Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
For the transition period from to
Commission file number 001-34034
REGIONS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
63-0589368
(I.R.S. Employer
Identification No.)
1900 Fifth Avenue North, Birmingham, Alabama 35203
(Address of principal executive offices)
Registrant’s telephone number, including area code: (800) 734-4667
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $.01 par value
Depositary Shares, each representing a 1/40th Interest in a Share of
6.375% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series B
Depositary Shares, each representing a 1/40th Interest in a Share of
5.700% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
Series C
Depositary Shares, each representing a 1/40th Interest in a Share of
4.45% Non-Cumulative Perpetual Preferred Stock, Series E
Trading Symbol(s) Name of each exchange on which registered
RF
New York Stock Exchange
RF PRB
New York Stock Exchange
RF PRC
New York Stock Exchange
RF PRE
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer ý Accelerated filer ☐ Non-
accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
1
Table of Contents
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the
registrant’s most recently completed second fiscal quarter.
Common Stock, $.01 par value—$16,319,687,553 as of June 30, 2023.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value—918,864,048 shares issued and outstanding as of February 21, 2024.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement for the registrant's 2024 Annual Meeting of Shareholders are incorporated by reference into Part III to
the extent described therein.
2
Table of Contents
REGIONS FINANCIAL CORPORATION
FORM 10-K
INDEX
PART I
Cautionary Note Regarding Forward-Looking Statements and Risk Factor Summary
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant's Common Equity, Related shareholder Matters and Issuer Purchases
of Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
Form 10-K Summary
Page
8
11
23
43
43
44
44
44
46
47
48
88
89
167
167
167
167
168
168
168
168
168
169
174
175
Table of Contents
Glossary of Defined Terms
Agencies - collectively, FNMA, FHLMC, and GNMA.
ACL - Allowance for credit losses.
ALCO - Asset/Liability Management Committee.
Allowance - Allowance for credit losses.
AMLA - Anti-Money Laundering Act of 2020.
AOCI - Accumulated other comprehensive income.
ASU - Accounting Standards Update.
ATM - Automated teller machine.
Bank - Regions Bank.
Basel III - Basel Committee's 2010 Regulatory Capital Framework (Third Accord).
Basel III Endgame - New rules for capital requirements that include broad-based changes to the risk-weighting framework
that were proposed by U.S. federal regulators in 2023.
Basel III Rules - Final capital rules adopting the Basel III capital framework approved by U.S. federal regulators in 2013.
Basel Committee - Basel Committee on Banking Supervision.
BHC - Bank Holding Company.
BHC Act - Bank Holding Company Act of 1956, as amended.
BITS - Technology policy division of the Bank Policy Institute.
Board - The Company’s Board of Directors.
BSBY - Bloomberg Short-Term Bank Yield index.
BTFP - Bank Term Funding Program.
Call Report - Regions Bank's FFIEC 031 filing.
CAP - Customer Assistance Program.
CCAR - Comprehensive Capital Analysis and Review.
CCPA - California Privacy Rights Act of 2018, as amended by the California Privacy Rights Act of 2020.
CECL - Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments ("Current
Expected Credit Losses").
CEO - Chief Executive Officer.
CET1 - Common Equity Tier 1.
CFO - Chief Financial Officer.
CFPB - Consumer Financial Protection Bureau.
CFTC - Commodity Futures Trading Commission
CHR - Compensation and Human Resources.
Company - Regions Financial Corporation and its subsidiaries.
COSO - Committee of Sponsoring Organizations of the Treadway Commission.
COVID-19 - Coronavirus Disease 2019.
CPI- Consumer Price Index.
CPR - Constant (or Conditional) prepayment rate.
CRA - Community Reinvestment Act of 1977.
DEI - Diversity, Equity & Inclusion.
DIF - Deposit Insurance Fund.
Dodd-Frank Act - The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
DPD - Days past due.
4
Table of Contents
DUS - Fannie Mae Delegated Underwriting & Servicing.
EAD - Exposure-at-default.
EEO-1 - Equal employment opportunity commission's Standard Form 100 report.
ERMC - Enterprise Risk Management Committee.
ESG - Environmental, Social and Governance.
FASB - Financial Accounting Standards Board.
FCA - Financial Conduct Authority.
FDIA - Federal Deposit Insurance Act, as amended.
FDIC - The Federal Deposit Insurance Corporation.
Federal Reserve - The Board of Governors of the Federal Reserve System.
FFIEC - Federal Financial Institutions Examination Council.
FHA - Federal Housing Administration.
FHC - Financial Holding Company.
FHLB - Federal Home Loan Bank.
FICO - The Financing Corporation, established by the Competitive Equality Banking Act of 1987.
FICO scores - Personal credit scores based on the model introduced by the Fair Isaac Corporation.
FinCEN - the Financial Crimes Enforcement Network.
FINRA - Financial Industry Regulatory Authority.
Fintechs - Financial Technology Companies.
FOMC - Federal Open Market Committee.
FS-ISAC - Financial Services - Information Sharing & Analysis Center.
FTP - Funds Transfer Pricing.
GAAP - Generally Accepted Accounting Principles in the United States.
GDP - Gross domestic product.
GLBA - Gramm-Leach-Bliley Act.
GSE - Government-Sponsored Enterprise.
G-SIB - Globally Systemically Important Bank Holding Company.
HPI - Housing price index.
HUD - U.S. Department of Housing and Urban Development.
HCM - Human Capital Management.
IDI - Insured Depository Institution.
IPO - Initial public offering.
IRA - Individual Retirement Account.
IRS - Internal Revenue Service.
IS Program - Information Security Program.
LCR - Liquidity coverage ratio.
LGD - Loss given default.
LIBOR - London InterBank Offered Rate.
LLC - Limited Liability Company.
LROC - Liquidity Risk Oversight Committee.
LTIP - Long-term incentive plan.
LTV - Loan to value.
5
Table of Contents
MBS - Mortgage-backed securities.
MD&A - Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MSAs - Metropolitan Statistical Areas.
MSR - Mortgage servicing right.
NAV - Net Asset Value.
NIST - National Institute of Standards and Technology.
NSFR - Net stable funding ratio.
NYSE - New York Stock Exchange.
OAS - Option-adjusted spread.
OCC - Office of the Comptroller of the Currency.
OCI - Other comprehensive income.
OFAC - U.S. Treasury Department - Office of Foreign Assets Control.
ORC - Operational Risk Committee.
PCAOB - Public Company Accounting Oversight Board.
PCD - Purchased credit deteriorated.
PD - Probability of default.
R&S - Reasonable and supportable.
REIT - Real estate investment trust.
Regions Securities - Regions Securities LLC.
RETDR - Reasonable expectation of a troubled debt restructuring.
RWAs - Risk-weighted assets.
S&P 500 - a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in
the United States.
SBA - Small Business Administration.
SBIC - Small Business Investment Company.
SCB - Stress Capital Buffer.
SEC - U.S. Securities and Exchange Commission.
SERP - Supplemental Executive Retirement Plan.
SOFR - Secured Overnight Financing Rate.
TAL - Total trading assets and liabilities.
TBA - To Be Announced.
TDR - Troubled debt restructuring.
TOROC - Technology Operations Risk Oversight Committee.
TPRM - Third-Party Risk Management.
TRACE - Trade Reporting and Compliance Engine.
TTC - Through-the-cycle.
U.S. - United States.
USA PATRIOT Act - Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001.
U.S. Treasury - The United States Department of the Treasury.
USD - United States dollar.
UTB - Unrecognized tax benefits.
VIE - Variable interest entity.
6
Table of Contents
Visa - The Visa, U.S.A. Inc. card association or its affiliates, collectively.
wSTWF - Weighted short-term wholesale funding.
7
Table of Contents
PART I
Cautionary Note Regarding Forward-Looking Statements and Risk Factor Summary
This Annual Report on Form 10-K, other periodic reports filed by Regions Financial Corporation under the Securities
Exchange Act of 1934, as amended, and any other written or oral statements made by us or on our behalf to analysts, investors,
the media and others, may include forward-looking statements as defined in the Private Securities Litigation Reform Act of
1995. The terms “Regions,” the “Company,” “we,” “us” and “our” as used herein mean collectively Regions Financial
Corporation, a Delaware corporation, together with its subsidiaries when or where appropriate.The words “future,”
“anticipates,” “assumes,” “intends,” “plans,” “seeks,” “believes,” “predicts,” “potential,” “objectives,” “estimates,” “expects,”
“targets,” “projects,” “outlook,” “forecast,” “would,” “will,” “may,” “might,” “could,” “should,” “can,” and similar terms and
expressions often signify forward-looking statements. Forward-looking statements are subject to the risk that the actual effects
may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future
developments that are uncertain, unpredictable and in many cases beyond our control. Forward-looking statements are not
based on historical information, but rather are related to future operations, strategies, financial results or other developments.
Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made
by, and information available to, management at the time the statements are made. Those statements are based on general
assumptions and are subject to various risks, and because they also relate to the future they are likewise subject to inherent
uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and projections
expressed in such statements. Therefore, we caution you against relying on any of these forward-looking statements. These
risks, uncertainties and other factors include, but are not limited to, those described below:
Current and future economic and market conditions in the United States generally or in the communities we serve (in particular
the Southeastern United States), including the effects of possible declines in property values, increases in interest rates and
unemployment rates, inflation, financial market disruptions and potential reductions of economic growth, which may adversely
affect our lending and other businesses and our financial results and conditions.
Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central
banks and similar organizations, which could have a material adverse effect on our businesses and our financial results and
conditions.
Changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets (such as
our portfolio of investment securities) and obligations, as well as the availability and cost of capital and liquidity.
Volatility and uncertainty related to inflation and the effects of inflation, which may lead to increased costs for businesses and
consumers and potentially contribute to poor business and economic conditions generally.
Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and leases,
including operating leases.
Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, credit loss provisions or actual credit
losses where our allowance for credit losses may not be adequate to cover our eventual losses.
Possible acceleration of prepayments on mortgage-backed securities due to declining interest rates, and the related acceleration
of premium amortization on those securities.
Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets
and to attract deposits, which could adversely affect our net income.
Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments, or the need to
price interest-bearing deposits higher due to competitive forces. Either of these activities could increase our funding costs.
Possible downgrades in our credit ratings or outlook could, among other negative impacts, increase the costs of funding from
capital markets.
The loss of value of our investment portfolio could negatively impact market perceptions of us.
Our 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 our businesses.
The effects of social media on market perceptions of us and banks generally.
•
•
•
•
•
•
•
•
•
•
•
•
•
• Market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not
limited to, derivative products, debt obligations, deposits, investments, and loans.
•
The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally
could require us to change certain business practices, reduce our revenue, impose additional costs on us, or otherwise negatively
affect our businesses.
8
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Table of Contents
Volatility in the financial services industry (including failures or rumors of failures of other depository institutions), along with
actions taken by governmental agencies to address such turmoil, could affect the ability of depository institutions, including us,
to attract and retain depositors and to borrow or raise capital.
Our ability to effectively compete with other traditional and non-traditional financial services companies, including fintechs,
some of which possess greater financial resources than we do or are subject to different regulatory standards than we are.
Our inability to develop and gain acceptance from current and prospective customers for new products and services and the
enhancement of existing products and services to meet customers’ needs and respond to emerging technological trends in a
timely manner could have a negative impact on our revenue.
Our inability to keep pace with technological changes, including those related to the offering of digital banking and financial
services, could result in losing business to competitors.
Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and nonfinancial
benefits relating to our strategic initiatives.
The risks and uncertainties related to our acquisition or divestiture of businesses and risks related to such acquisitions, including
that the expected synergies, cost savings and other financial or other benefits may not be realized within expected timeframes,
or might be less than projected; and difficulties in integrating acquired businesses.
The success of our marketing efforts in attracting and retaining customers.
Our ability to achieve our expense management initiatives.
Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in
industries that are impacted by changes in commodity prices (including businesses indirectly impacted by commodities prices
such as businesses that transport commodities or manufacture equipment used in the production of commodities), which could
impair the ability of those borrowers to service any loans outstanding to them and/or reduce demand for loans in those
industries.
The effects of geopolitical instability, including wars, conflicts, civil unrest, and terrorist attacks and the potential impact,
directly or indirectly, on our businesses.
Fraud, theft or other misconduct conducted by external parties, including our customers and business partners, or by our
employees.
Any inaccurate or incomplete information provided to us by our customers or counterparties.
Inability of our framework to manage risks associated with our businesses, such as credit risk and operational risk, including
third-party vendors and other service providers, which inability could, among other things, result in a breach of operating or
security systems as a result of a cyber-attack or similar act or failure to deliver our services effectively.
Our ability to identify and address operational risks associated with the introduction of or changes to products, services, or
delivery platforms.
Dependence on key suppliers or vendors to obtain equipment and other supplies for our businesses on acceptable terms.
The inability of our internal controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts.
Our ability to identify and address cyber-security risks such as data security breaches, malware, ransomware, “denial of
service” attacks, “hacking” and identity theft, including account take-overs, a failure of which could disrupt our businesses and
result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage to
our systems, increased costs, losses, or adverse effects to our reputation.
The effects of the failure of any component of our business infrastructure provided by a third party could disrupt our businesses,
result in the disclosure of and/or misuse of confidential information or proprietary information, increase our costs, negatively
affect our reputation, and cause losses.
The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or
any of our subsidiaries.
The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse
judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions or other legal actions to which we or
any of our subsidiaries are a party, and which may adversely affect our results.
Changes in laws and regulations affecting our businesses, including legislation and regulations relating to bank products and
services, such as changes to debit card interchange fees, special FDIC assessments, any new long-term debt requirements, as
well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-
regulatory agencies, including as a result of the changes in U.S. presidential administration, control of the U.S. Congress, and
9
Table of Contents
•
•
•
•
•
•
•
•
•
•
•
•
•
•
changes in personnel at the bank regulatory agencies, which could require us to change certain business practices, increase
compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.
Our capital actions, including dividend payments, common stock repurchases, or redemptions of preferred stock, must not cause
us to fall below minimum capital ratio requirements, with applicable buffers taken into account, and must comply with other
requirements and restrictions under law or imposed by our regulators, which may impact our ability to return capital to
shareholders.
Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may
continue to require a significant investment of our managerial resources due to the importance of such tests and requirements.
Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital
standards), including our ability to generate capital internally or raise capital on favorable terms, and if we fail to meet
requirements, our financial condition and market perceptions of us could be negatively impacted.
Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of
our products and services may be affected by changes in laws and regulations in effect from time to time.
Our ability to receive dividends from our subsidiaries, in particular Regions Bank, could affect our liquidity and ability to pay
dividends to shareholders.
Fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms
anticipated.
The effects of anti-takeover laws and exclusive forum provision in our certificate of incorporation and bylaws.
The effect of new tax legislation and/or interpretation of existing tax law, which may impact our earnings, capital ratios and our
ability to return capital to shareholders.
Changes in accounting policies or procedures as may be required by the FASB or other regulatory agencies could materially
affect our financial statements and how we report those results, and expectations and preliminary analyses relating to how such
changes will affect our financial results could prove incorrect.
Any impairment of our goodwill or other intangibles, any repricing of assets or any adjustment of valuation allowances on our
deferred tax assets due to changes in tax law, adverse changes in the economic environment declining operations of the
reporting unit or other factors.
The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes and environmental
damage (especially in the Southeastern United States), which may negatively affect our operations and/or our loan portfolios
and increase our cost of conducting business. The severity and frequency of future earthquakes, fires, hurricanes, tornadoes,
droughts, floods and other weather-related events are difficult to predict and may be exacerbated by global climate change.
The impact of pandemics on our businesses, operations and financial results and conditions. The duration and severity of any
pandemic as well as government actions or other restrictions in connection with such events could disrupt the global economy,
adversely affect our capital and liquidity position, impair the ability of borrowers to repay outstanding loans and increase our
allowance for credit losses, impair collateral values and result in lost revenue or additional expenses.
The effects of any damage to our reputation resulting from developments related to any of the items identified above.
Other risks identified from time to time in reports that we file with the SEC.
You should not place undue reliance on any forward-looking statements, which speak only as of the date made. Factors or
events that could cause our actual results to differ may emerge from time to time, and it is not possible to predict all of them.
We assume no obligation and do not intend to update or revise any forward-looking statements that are made from time to time,
either as a result of future developments, new information or otherwise, except as may be required by law.
10
Table of Contents
Item 1. Business
Regions Financial Corporation is a FHC headquartered in Birmingham, Alabama operating in the South, Midwest and
Texas. In addition, Regions operates several offices delivering specialty capabilities in New York, Washington D.C., Chicago
and other locations nationwide. Regions provides financial solutions for a wide range of clients including retail and mortgage
banking services, commercial banking services and wealth and investment services. Further, Regions and its subsidiaries
deliver other financial services capabilities described below. At December 31, 2023, Regions had total consolidated assets of
approximately $152.2 billion, total consolidated deposits of approximately $127.8 billion and total consolidated shareholders’
equity of approximately $17.4 billion.
The terms “Regions,” the “Company,” “we,” “us” and “our” as used herein mean collectively Regions Financial
Corporation, a Delaware corporation, together with its subsidiaries when or where appropriate. Its principal executive offices
are located at 1900 Fifth Avenue North, Birmingham, Alabama 35203, and its telephone number at that address is
(800) 734-4667.
Banking Operations
Regions conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank that is a
member of the Federal Reserve System. At December 31, 2023, Regions operated 2,023 ATMs and 1,271 total branch outlets
primarily across the South, Midwest and Texas.
The following table reflects the distribution of branch locations in each of the states in which Regions conducts its
banking operations.
Branches
Florida
Tennessee
Alabama
Georgia
Mississippi
Texas
Louisiana
Arkansas
Missouri
Illinois
Indiana
South Carolina
Kentucky
North Carolina
Iowa
Utah
Total
272
198
186
117
99
90
82
57
49
41
40
18
9
7
5
1
1,271
Other Financial Services Operations
In addition to its banking operations, Regions and its subsidiaries deliver specialty capabilities including merger and
acquisition advisory services, capital markets solutions, home improvement lending, investment services, equipment financing
for commercial clients and small business customers, low income housing tax credit corporate fund syndication and asset
management, financing to CRA-qualified customers, investments and insurance products, broker-dealer services to commercial
clients, and others.
