuarial gains and losses arising during the period ...Less: amortization of actuarial loss and prior service credit realized in net income (loss) ...Net change from defined benefit plans ...Comprehensive income (loss) ... $(1,202) 515 - 69 446 147 362 (215) 57...

  • Page 166
    ... earnings (loss) per common share for the years ended December 31: 2009 2008 2007 (In millions, except per share amounts) Numerator: Income (loss) from continuing operations ...Less: Preferred stock dividends ...Income (loss) from continuing operations available to common shareholders ...Loss from...

  • Page 167
    ... a lower exercise price than the fair market value of Regions' common stock on the date of grant. The contractual life of options granted under these plans ranges from seven to ten years from the date of grant. Regions issues new shares from authorized reserves upon exercise. Grantees of restricted...

  • Page 168
    ... consolidated statements of operations for the years ended December 31: 2009 2008 2007 (In millions) Compensation cost of share-based compensation awards: Restricted stock awards and units ...Stock options ...Tax benefits related to compensation cost ...Compensation cost of share-based compensation...

  • Page 169
    ... certain senior executive officers defined pension benefits in relation to their compensation. Regions also sponsors a defined-benefit postretirement health care plan that covers certain retired employees. Currently, the Company pays a portion of the costs of certain health care benefits for all...

  • Page 170
    ... The Company's policy is to fund the Company's share of the cost of health care benefits in amounts determined at the discretion of management. As a result of the merger with AmSouth, Regions assumed the obligations related to AmSouth's employee benefit plans. One of these assumed plans is a defined...

  • Page 171
    ... value of plan assets, end of period ...Funded status and prepaid (accrued) benefit cost at measurement date ...Amount recognized in the Consolidated Balance Sheets: Other liabilities ...Amounts recognized in Accumulated Other Comprehensive Income (Loss): Net actuarial loss (gain) ...Prior service...

  • Page 172
    ... used to determine net periodic benefit cost for the years ended December 31 are as follows: Other Postretirement Benefits 2009 2008 2007 2009 Pension 2008 2007 Discount rate ...Expected long-term rate of return on plan assets ...Rate of annual compensation increase ...158 6.15% 6.38% 6.02...

  • Page 173
    ... fair value of Regions' defined-benefit pension plans and other postretirement plan financial assets as of December 31, 2009: Level 1 Level 2 Level 3 (In millions) Fair Value Cash and cash equivalents(1) ...Fixed income securities ...Common stock ...Mutual funds ...Hedge funds ...Real estate funds...

  • Page 174
    ... inputs (Level 3) for the year ended December 31, 2009 (the other postretirement plan had no Level 3 financial assets): Fair Value Measurements Using Significant Unobservable Inputs Year Ended December 31, 2009 (Level 3 measurements only) Hedge funds Real estate Miscellaneous funds assets (In...

  • Page 175
    ...interest expense for the years ended December 31: 2009 2008 (In millions) 2007 Professional and legal fees ...Amortization of core deposit intangibles ...Other real estate expense ...Marketing ...Mortgage servicing rights impairment ...FDIC special assessment ...FDIC premiums ...Other miscellaneous...

  • Page 176
    ...2009 2008 (In millions) Deferred tax assets: Allowance for loan losses ...Other employee and director benefits ...Purchase accounting basis differences ...Federal credit carryforward ...Net operating loss carryfowards, primarily state ...Deferred compensation ...Unrealized losses included in equity...

  • Page 177
    ... or changes in tax law may impact the tax benefits of these plans. The provisions for income taxes from continuing operations charged to earnings are summarized for the years ended December 31 as follows: Current tax (benefit) expense Deferred tax (benefit) expense (In millions) Total 2009 Federal...

  • Page 178
    ... forward rate contracts on marketable instruments, which expose Regions to market risk associated with changes in the value of the underlying financial instrument, as well as the credit risk that the counterparty will fail to perform. Eurodollar futures are futures contracts on Eurodollar deposits...

  • Page 179
    ...Changes in fair value are cash-settled daily; therefore there is no ending balance at any given reporting period. HEDGING DERIVATIVES Derivatives entered into to manage interest rate risk and facilitate asset/liability management strategies are designated as hedging derivatives. Derivative financial...

  • Page 180
    ... changes in fair value of the hedged item as other non-interest expense. Regions enters into interest rate swap agreements to manage interest rate exposure on the Company's fixedrate borrowings, which includes long-term debt and certificates of deposit. These agreements involve the receipt of fixed...

  • Page 181
    ... swap agreements to manage overall cash flow changes related to interest rate risk exposure on prime-based loans. The agreements effectively modified the Company's exposure to interest rate risk by utilizing receive fixed/pay prime interest rate swaps. As of December 31, 2009, Regions had no active...

  • Page 182
    ... amount of rate lock commitments. Regions manages market risk on interest rate lock commitments and mortgage loans held for sale with corresponding forward sale commitments, which are recorded at fair value with changes in fair value recorded in mortgage income. At December 31, 2009, Regions had...

