Regions Bank 2009 Annual Report Download - page 179

The following table presents the fair value of derivative instruments on a gross basis as of December 31,
2009:
Asset Derivatives Liability Derivatives
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
(In millions)
Derivatives designated as hedging instruments
Interest rate swaps ................................... Other assets $ 390 Other liabilities $ 22
Interest rate options ................................. Other assets 52 Other liabilities —
Eurodollar futures(1) ................................ Other assets — Other liabilities —
Total derivatives designated as hedging instruments .... $ 442 $ 22
Derivatives not designated as hedging instruments
Interest rate swaps ................................... Other assets $1,518 Other liabilities $1,505
Interest rate options ................................. Other assets 26 Other liabilities 33
Interest rate futures and forward commitments ............ Other assets 13 Other liabilities —
Other contracts ..................................... Other assets 20 Other liabilities 19
Total derivatives not designated as hedging instruments ..... $1,577 $1,557
Total derivatives ............................ $2,019 $1,579
(1) 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 instruments that qualify in a hedging relationship are
classified, based on the exposure being hedged, as either fair value or cash flow hedges. The Company formally
documents all hedging relationships between hedging instruments and the hedged items, as well as its risk
management objective and strategy for entering into various hedge transactions. The Company performs periodic
assessments to determine whether the hedging relationship has been highly effective in offsetting changes in fair
values or cash flows of hedged items and whether the relationship is expected to continue to be highly effective
in the future.
When a hedge is terminated or hedge accounting is discontinued because the hedged item no longer meets
the definition of a firm commitment, or because it is probable that the forecasted 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 fair value, with changes in fair value recognized currently in other non-interest income. Any asset or liability
that was recorded pursuant to recognition of the firm commitment is removed from the consolidated balance
sheets and recognized currently in other non-interest expense. Gains and losses that were accumulated in other
comprehensive income pursuant to the hedge of a forecasted transaction are recognized immediately in other
non-interest expense.
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