Supervision and Regulation
We are subject to the extensive regulatory framework applicable to BHCs and their subsidiaries. This framework is
intended primarily for the protection of depositors, the FDIC’s DIF and the banking system as a whole, and is not intended for
the protection of shareholders or other investors.
Banking and other financial services statutes, regulations and policies are continually under review by United States
Congress, state legislatures and federal and state regulatory agencies. In addition to laws and regulations, state and federal bank
regulatory agencies may issue policy statements, interpretive letters and similar written guidance applicable to Regions and its
subsidiaries. Regions cannot predict future changes in the applicable laws, regulations and regulatory agency policies, including
11
Table of Contents
any changes resulting from changes in the U.S. presidential administration. Yet, such changes may have a material impact on
Regions’ business, financial condition or results of operations. We will continue to evaluate the impact of any changes in law
and any new regulations promulgated, including changes in regulatory costs and fees, modifications to consumer products or
disclosures and the requirements of the enhanced supervision provisions, among others.
The scope of the laws and regulations and the intensity of the supervision to which Regions is subject have increased in
recent years, initially in response to the financial crisis, and more recently in light of other factors, including the failure of U.S.
depository institutions in the first half of 2023, technological factors, market changes, climate change concerns, as well as
increased scrutiny and possible denials of bank mergers and acquisitions by federal banking regulators. Regulatory enforcement
and fines have also increased across the banking and financial services sector. Regions expects that its business will remain
subject to extensive regulation and supervision.
The descriptions below summarize certain significant federal and state laws to which Regions is subject. These
descriptions do not summarize all possible or proposed changes in laws or regulations and are not intended to be a substitute for
the related statues or regulatory provisions. Changes in applicable law or regulation, and in their interpretation and application
by regulatory agencies and other governmental authorities, cannot be predicted, but may have a material effect on our business,
financial condition or results of operations.
Overview
As a BHC, Regions is subject to regulation under the BHC Act and to regulation, examination and supervision by the
Federal Reserve. Regions has elected to be treated as an FHC which allows it to engage in a broader range of activities than
would otherwise be permissible for a BHC. The BHC Act provides for “umbrella” regulation of FHCs by the Federal Reserve
and functional regulation of holding company subsidiaries by applicable regulatory agencies. The BHC Act also requires the
Federal Reserve to examine any subsidiary of a BHC, other than a depository institution, engaged in activities permissible for a
depository institution. The Federal Reserve is also granted the authority, in certain circumstances, to require reports of, examine
and adopt rules applicable to any holding company subsidiary.
Regions Bank is an Alabama state-chartered bank and a member of the Federal Reserve System. Its operations are
generally subject to supervision and examination by both the Federal Reserve and the Alabama State Banking Department.
Regions Bank is also affected by the actions of the Federal Reserve as it implements monetary policy. As a Federal Reserve
System member bank, Regions Bank is required to hold stock in the Federal Reserve Bank of Atlanta in an amount equal to six
percent of its capital stock and surplus. Member banks with total assets in excess of $10 billion, including Regions Bank,
receive a floating rate dividend tied to 10-year U.S. Treasuries, with the maximum dividend rate capped at six percent.
Regions Bank and its affiliates are also subject to supervision, regulation and examination by the CFPB with respect to
consumer protection laws and regulations.
Regions and certain of its subsidiaries and affiliates, including those that engage in derivatives transactions, securities
underwriting, market making, brokerage, investment advisory and insurance activities, are subject to other federal and state
laws and regulations, as well as supervision and examination by other federal and state regulatory agencies and other regulatory
authorities, including the SEC, CFTC, FINRA and the NYSE. Regions Bank is also subject to additional state and federal laws,
as well as various compliance regulations, that govern its activities, the investments it makes and the aggregate amount of loans
that may be granted to one borrower.
Examinations by Regions’ regulators consider not only compliance with applicable laws, regulations and supervisory
policies of the agency, but also capital levels, asset quality, risk management effectiveness, the ability and performance of
management and the board of directors, the effectiveness of internal controls, earnings, liquidity, interest rate risk management
and various other factors. Following those examinations, Regions and Regions Bank are assigned supervisory ratings. This
supervisory framework, including the examination reports and supervisory ratings, which are considered confidential
supervisory information, could materially impact the conduct, growth and profitability of Regions’ operations.
Under the Federal Reserve’s Large Financial Institution Rating System, component ratings are assigned for capital
planning, liquidity risk management, and governance and controls. To be considered “well managed” under this rating system,
a firm must be rated “broadly meets expectations” or “conditionally meets expectations” for each of its three component ratings.
The results of examinations by any of Regions’ federal bank regulators potentially can result in the imposition of
significant limitations on Regions’ activities and growth. These regulatory agencies generally have broad enforcement authority
and discretion to impose restrictions and limitations on the operations of a regulated entity, including the imposition of
substantial monetary penalties and non-monetary requirements against a regulated entity where the relevant agency determines
that the operations of the regulated entity or any of its subsidiaries fail to comply with applicable laws or regulations, are
conducted in an unsafe or unsound manner or represent an unfair or deceptive act or practice.
Enhanced Prudential Standards and Regulatory Tailoring Rules
As a BHC with over $100 billion in total consolidated assets, we are subject to enhanced prudential standards and capital
rules (the “Tailoring Rules”). The Tailoring Rules assign each U.S. BHC with $100 billion or more in total consolidated assets,
12
Table of Contents
as well as its bank subsidiaries, to one of four categories based on its size and five other risk-based indicators: (1) cross-
jurisdictional activity, (2) wSTWF, (3) non-bank assets, (4) off-balance sheet exposure and (5) status as a U.S. G-SIB.
Under the Tailoring Rules, Regions and Regions Bank are each subject to Category IV standards, which apply to banking
organizations with at least $100 billion in total consolidated assets that do not meet any of the thresholds specified for
Categories I through III. Firms subject to Category IV standards are generally subject to the same capital and liquidity
requirements as firms with less than $100 billion in total consolidated assets, but are, among other things, subject to certain
enhanced prudential standards and also required to monitor and report certain risk-based indicators. Accordingly, under the
Tailoring Rules, Category IV firms are, among other things, (1) not subject to LCR or NSFR requirements (or, in certain cases,
subject to reduced requirements), (2) remain eligible to opt-out of the requirement to recognize most elements of AOCI in
regulatory capital, (3) not subject to company-run capital stress testing requirements, (4) subject to supervisory capital stress
testing on a biennial instead of annual basis, (5) subject to requirements to develop and maintain a capital plan on an annual
basis and (6) subject to certain liquidity risk management and risk committee requirements.
Permissible Activities under the BHC Act
The BHC Act limits the activities permissible for BHCs to the business of banking, managing or controlling banks and
such other activities as the Federal Reserve has determined to be so closely related to banking as to be properly incidental
thereto. A BHC electing to be treated as a FHC, like Regions, may also engage in a range of activities that are (i) financial in
nature or incidental to such financial activity or (ii) complementary to a financial activity and that do not pose a substantial risk
to the safety and soundness of a depository institution or to the financial system generally. These activities include securities
dealing, underwriting and market making, insurance underwriting and agency activities, merchant banking and insurance
company portfolio investments.
The Federal Reserve has the authority to limit an FHC’s ability to conduct otherwise permissible activities if the FHC or
any of its depository institution subsidiaries ceases to meet applicable eligibility requirements. The Federal Reserve may also
impose corrective capital and/or managerial requirements on the FHC, and if deficiencies are persistent, may require the
company to divest its subsidiary banks or the company may be required to discontinue or divest investments in companies
engaged in activities permissible only for a BHC electing to be treated as an FHC. Furthermore, if the Federal Reserve
determines that an FHC has not maintained a CRA rating of at least “satisfactory,” the FHC would not be able to commence
any new financial activities or acquire a company that engages in such activities, although the FHC would still be allowed to
engage in activities closely related to banking and make investments in the ordinary course of conducting banking activities.
The Federal Reserve has the power to order any BHC or its subsidiaries to terminate any activity or to terminate its
ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe that continuation of such
activity or such ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank
subsidiary of the BHC.
Regulatory Capital Requirements
Regions and Regions Bank are each required to comply with applicable capital adequacy standards established by the
Federal Reserve, which are based on the Basel III framework.
The Basel III-based U.S. capital rules, among other things, include both risk-based requirements, which compare three
measures of capital to RWAs, as well as leverage requirements, which in the case of Category IV banking organizations such as
Regions, consist of the Tier 1 leverage ratio described below.