  • Page 183
    ... associated with the original swap transaction is available to offset some or all of Regions' obligation. CONTINGENT FEATURES Certain Regions' derivative instruments contain provisions that require Regions Bank's debt to maintain an investment grade credit rating from major credit rating agencies...

  • Page 184
    ... not directly comparable to the subject asset or liability. ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS Trading account assets, securities available for sale, mortgage loans held for sale, and derivatives were recorded at fair value on a recurring basis during 2009 and 2008. Mortgage servicing...

  • Page 185
    ...: Fair Value Measurements Using Significant Unobservable Inputs Year Ended December 31, 2009 (Level 3 measurements only) Trading Securities Mortgage Account Available Servicing Derivatives, Assets, net(1) for Sale Rights net (In millions) Beginning balance, January 1, 2009 ...Total gains (losses...

  • Page 186
    ...) Year Ended December 31, 2009 Trading Securities Mortgage Account Available Servicing Derivatives, Assets, net(1) for Sale Rights net (In millions) Classifications of gains (losses) both realized and unrealized included in earnings for the period: Brokerage, investment banking and capital markets...

  • Page 187
    ...presentation of only unrealized gains and losses recorded in earnings for Level 3 assets and liabilities for the year ended December 31, 2009 and 2008: Year Ended December 31, 2009 Trading Account Assets, net Securities Mortgage Available Servicing for Sale Rights (In millions) Derivatives, net The...

  • Page 188
    ... for the year ended December 31, 2009 Loans held for sale ...Foreclosed property and other real estate(1) ... $- - $ 86 362 $ 17 - $103 362 $(54) (59) (1) Beginning in 2009, due to issuance of new accounting guidance, non-financial assets and liabilities were required to be reported with non...

  • Page 189
    held for sale in the consolidated statements of operations. Net gains (losses) resulting from changes in fair value of these loans of $7 million and $16 million, respectively, were recorded in mortgage income in the consolidated statements of operations for the years ended December 31, 2009 and 2008...

  • Page 190
    ...orderly transaction. In estimating fair value, the Company makes adjustments for interest rates, market liquidity and credit spreads as appropriate. (2) The estimated fair value of portfolio loans assumes sale of the notes to a third-party financial investor. Accordingly, the value to the Company if...

  • Page 191
    ... present financial information for each reportable segment for the years ended December 31: General Banking/ Treasury 2009 Investment Banking/ Brokerage/ Trust Merger Charges and Discontinued Operations Insurance (In millions) Total Company Net interest income ...Provision for loan losses ...Non...

  • Page 192
    ... AND GUARANTEES COMMERCIAL COMMITMENTS Regions issues off-balance sheet financial instruments in connection with lending activities. The credit risk associated with these instruments is essentially the same as that involved in extending loans to customers and is subject to Regions' credit policies...

  • Page 193
    ... been named in class-action lawsuits filed in federal and state courts on behalf of investors who purchased shares of certain Regions Morgan Keegan Select Funds (the "Funds") and shareholders of Regions. The Funds were formerly managed by Morgan Asset Management, Inc. The complaints contain various...

  • Page 194
    ... of operations. In July 2009, Morgan Keegan & Company, Inc. ("Morgan Keegan"), a wholly-owned subsidiary of Regions, Morgan Asset Management, Inc. and three employees each received a Wells notice from the Staff of the Atlanta Regional Office of the Securities and Exchange Commission ("SEC") stating...

  • Page 195
    In December 2009, Regions and certain current and former directors and officers were named in a consolidated shareholder derivative action filed in Jefferson County, Alabama. The complaint alleges mismanagement, waste of corporate assets, breach of fiduciary duty and unjust enrichment relating to ...

  • Page 196
    NOTE 25. PARENT COMPANY ONLY FINANCIAL STATEMENTS Presented below are condensed financial statements of Regions Financial Corporation: Balance Sheets December 31 2009 2008 (In millions) ASSETS Cash and due from banks ...Interest-bearing deposits ...Loans to subsidiaries ...Securities available for ...

  • Page 197
    Statements of Operations Year Ended December 31 2009 2008 2007 (In millions) Income: Dividends received from subsidiaries ...Service fees from subsidiaries ...Interest from subsidiaries ...Gain on extinguishment of debt ...Other ...Expenses: Salaries and employee benefits ...Interest ...Net ...

  • Page 198
    ... assets ...69 (76) (45) Other ...122 (125) - Net cash from operating activities ...Investing activities: Investment in subsidiaries ...Principal payments on loans to subsidiaries ...Net sales (purchases) of premises and equipment ...Proceeds from sales and maturities of securities available for sale...

  • Page 199
    ... that Regions' disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective. During the fourth fiscal quarter of the year ended December 31, 2009, there have been no changes in Regions' internal control over financial reporting that...

  • Page 200
    ... and Regions Bank, Senior Executive Vice President and Head of General Banking Group, registrant and Regions Bank and Senior Executive Vice President and Lines of Business/Operations and Technology Group Head of AmSouth Bancorporation and AmSouth Bank. Director, Morgan Keegan & Company, Inc...