The capital rules also require firms to maintain a buffer (referred to as the SCB) consisting of solely CET1 capital, in
addition to the minimum risk-based requirements. Failure to satisfy the buffer requirement in full results in graduated
constraints on capital distributions, including dividends and share repurchases, and discretionary executive compensation. The
extent to which capital distributions will be constrained depends on the amount of the shortfall and the institution’s “eligible
retained income,” which is defined as the greater of (1) a banking institution’s net income for the four preceding calendar
quarters, net of any distributions to shareholders and associated tax effects not already reflected in net income, and (2) the
average of a banking institution’s net income over the preceding four quarters. As a Category IV banking organization,
Regions’ SCB is determined through the Federal Reserve’s CCAR supervisory stress tests which include analyses using
baseline and severely adverse economic and financial scenarios. Regions’ SCB requirement is determined by adding the Federal
Reserve’s modeled capital degradation, in the supervisory severely adverse scenario, plus four quarters of planned common
stock dividends. As a Category IV banking organization, the capital degradation component of the SCB is calculated every
other year, in even-numbered years. During a year in which a Category IV banking organization does not undergo a supervisory
stress test, it will receive an updated SCB requirement that reflects its updated planned common stock dividends. A Category
IV banking organization is also able to elect to participate in the supervisory stress test in a year in which it would not normally
be subject to the supervisory stress test and consequently receive an updated SCB requirement. The SCB is subject to a 2.5
percent floor.
While Regions was not required to participate in 2023 supervisory stress testing, the Company did receive its SCB
reflecting planned capital changes including plans to increase its common stock dividend. For the fourth quarter of 2023
13
Table of Contents
through the third quarter of 2024, the SCB continues to be floored at 2.5 percent, the regulatory minimum. For Regions Bank,
the buffer requirement is the 2.5 percent SCB.
See Note 12 "Regulatory Capital Requirements and Restrictions" in Item 8. “Financial Statements and Supplementary
Data” of this Annual Report on Form 10-K for details on minimum capital ratios and those needed to be well capitalized.
Regions is also subject to rules that provide for simplified capital requirements relating to the threshold deductions for
mortgage servicing assets, deferred tax assets arising from temporary differences that a banking organization could not realize
through net operating loss carry backs and investments in the capital of unconsolidated financial institutions, as well as the
inclusion of minority interests in regulatory capital.
As a Category IV banking organization, Regions must also develop and maintain a capital plan, and must submit the
capital plan to the Federal Reserve as part of the CCAR process. The CCAR process is intended to help ensure that BHCs have
robust, forward-looking capital planning processes that account for each company’s unique risks and that permit continued
operations during times of economic and financial stress. In addition, the Federal Reserve’s capital plan rule relating to the
CCAR process provides that a BHC must receive prior approval for any dividend, stock repurchase or other capital distribution
if the BHC is required to resubmit its capital plan, subject to an exception for distributions on newly issued capital instruments.
Among other circumstances, a BHC may be required to resubmit its capital plan in connection with certain acquisitions or
dispositions.
In 2020, the U.S. federal banking agencies published a final rule to delay the estimated impact on regulatory capital
stemming from the implementation of CECL. The final rule provides banks the option to delay for two years an estimate of
CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a
three-year transition period (five-year transition option). Regions adopted the capital transition relief over the permissible five-
year period.
In July 2023, the U.S. banking regulators issued a proposal to revise the risk-based capital standards applicable to
Regions, which generally aligns with the global Basel Accord. The proposal would introduce a new measure of risk-weighted
assets, which would reflect the proposed new standardized approaches for credit risk, operational risk and credit valuation
adjustment risk, as well as a proposed new measure for market risk that would be based on both internal models and
standardized supervisory models of market risk. For Category III and IV institutions, this includes removing the AOCI opt-out
in calculating regulatory capital. The proposed effective date is July 1, 2025, subject to a three-year transition period ending
July 1, 2028, over which the expanded total risk-weighted assets would be phased in. The Company will continue to evaluate
this proposal, as well as any potential future changes to the proposal, and the potential impacts on Regions.
In August 2023, the U.S. banking regulators proposed a rule that would require banking organizations with $100 billion or
more in total assets to comply with long-term debt requirements and clean holding company requirements that currently apply
only to global systemically important banking organizations. This proposal would also impose a long-term debt requirement on
certain categories of IDIs, including IDIs with $100 billion or more in total assets, such as Regions Bank. If adopted, this
proposal would require the Company and Regions Bank to each maintain a minimum outstanding eligible long-term debt
amount of no less than the greatest of (i) 6% of risk-weighted assets, (ii) 2.5% of total leverage exposure and (iii) 3.5% of
average total consolidated assets. Regions Bank would be required to issue the minimum amount of eligible long-term debt to
the Company, and the Company would be required to issue the minimum amount of eligible long-term debt externally. In
addition, if adopted as proposed, the clean holding company requirement would limit or prohibit the Company from entering
into certain transactions that could impede its orderly resolution, including, for example, prohibiting the Company from
entering into transactions that could spread losses to subsidiaries and third parties, as well as limiting the amount of the
Company’s liabilities that are not eligible long-term. This proposal is subject to a comment period. The Company will continue
to evaluate this proposal and the potential impacts, if adopted as proposed.
For more information, see the “Regulatory Requirements” section of Item 7. “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of this Annual Report on Form 10-K.
Liquidity Requirements
Under the Tailoring Rules, Category IV firms with less than $50 billion in wSTWF, including Regions and Regions Bank,
are not subject to a LCR requirement or any NSFR requirement. However, BHCs that are Category IV firms are subject to
minimum monthly liquidity buffers and liquidity stress testing requirements under the Federal Reserve’s enhanced prudential
standards. Furthermore, as a Category IV firm, Regions is obligated, at a minimum, to: (i) calculate collateral positions
monthly; (ii) establish a more limited set of liquidity risk limits; (iii) monitor elements of intraday liquidity risk exposures; and
(iv) report liquidity data on the FR 2052a on a monthly basis.
14
Table of Contents
Resolution Planning
Category IV firms such as Regions are not required to submit 165(d) resolution plans. The FDIC separately requires
insured depositary institutions with $100 billion or more in total assets, such as Regions Bank, to submit to the FDIC periodic
plans for resolution in the event of the bank’s failure. Regions Bank submitted its most recent resolution plan in November
2022.
In August 2023, the FDIC issued a proposal to amend its rules requiring covered IDIs, including Regions Bank, to
periodically submit resolution plans to the FDIC. If adopted as proposed, Regions Bank would be required to submit a full
resolution plan to the FDIC every two years and submit an interim supplement in each year that it is not required to submit a
full resolution plan. In addition, this proposal would increase the content requirements for plan submissions and introduce a
new credibility standard for the FDIC’s evaluation of resolution plans, which would be enforceable against the covered IDIs.
Enforcement Authority
The federal banking agencies have broad authority to issue orders to depository institutions and their holding companies
prohibiting activities that constitute violations of law, rule, regulation or administrative order, or that represent unsafe or
unsound banking practices, as determined by the federal banking agencies. The federal banking agencies also are empowered
to require affirmative actions to correct any violation or practice; issue administrative orders that can be judicially enforced;
direct increases in capital; limit dividends and distributions; restrict growth; assess civil money penalties against institutions or
individuals who violate any laws, regulations, orders or written agreements with the agencies; order termination of certain
activities of holding companies or their non-bank subsidiaries; remove officers and directors; order divestiture of ownership or
control of a non-banking subsidiary by a holding company; or terminate deposit insurance and appoint a conservator or
receiver.
FDIA and Prompt Corrective Action
The FDIA requires the federal banking agencies to take prompt corrective action in respect of depository institutions that
do not meet specified capital requirements. The FDIA establishes five capital categories (“well-capitalized,” “adequately
capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized”), and the federal banking
agencies must take certain mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to
institutions that are undercapitalized, significantly undercapitalized or critically undercapitalized. The severity of these
mandatory and discretionary supervisory actions depends upon the capital category in which the institution is placed. Subject to
a narrow exception, the FDIA requires the banking regulator to appoint a receiver or conservator for an institution that is
critically undercapitalized. As of December 31, 2023, both Regions and Regions Bank were well-capitalized.
An institution that is classified as well-capitalized based on its capital levels may be treated as adequately capitalized, and
an institution that is adequately capitalized or undercapitalized based upon its capital levels may be treated as though it were
undercapitalized or significantly undercapitalized, respectively, if the appropriate federal banking agency, after notice and
opportunity for hearing, determines that an unsafe or unsound condition or an unsafe or unsound practice warrants such
treatment.
An institution that is categorized as undercapitalized, significantly undercapitalized or critically undercapitalized is
required to submit an acceptable capital restoration plan to its appropriate federal banking regulator. Under the FDIA, in order
for the capital restoration plan to be accepted by the appropriate federal banking agency, a BHC must guarantee that a
subsidiary depository institution will comply with its capital restoration plan, subject to certain limitations. The BHC must also
provide appropriate assurances of performance.
The FDIA requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness
relating generally to operations and management, asset quality and executive compensation and permits regulatory action
against a financial institution that does not meet such standards. Regulators also must take into consideration: (i) concentrations
of credit risk; (ii) interest rate risk (when the interest rate sensitivity of an institution’s assets does not match the sensitivity of
its liabilities or its off-balance sheet position); and (iii) risks from non-traditional activities, as well as an institution’s ability to
manage those risks, when determining the adequacy of an institution’s capital. Regulators make this evaluation as a part of their
regular examination of the institution’s safety and soundness. Additionally, regulators may choose to examine other factors in
order to evaluate the safety and soundness of financial institutions.
Safety and Soundness
The federal banking agencies have adopted a set of guidelines prescribing safety and soundness standards relating to
internal controls and information systems, informational security, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth and compensation, fees and benefits. The guidelines prohibit excessive
compensation as an unsafe and unsound practice, and describe compensation as excessive when the amounts paid are
unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
Properly managing risks is critical to the conduct of safe and sound banking activities and has become even more
important as new technologies, product innovation and the size and speed of financial transactions have changed the nature of
15
Table of Contents
banking markets. The agencies have identified a spectrum of risks facing banking institutions including, but not limited to,
credit, market, liquidity, operational, legal, compliance and reputational risk. Some of the regulatory pronouncements have
focused on operational risk, which arises from the potential that inadequate information systems, operational problems,
breaches in internal controls, fraud or unforeseen catastrophes will result in unexpected losses. New products and services,
third-party risk management and cybersecurity are critical sources of operational risk that financial institutions are expected to
address in the current environment. Regions Bank is expected to have active board and senior management oversight; adequate
policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and
comprehensive and effective internal controls.
Payment of Dividends
Regions is a legal entity separate and distinct from its banking and other subsidiaries. The principal source of cash flow to
us, including cash flow to pay dividends to our shareholders and principal and interest on any of our outstanding debt, is
dividends from Regions Bank. There are statutory and regulatory limitations on the payment of dividends by Regions Bank to
us, as well as by us to our shareholders.
If, in the opinion of a federal bank regulatory agency, an institution under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice, such agency may require, after notice and hearing, that such institution cease and
desist from such practice. The federal bank regulatory agencies have indicated that paying dividends that deplete an institution’s
capital base to an inadequate level would be an unsafe and unsound banking practice. Under the FDIA, an insured institution
may not pay a dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. See “Safety
and Soundness Standards” above. Moreover, the Federal Reserve and the FDIC have issued policy statements stating that BHCs
and insured banks should generally pay dividends only out of current operating earnings.
Payment of Dividends by Regions Bank. Under the Federal Reserve’s Regulation H, Regions Bank may not, without
approval of the Federal Reserve, declare or pay a dividend to Regions if the total of all dividends declared in a calendar year
exceeds the total of (a) Regions Bank’s net income for that year and (b) its retained net income for the preceding two calendar
years, less any required transfers to additional paid-in capital or to a fund for the retirement of preferred stock.
Under Alabama law, Regions Bank may not pay a dividend in excess of 90% of its net earnings unless its surplus is equal
to at least 20% of capital. Regions Bank is also required by Alabama law to seek the approval of the Alabama Superintendent of
Banking prior to the payment of dividends if the total of all dividends declared by Regions Bank in any calendar year will
exceed the total of (a) Regions Bank’s net earnings for that year, plus (b) its retained net earnings for the preceding two years,
less any required transfers to surplus. The statute defines net earnings as the remainder of all earnings from current operations
plus actual recoveries on loans and investments and other assets, after deducting from the total thereof all current operating
expenses, actual losses, accrued dividends on preferred stock, if any, and all federal, state and local taxes. Regions Bank cannot,
without approval from the Federal Reserve and the Alabama Superintendent of Banking, declare or pay a dividend to Regions
unless Regions Bank is able to satisfy the criteria discussed above.
Payment of Dividends by Regions. Payment of dividends to our shareholders is subject to the oversight of the Federal
Reserve. In particular, the dividend policies and share repurchases of a large BHC, such as Regions, are reviewed by the
Federal Reserve based on capital plans submitted as part of the CCAR process and may be constrained in certain scenarios. See
“Capital Requirements” above.
Support of Subsidiary Banks
Under the Dodd-Frank Act, Regions is expected to act as a source of financial strength to, and to commit resources to
support, its subsidiary bank. This support may be required at times when Regions may not be inclined to provide it.
Limits on Exposure to One Borrower and Exposure to Insiders
Alabama banking law imposes limits on the amount of credit a bank can extend to any one person (or group of related
persons). For Regions Bank, this limit includes credit exposures arising from loan and equivalent exposure and investment and
trading exposure.
Applicable banking laws and regulations also place restrictions on loans by FDIC-insured banks and their affiliates to
their directors, executive officers and principal shareholders.
Lending Standards and Guidance
The federal banking agencies have adopted uniform regulations prescribing standards for extensions of credit that are
secured by liens or interests in real estate or made for the purpose of financing permanent improvements to real estate. Under
these regulations, all IDIs, such as Regions Bank, must adopt and maintain written policies establishing appropriate limits and
standards for extensions of credit that are secured by liens or interests in real estate or are made for the purpose of financing
permanent improvements to real estate. These policies must establish loan portfolio diversification standards, prudent
underwriting standards (including loan-to-value limits) that are clear and measurable, loan administration procedures and
16
Table of Contents
documentation, approval and reporting requirements. The real estate lending policies must reflect consideration of the federal
bank regulators’ Interagency Guidelines for Real Estate Lending Policies.
De Novo Branching and De Novo Banks
With the approval of applicable regulators, state banks may establish de novo branches in states other than their home
state as if such state was the bank’s home state.
Anti-Tying Provisions
Regions Bank is prohibited from conditioning the availability of any product or service, or varying the price for any
product or service, on the requirement that the customer obtain some additional product or service from the bank or any of its
affiliates, other than loans, deposits and trust services.
Transactions with Affiliates
Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve’s Regulation W restrict transactions between a
bank and its affiliates, including a parent BHC. Regions Bank is subject to these restrictions, which include quantitative and
qualitative limits on the amounts and types of transactions that may take place, including extensions of credit to affiliates,
investments in the stock or securities of affiliates, purchases of assets from affiliates and certain other transactions with
affiliates. These restrictions also require that credit transactions with affiliates be collateralized and that transactions with
affiliates be on market terms or better for the bank. Generally, a bank’s covered transactions with any affiliate are limited to
10% of the bank’s capital stock and surplus and covered transactions with all affiliates are limited to 20% of the bank’s capital
stock and surplus.
Deposit Insurance
Regions Bank’s deposits are insured by the FDIC up to the applicable limits, which is currently $250,000 per account
ownership type. The FDIC imposes a risk-based deposit premium assessment system that determines assessment rates for an
IDI based on an assessment rate calculator, which is based on a number of elements to measure the risk each IDI poses to the
DIF. The assessment rate is applied to total average assets less tangible equity, as defined under the Dodd-Frank Act. The
assessment rate schedule can change from time to time at the discretion of the FDIC, subject to certain limits. Under the current
system, premiums are assessed quarterly.
The FDIC, as required under the FDIA, established a plan in September 2020 to restore the DIF reserve ratio to meet or
exceed the statutory minimum of 1.35 percent within eight years. This plan did not include an increase in the deposit insurance
assessment rate. Based on the FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of
not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance
assessment rates.
During 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules by 2 basis
points, beginning with the first quarterly assessment period of 2023. This rule, combined with other factors influenced by
Regions’ financial performance, increased regulatory premiums in 2023. The FDIC also concurrently maintained the
Designated Reserve Ratio for the DIF at 2 percent.
In November 2023, the FDIC issued a final rule to implement a special assessment to recoup losses to the DIF associated
with bank failures in the first half of 2023. Under the rule, the assessment base for the special assessment is equal to an IDI’s
estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion of uninsured deposits.
The special assessment for Regions is estimated at approximately $119 million, was recorded in the fourth quarter of 2023 and
will be paid in eight quarterly installments beginning in the first quarter of 2024. For more details on the special assessment, see
the “Non-Interest Expense” section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Annual Report on Form 10-K.
FDIC Recordkeeping Requirements
As a part of the FDIC Part 370 recordkeeping requirements, Regions is subject to facilitate rapid and accurate payment of
FDIC-insured deposits to customers when large IDIs fail. FDIC rules require IDIs with two million or more deposit accounts to
maintain complete and accurate data on each depositor's ownership interest by right and capacity and to develop the capability
to calculate the insured and uninsured amounts for each deposit owner by ownership right and capacity.
Acquisitions
The BHC Act requires every BHC to obtain the prior approval of the Federal Reserve before: (i) it may acquire direct or
indirect ownership or control of any voting shares of any bank or savings and loan association, if after such acquisition, the
BHC will directly or indirectly own or control 5% or more of the voting shares of the institution; (ii) it or any of its subsidiaries,
other than a bank, may acquire all or substantially all of the assets of any bank or savings and loan association; or (iii) it may
merge or consolidate with any other BHC. FHCs must obtain prior approval from the Federal Reserve before acquiring certain
17
Table of Contents
non-bank financial companies with assets exceeding $10 billion. FHCs seeking approval to complete an acquisition must be
well-capitalized and well-managed.