  • Page 201
    ... in treasury, commercial banking, private banking, corporate marketing and change management. Director, Regions Equipment Finance Corporation and Regions Business Capital Corporation. Senior Executive Vice President and Head of Consumer Services Group, registrant and Regions Bank. Previously Senior...

  • Page 202
    ... "APPROVAL OF THE REGIONS FINANCIAL CORPORATION 2010 LONG TERM INCENTIVE PLAN-Equity Compensation Plan Information" of the Proxy Statement is incorporated herein by reference. Item 12. Certain Relationships and Related Transactions, and Director Independence All information presented under the...

  • Page 203
    ... public accounting firm and consolidated financial statements of Regions and its subsidiaries are included in Item 7. of this Form 10-K: Reports of Independent Registered Public Accounting Firm; ...Consolidated Balance Sheets-December 31, 2009 and 2008; ...Consolidated Statements of Operations-Years...

  • Page 204
    ... agreement and award notice under AmSouth Bancorporation 2006 Long Term Incentive Compensation Plan and Regions Financial Corporation 2006 Long Term Incentive Plan, incorporated by reference to Exhibit 10.5 to Form 10-Q Quarterly Report filed by registrant on May 11, 2009. Form of performance-based...

  • Page 205
    ... and Restated Regions Financial Corporation Directors' Deferred Stock Investment Plan, incorporated by reference to Exhibit 10.27 to Form 10-K Annual Report filed by registrant on February 25, 2009. Amended and Restated Deferred Compensation Plan for Directors of AmSouth Bancorporation, incorporated...

  • Page 206
    ... Number 2 to AmSouth Bancorporation Deferred Compensation Plan, incorporated by reference to Exhibit 10.36 to Form 10-K Annual Report filed by registrant on February 25, 2009. Regions Financial Corporation Executive Bonus Plan, incorporated by reference to Exhibit 99 to Form 8-K Current Report filed...

  • Page 207
    ...February 25, 2009. Amendment Number Two to the Regions Financial Corporation Supplemental 401(K) Plan, incorporated by reference to Exhibit 10.2 to Form 8-K Current Report filed by registrant on December 18, 2009. AmSouth Bancorporation Amended and Restated Supplemental Retirement Plan, incorporated...

  • Page 208
    ....1 to Form 10-Q Quarterly Report filed by registrant on November 4, 2009. Form of 2009-2010 Annual Salary Stock Unit Award Agreement, incorporated by reference to Exhibit 10.1 to Form 8-K Current Report filed by registrant on December 11, 2009. Regions Financial Corporation Management Incentive Plan...

  • Page 209
    ... officer) President, Chief Operating Officer, and Director Senior Executive Vice President and Chief Financial Officer (principal financial officer) Executive Vice President and Controller (principal accounting officer) Director February 22, 2010 /S/ O. B. GRAYSON HALL, JR. O. B. Grayson Hall...

  • Page 210
    ... * Lee J. Styslinger III Director February 22, 2010 * John D. Buchanan, by signing his name hereto, does sign this document on behalf of each of the persons indicated above pursuant to powers of attorney executed by such persons and filed with the Securities and Exchange Commission. By: /S/ JOHN...

  • Page 211
    EXHIBIT 12 Regions Financial Corporation Computation of Ratio of Earnings to Fixed Charges (from continuing operations) (Unaudited) 2009(1) December 31 2008(1) 2007(1) 2006 (Amounts in thousands) 2005 Excluding Interest on Deposits Income (loss) from continuing operations before income taxes ......

  • Page 212
    ...'s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 22, 2010 /S/ C. DOWD RITTER...

  • Page 213
    ...'s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 22, 2010 /S/ IRENE M. ESTEVES...

  • Page 214
    ... In connection with the Annual Report of Regions Financial Corporation (the "Company") on Form 10-K for the year ending December 31, 2009 (the "Report"), I, C. Dowd Ritter, Chief Executive Officer of the Company, and Irene M. Esteves, Chief Financial Officer of the Company, certify, pursuant to 18...

  • Page 215
    ...day of the TARP recipient's fiscal year containing that date (the applicable period), the senior executive officer (SEO) compensation plans and the employee compensation plans and the risks these plans pose to Regions Financial Corporation; The compensation committee of Regions Financial Corporation...

  • Page 216
    ... the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved; Regions Financial Corporation will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and...

  • Page 217
    ...day of the TARP recipient's fiscal year containing that date (the applicable period), the senior executive officer (SEO) compensation plans and the employee compensation plans and the risks these plans pose to Regions Financial Corporation; The compensation committee of Regions Financial Corporation...

  • Page 218
    ... the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved; Regions Financial Corporation will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and...

  • Page 219
    ... MORE INFORMATION Regions Financial Corporation Investor Relations 1900 Fifth Avenue North Birmingham, AL 35203 M. List Underwood, Jr. Director of Investor Relations (205) 801-0265 Tobin N. Vinson Associate Director of Investor Relations (205) 326-4891 Helen S. Johnson Shareholder Services Manager...

  • Page 220