The BHC Act further provides that the Federal Reserve may not approve any transaction that would result in a monopoly
or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the business of banking in
any section of the U.S., or the effect of which may be substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of trade, unless the anticompetitive effects of the
proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be
served. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the
BHCs and banks impacted and the convenience and needs of the community to be served. Consideration of financial resources
generally focuses on capital adequacy, and the consideration of convenience and needs of the community to be served includes
the parties’ performance under the CRA. The Federal Reserve must also take into account the institutions’ effectiveness in
combating money laundering. In addition, pursuant to the Dodd-Frank Act, the BHC Act was amended to require the Federal
Reserve to, when evaluating a proposed transaction, consider the extent to which the transaction would result in greater or more
concentrated risks to the stability of the U.S. banking or financial system.
In July 2021, the Biden Administration issued an executive order on competition, which included provisions relating to
bank mergers. These provisions “encourage” the Department of Justice and the federal banking regulators to update guidelines
on banking mergers and to provide more scrutiny of bank mergers.
Depositor Preference
Under federal law, claims of depositors and certain claims for both administrative expenses and employee compensation
against an insured depository institution would be afforded a priority over other general unsecured claims against such an
institution in the “liquidation or other resolution” of such an institution by any receiver.
Volcker Rule
The Dodd-Frank Act prohibits banks and their affiliates from engaging in proprietary trading and investing in, sponsoring
and having certain relationships with private funds such as hedge funds or private equity funds that would be considered an
investment company for purposes of the Volcker Rule. The compliance requirements under regulations implementing the
Volcker Rule are tailored based on the size and scope of trading activities. Because TAL are maintained under $1 billion,
Regions is categorized with "limited" TAL and benefits from a presumption of compliance with the Volcker Rule. Regions has
put in place the compliance programs required by the Volcker Rule and has either divested or received extensions for any
holdings in illiquid funds.
Consumer Protection Laws
We are subject to a number of federal and state consumer protection laws, including laws designed to protect customers
and promote lending to various sectors of the economy and population. These laws include, but are not limited to, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real
Estate Settlement Procedures Act, the Truth in Savings Act, the Electronic Funds Transfer Act, the Consumer Financial
Protection Act and their respective state law counterparts.
The CFPB has broad rulemaking, supervisory and enforcement powers under various federal consumer financial
protection laws, including the laws referenced above, other fair lending laws and certain other statutes. The CFPB also has
examination and primary enforcement authority with respect to consumer financial laws for depository institutions with $10
billion or more in assets, including the authority to prevent unfair, deceptive or abusive practices in connection with the offering
of consumer financial products. The CFPB may issue regulations that impact products and services offered by Regions or
Regions Bank. The regulations could reduce the fees that Regions receives, alter the way Regions provides its products and
services or expose Regions to greater risk of private litigation or regulatory enforcement action.
Privacy and Cybersecurity
We are, or may in the future become, subject to a variety of complex and evolving laws, regulations, rules and standards
at the federal, state and local level regarding privacy and cybersecurity. Privacy and cybersecurity are currently areas of
considerable legislative and regulatory attention, with new or modified laws, regulations, rules and standards being frequently
adopted and potentially subject to divergent interpretation or application in a manner that may create inconsistent or conflicting
requirements for businesses. Privacy and cybersecurity laws and regulations often impose strict requirements regarding the
collection, storage, handling, use, disclosure, transfer, protection and other processing of personal information, which may have
adverse consequences on our business, including incurring significant compliance costs, requiring changes to our business or
operations and imposing severe penalties for non-compliance.
For example, at the federal level, the federal banking regulators have adopted certain rules, including pursuant to the
GLBA, that limit the ability of banks and other financial institutions to disclose non-public personal information about
consumers to third parties. These limitations require disclosure of privacy policies to consumers and, in some circumstances,
allow consumers to prevent disclosure of certain non-public personal information to non-affiliated third parties. In addition,
18
Table of Contents
consumers may also prevent disclosure among affiliated companies of certain non-public personal information that is
assembled or used to determine eligibility for a product or service, such as that shown on consumer credit reports and
application information. Consumers also have the option to direct banks and other financial institutions not to share certain
information about transactions and experiences with affiliated companies for the purpose of marketing products or services.
Federal law also requires financial institutions to implement a written information security program that includes
administrative, technical, and physical safeguards appropriate to the size and complexity of the institution and the nature and
scope of its activities. The program should be designed to ensure the security and confidentiality of customer information,
protect against unanticipated threats or hazards to the security or integrity of such information, and protect against unauthorized
access to or use of such information that could result in substantial harm or inconvenience to any customer. Financial
institutions must also conduct ongoing oversight of third-party service providers to ensure they are maintaining appropriate
security controls. Financial institutions must report on the institution’s cybersecurity program annually to the board of directors
or a committee of the board of directors. The federal banking regulators regularly issue guidance regarding cybersecurity
intended to enhance cyber risk management standards among financial institutions. A financial institution is expected to
establish multiple lines of defense against security threats and to ensure their risk management processes appropriately address
the risk posed by potential threats to the institution. A financial institution’s management is expected to maintain sufficient
processes to effectively identify, prevent and detect a cyber-attack. A financial institution is also expected to develop
appropriate processes to enable recovery of data and business operations if a critical service provider of the institution falls
victim to cyber-attack. The Regions Information Security Program is designed to reflect the requirements of these regulatory
requirements and guidance.
In addition, in the spring of 2022, federal banking regulators have imposed a new cybersecurity-related notification rule
that requires banking organizations, including Regions and Regions Bank to notify their primary federal regulator as soon as
possible and within 36 hours of incidents that, among other things, have materially disrupted or degraded, or are reasonably
likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its customer
base, jeopardize the viability of key operations of the banking organization or impact the stability of the financial sector. The
rule also imposes requirements on bank service providers to notify their affected banking organization customers of certain
computer-security incidents. Further, in 2023, the SEC issued regulations requiring public companies to disclose certain
information regarding material cybersecurity incidents impacting those companies, as well as descriptions about how they
manage material cybersecurity risks.
State regulators have also been increasingly active in implementing privacy and cybersecurity laws, regulations, rules and
standards. Several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs
and have provided detailed requirements with respect to these programs, including data encryption requirements. Many states
have also implemented or are considering implementing, comprehensive data privacy and cybersecurity laws and regulations,
such as the CCPA. In addition, laws in all 50 U.S. states generally require businesses to provide notice under certain
circumstances to individuals whose personal information has been disclosed as a result of a data breach. We expect this trend of
state-level activity to persist and we are continually monitoring developments in the states in which our customers are located.
Moreover, the United States Congress has considered, and is currently considering, various proposals for more comprehensive
data privacy and cybersecurity legislation, to which Regions and/or Regions Bank may be subject to if passed.
In October 2023, the CFPB proposed a rule to implement Section 1033 of the Dodd-Frank Act, sometimes referred to as
the Dodd-Frank Act's "open banking" provision, which would require certain entities, including Regions and Regions Bank, to
comply with an established framework to govern consumer access to electronic financial data. The Company continues to
monitor this proposal and evaluate the potential impacts, if adopted as proposed or otherwise, on Regions and Regions Bank.
Community Reinvestment Act
The CRA requires Regions Bank’s primary federal bank regulatory agency, the Federal Reserve, to assess the bank’s
record in meeting the credit needs of the communities served by the bank, including low- and moderate-income neighborhoods
and persons. Institutions are assigned one of four ratings: “Outstanding,” “Satisfactory,” “Needs to Improve” or “Substantial
Noncompliance.” This assessment is considered for any bank that applies to merge or consolidate with or acquire the assets or
assume the liabilities of an IDI, or to open or relocate a branch office. The CRA record of each subsidiary bank of a FHC also is
assessed by the Federal Reserve in connection with reviewing any proposed acquisition or merger application. Regions Bank’s
most recent CRA rating from the Federal Reserve was “Satisfactory.”
In October 2023, the Federal Reserve, FDIC and OCC issued a final rule to amend their regulations implementing the
CRA. The rule materially revises the current CRA framework, including the assessments areas in which a bank is evaluated to
include activities associated with online and mobile banking, the tests used to evaluate the bank in its assessment areas, new
methods of calculating credit for lending, investment and service activities and additional data collection and reporting
requirements. The rule is expected to result in a significant increase in the thresholds for large banks to receive “Outstanding”
ratings in the future. The rule is expected to take effect on April 1, 2024, with most of the provisions becoming applicable on
January 1, 2026. Reporting of the collected data will not be required until 2027.
19
Table of Contents
Compensation Practices
Our compensation practices are subject to oversight by the Federal Reserve. The federal banking regulators have provided
guidance designed to ensure that incentive compensation arrangements at banking organizations take into account risk and are
consistent with safe and sound practices. The guidance sets forth the following three key principles with respect to incentive
compensation arrangements: (i) the arrangements should provide employees with incentives that appropriately balance risk and
financial results in a manner that does not encourage employees to expose their organizations to imprudent risk; (ii) the
arrangements should be compatible with effective controls and risk management; and (iii) the arrangements should be
supported by strong corporate governance. The guidance provides that supervisory findings with respect to incentive
compensation will be incorporated, as appropriate, into the organization’s supervisory ratings, which can affect its ability to
make acquisitions or perform other actions. The guidance also provides that enforcement actions may be taken against a
banking organization if its incentive compensation arrangements or related risk management, control or governance processes
pose a risk to the organization’s safety and soundness.
Anti-Money Laundering
A continued focus of governmental policy relating to financial institutions in recent years has been combating money
laundering and terrorist financing. Regions Bank is subject to the reporting and recordkeeping requirements of the BSA. The
BSA requires financial institutions to, among other things, establish and maintain procedures reasonably designed to assure and
monitor compliance with BSA regulatory requirements. The USA PATRIOT Act, which amended the BSA, broadened the
application of anti-money laundering regulations to apply to additional types of financial institutions such as broker-dealers and
insurance companies, and strengthened the ability of the U.S. Government to help prevent, detect and prosecute international
money laundering and the financing of terrorism. The principal provisions of Title III of the USA PATRIOT Act require that
regulated financial institutions, including state member banks: (i) establish an anti-money laundering program that includes
internal policies, procedures and internal controls, the designation of a chief compliance officer, as well as training and audit
components; (ii) comply with regulations regarding the verification of the identity of any person seeking to open an account;
(iii) take additional required precautions with non-U.S. owned accounts; and (iv) perform certain due diligence on private bank
accounts and due diligence on and verification and certification of money laundering risk for their foreign correspondent
banking relationships. The USA PATRIOT Act also requires federal banking regulators to evaluate the effectiveness of an
applicant in combating money laundering in determining whether to approve a proposed bank acquisition. A financial
institution's failure to comply with the BSA could have serious legal and reputational consequences for the institution. Regions
Bank has continued to augment its anti-money laundering compliance program to comply with the BSA and its implementing
regulations and will continue to revise and update its anti-money laundering policies, procedures and controls to reflect future
regulatory changes. The AMLA, which amends the BSA, was enacted in January 2021. Among other things, the AMLA
codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of
standards by the U.S. Department of the Treasury for evaluating technology and internal processes for BSA compliance; and
expands enforcement- and investigation-related authority, including a significant expansion in the available sanctions for certain
BSA violations. Many of the statutory provisions in the AMLA will require additional rulemaking, reports and other measures,
and the impact of the AMLA will depend on, among other things, implementation guidance.
As required by AMLA, in June 2021, FinCEN, which promulgates the implementing regulations of the USA PATRIOT
Act, BSA, and other anti-money laundering legislation, issued the national anti-money laundering and countering the financing
of terrorism priorities. The priorities include: corruption, cybercrime, terrorist financing, fraud, transnational crime, drug
trafficking, human trafficking and proliferation financing. Banks are not required to implement any immediate changes related
to the national priorities to their anti-money laundering compliance programs until FinCEN issues the implementing regulations
related to the national priorities. Bank regulators continue to examine financial institutions for anti-money laundering
compliance and Regions Bank will continue to monitor and augment, where necessary, our anti-money laundering compliance
framework, including the anti-money laundering program, policies and procedures of Regions Bank to ensure that it is
commensurate with our risk profile.
Office of Foreign Assets Control Regulation
The U.S. has imposed economic sanctions that affect transactions with designated foreign countries, nationals,
organizations, regimes and other entities. In the United States, economic sanctions are administered by OFAC. OFAC publishes
lists of specially designated targets, issues regulations and implements executive orders that restrict dealings with certain
countries and territories. Territorial sanctions, which target certain countries, regions and territories, take many different forms.
Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a
sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and
prohibitions on U.S. persons engaging in financial transactions relating to, making investments in, or providing investment-
related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially
designated nationals of the sanctioned country have an interest, by prohibiting transfers of property within U.S. jurisdiction
(including property in the possession or control of U.S. persons). OFAC also administers sanctions lists that have various
associated prohibitions, including the Specially Designated Nationals and Blocked Persons List. U.S. persons are prohibited
20
Table of Contents
from dealing with Specially Designated Nationals regardless of location, and all assets of Specially Designated Nationals and
Blocked Persons are blocked. Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or
transferred in any manner without a general or specific license from OFAC. Failure to comply with these sanctions could have
serious legal and reputational consequences.
Regulation of Broker Dealers and Investment Advisers
Our subsidiaries, Regions Securities LLC and BlackArch Securities LLC, are registered broker-dealers with the SEC and
FINRA, and Regions Investment Management, Inc. and Highland Associates, Inc. are registered investment advisers with the
SEC. These subsidiaries are, as a result, subject to regulation and examination by the SEC, FINRA and other self-regulatory
organizations. These regulations cover a broad range of issues, including capital requirements; sales and trading practices; use
of client funds and securities; the conduct of directors, officers and employees; record-keeping and recording; supervisory
procedures to prevent improper trading on material non-public information; qualification and licensing of sales personnel; and
limitations on the extension of credit in securities transactions. In addition to federal registration, state securities commissions
require the registration of certain broker-dealers and investment advisers.
Competition
All aspects of our business are highly competitive. Our subsidiaries compete with other financial institutions located in the
states in which they operate and other adjoining states, as well as large banks in major financial centers and other financial
intermediaries, such as savings and loan associations, credit unions, fintechs, finance companies, mutual funds, insurance
companies, brokerage and investment banking firms, mortgage companies and financial service operations of major commercial
and retail corporations. We expect competition to remain intense among financial services companies. Our success will depend,
in part, on market acceptance and regulatory approval of new products and services. Further, despite delays in obtaining
regulatory approvals, we expect consolidation in the financial services industry to continue, which may produce larger, better-
capitalized and more geographically diverse companies that are capable of offering a wide array of financial products and
services at competitive prices. In addition, technology has lowered barriers to entry and made it possible for non-banks to offer
traditional bank or bank-like products and services and therefore compete with financial institutions like us in providing
electronic, internet-based and mobile phone-based financial solutions. In particular, the activity of fintechs has grown
significantly over recent years and is expected to continue to grow. A number of fintechs have applied for, and in some cases
been granted, bank or industrial loan charters, while other fintechs have partnered with existing banks to allow them to offer
deposit products to their customers. In addition to fintechs, traditional technology companies have begun to make efforts toward
providing financial services directly to their customers. Regions provides an array of digital products and services to our
customers and we expect a bank’s digital offerings to be a key competitive differentiator. The continued move toward digital
banking and financial services, combined with customer expectations regarding digital offerings, will require us to invest
greater resources in technological improvements. Customers for banking services and other financial services offered by our
subsidiaries are generally influenced by convenience, quality of service, price of service, personal contacts, the quality of the
technology that supports the customer experience and availability of products. Although our position varies in different
markets, we believe that our affiliates effectively compete with other financial services companies in their relevant market
areas.
Human Capital
One pillar of our strategic priorities at Regions is the commitment to “Build the Best Team”. We believe one of the
biggest differentiators of our performance is the people we employ. The need to attract, retain and develop the right talent to
accomplish our strategic plan is central to our success. As of December 31, 2023, Regions and its subsidiaries had 20,101 full-
time equivalent employees supporting our consumer and commercial banking, wealth management and mortgage product and
services primarily across the Southeast and Midwest.
Our associate team reflects the diversity of the communities we serve. As of December 31, 2023, approximately 62
percent of our associates were women and approximately 38 percent self-identified as a part of a minority demographic.
Because diversity, equity and inclusion are fundamental to our human capital strategy, we believe it is important for our
stakeholders to understand our progress, and therefore, we provided additional transparency into our workforce demographics
by disclosing 2022 EEO-1 results on our 2022 Workforce Demographics Report available in our online ESG Resource Center.
A strong and impactful human capital program begins at the top. Our Board oversees our corporate strategy and sets the
tone for our culture, values and high ethical standards, and through its Committees, holds management accountable for results.
The primary committee responsible for the oversight of human capital is the CHR Committee. The CHR Committee
strategically meets with subject matter experts regarding talent management and acquisition, succession planning, associate
conduct, associate learning and development, diversity, equity, and inclusion, and associate retention. Additionally, on a
quarterly basis the CHR Committee reviews the HCM Dashboard which includes a mixture of trending and point-in-time
metrics designed to provide information and analysis of workforce demographics; talent acquisition; workforce stability
(retention, turnover, etc.); and associate conduct and engagement.
21
Table of Contents
In order to build the best team, it is necessary for us to fill talent needs with qualified, diverse and engaged associates. Key
to our success is our internal talent management program which strives to optimally deploy existing talent across Regions by
focusing on where our associates excel and helping them find the best roles that maximize their talents, abilities and interests.
For those roles which we fill externally, we continually build talent pipelines with an eye toward not only current needs, but
also future demands of our business. Regions uses innovative tools and structured processes to achieve our goals including
applications and resources designed to reach larger and more diverse audiences. Our recruiting technology is agile, user friendly
and allows us to offer to candidates a robust understanding of our needs, requirements and a view of our culture to support the
building of a diverse, engaged workforce.
Diversity, equity and inclusion are fundamental to our corporate strategy. Our commitment to DEI starts at the top of our
organization, with oversight of our initiatives provided by the CHR Committee. Launched in late 2022, the DEI Executive
Council continues to provide input and guidance over the DEI strategic priorities, build traction and support of DEI programs
and help garner leader support. The council is comprised of five business leaders and four leaders of strategic enabling
functions. It is chaired by Regions’ CEO and co-chaired by the Head of DEI. Additionally, Regions boasts 20 unique DEI
networks across the company, strategically placed in various markets. These ‘all-inclusive’ networks ensure that our DEI
priorities are cascaded deeper into the organization giving associates the opportunity to voluntarily engage in the work. We
monitor our DEI progress through external benchmarking and internal associate engagement surveys and continually implement
programs and practices to elevate our progress and commitment.
We also consider it critical to our success to invest in the professional development of all of our associates. We emphasize
our commitment to professional development through opportunities such as technical, skills-based, management, and leadership
training programs; formal talent and performance management processes; and sustainable career paths. We also aim to prepare
our workforce for a rapidly changing environment and understand that reskilling and upskilling are crucial to staying
competitive, meeting the needs of the modern workforce, and retaining associates. We have established a customized learning
experience platform that provides the tools to measure, build, and communicate skills inside the Company. This tool provides
the ability to inventory the skills our associates have, allowing us to target our development efforts on specific areas where
elevated skills are needed. Regions also offers a leader and manager development program created to help people managers
understand how to evaluate performance by leveraging the power of a strengths-based and engagement-focused workforce and
culture. Our partnership with Guild Education Services, an education, skilling and mobility solution provider has allowed us to
transition our tuition reimbursement program for associates to a best-in-class tuition assistance program that targets adult
learners and provides coaching support and access to a curated catalog from Guild’s Learning Marketplace. Through the Guild
program, associates can now pursue a degree or other educational opportunities tuition free while building their career at the
same time. By removing barriers and expanding access to education, we are continuing our commitment to Build the Best
Team.
Understanding that automation, cognitive technologies and the open talent economy are reshaping the future of work,
Regions makes available to technology associates courses on-demand that offer intensive learning in application development,
information technology operations, security and technology architecture. This solution also offers professional development for
data and business professionals. In addition, almost all associates may access a full suite of courses regardless of whether the
application is needed in their current role.
We aim to offer competitive and fair compensation to our associates. Base salaries are established considering market
competitive rates for specific roles; additionally, on an individual basis base salaries reflect the experience and performance
levels of our associates. We assess the competitiveness of our ranges on an annual basis by benchmarking our rates against
those paid by our peers. In addition to base salaries, we promote a robust pay-for-performance philosophy and incentivize a
large majority of our associate population with incentive compensation designed to drive strategies, behaviors and business
goals within our unique lines of business. Long-term stock-based incentive compensation is also key to the attraction and
retention of key talent and is offered thoughtfully to our executive and leadership ranks. We believe tying the interests of our
leaders to those of our shareholders creates a strong link to company performance.
As the success of our business is fundamentally connected to the well-being of our associates, we aim to offer a
competitive and comprehensive benefits program to support associates throughout all life stages. Our benefits include
comprehensive health, life, and disability coverage that are funded in whole or in part by the Company as well as a 401(k) plan
with a dollar-for-dollar company match on employee contributions up to 5 percent of pay and a base contribution of 2 percent
of pay for all associates who do not participate in our grandfathered pension program. We also offer our associates programs
and tools to support their total well-being including a range of flexible work arrangements, generous time-off policies, physical,
mental and financial wellness benefits as well as other programs and practices that support associates and their families
throughout the full spectrum of their careers and lives.
Available Information
We maintain a website at ir.regions.com. We make available on our website, free of charge, our annual reports on Form
10-K, quarterly reports on Form 10-Q, Form DEF 14A, and current reports on Form 8-K, including exhibits, and amendments
to those reports that are filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
22
Table of Contents
1934. These documents are made available on our website as soon as reasonably practicable after they are electronically filed
with or furnished to the SEC. The SEC also maintains an internet site (www.sec.gov) that contains reports, proxy and
information statements and other information regarding issuers that file electronically with the SEC, including Regions. Also
available on our website are our (i) Corporate Governance Principles, (ii) Code of Business Conduct and Ethics, (iii) Code of
Ethics for Senior Financial Officers, (iv) Fair Disclosure Policy, (v) the charters of our Audit Committee, Compensation and
Human Resources Committee, Nominating and Corporate Governance Committee, Risk Committee, Technology Committee,
and Executive Committee, and (vi) a number of ESG reports and documents. Information included on our website is not
incorporated into, or otherwise made a part of, this Annual Report on Form 10-K.
Item 1A. Risk Factors
An investment in the Company involves risks, some of which, including market, credit, technology, strategic, operational,
reputational, legal, regulatory and compliance, liquidity, talent management, estimate and assumption and other external risks,
could be substantial and is inherent in our business. These risks also include the possibility that the value of the investment
could decrease considerably, and dividends or other distributions concerning the investment could be reduced or eliminated.
Discussed below are risk factors that could adversely affect our financial results and condition, as well as the value of, and
return on investment in the Company.
Risk Factor Summary
Market Risks
•
Our businesses have been, and may continue to be, adversely affected by conditions in the financial markets and economic
conditions generally.
Fluctuations in market interest rates, including the level and shape of the yield curve, may adversely affect our
performance.
Transitions away from and the replacement of benchmark rates could adversely impact our business, financial condition
and results of operations.
•
•
Credit Risks
•
If we experience greater credit losses in our loan portfolios than anticipated, our earnings may be materially adversely
affected.
•
Any future reductions in our credit ratings may increase our funding costs and place limitations on business activities.
Changes in the soundness of other financial institutions could adversely affect us.
•
• We may suffer losses if the value of collateral declines in stressed market conditions.
Liquidity Risks
•
•
• We rely on the mortgage secondary market to manage various risks.
Ineffective liquidity management could adversely affect our financial results and condition.
Loss of deposits or a change in deposit mix could increase our funding costs.
Technology Risks
• We are at risk of a variety of systems failures or errors and cybersecurity incidents that could adversely affect customer
experience and our business and financial performance.
• We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding privacy
and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability.
• We will continually encounter technological change and must effectively anticipate, develop and implement new
technology.
Strategic Risks
•
•
Industry competition may adversely affect our degree of success.
Our operations are concentrated primarily in the South, Midwest and Texas, and adverse changes in the economic
conditions in this region can adversely affect our financial results and condition.
• Weakness in the residential real estate markets could adversely affect our performance.
• Weakness in the commercial real estate markets could adversely affect our performance.
•
Risks associated with home equity products where we are in a second lien position could materially adversely affect our
performance.
• Weakness in commodity businesses could adversely affect our performance.
•
An outbreak or escalation of hostilities between countries or within a country or region could have a material adverse effect
on the U.S. economy and on our businesses.
Operational Risks
• We are subject to a variety of operational risks, including the risk of fraud or theft by internal or external parties, which
may adversely affect our business and results of operations.
• We rely on other companies to provide key components of our business infrastructure.
• We depend on the accuracy and completeness of information about clients and counterparties.
23
Table of Contents
• We are exposed to risk of environmental liability when we take title to property.
• We can be negatively affected if we fail to identify and address operational risks associated with the introduction of or
•
changes to products, services and delivery platforms.
Enhanced regulatory and other standards for the oversight of vendors and other service providers can result in higher costs
and other potential exposures.
Reputational Risks
• We are subject to environmental, social and governance risks that could adversely affect our business, reputation and the
trading price of our common stock.
Damage to our reputation could significantly harm our businesses.
•
Legal, Regulatory and Compliance Risks
• We are, and may in the future be, subject to litigation, investigations and governmental proceedings that may result in
liabilities adversely affecting our financial condition, business or results of operations or in reputational harm.
• We are subject to extensive governmental regulation, which could have an adverse impact on our operations.
• We are subject to a variety of risks in connection with any sale of loans we may conduct.
• We may be subject to more stringent capital and liquidity requirements.
•
Rulemaking changes and regulatory initiatives implemented by the CFPB may result in higher regulatory and compliance
costs that may adversely affect our results of operations.
• We may not be able to complete future acquisitions, may not be successful in realizing the benefits of any future
•
•
acquisitions that are completed or may choose not to pursue acquisition opportunities we might find beneficial.
Increases in FDIC insurance assessments may adversely affect our earnings.
Unfavorable results from ongoing stress analyses may adversely affect our ability to retain customers or compete for new
business opportunities.
• We are a holding company and depend on our subsidiaries for dividends, distributions and other payments.
• We may not pay dividends on shares of our capital stock.
•
•
Anti-takeover and banking laws and certain agreements and charter provisions may adversely affect share value.
Our amended and restated bylaws designate (i) the Court of Chancery of the State of Delaware as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our shareholders and (ii) the federal district
courts of the United States as the sole and exclusive forum for any action asserting a cause of action arising under the
Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with our
company or our company’s directors, officers or other employees.
• We face substantial legal and operational risks in safeguarding personal information.
•
Differences in regulation can affect our ability to compete effectively.
Talent Management Risks
•
•
Our businesses may be adversely affected if we are unable to hire and retain qualified employees.
Our operations rely on its ability, and the ability of key external parties, to maintain appropriately-staffed workforces, and
on the competence, trustworthiness, health and safety of employees.
Estimates and Assumptions Risks
•
Our reported financial results depend on management’s selection of accounting methods and certain assumptions and
estimates.
If the models that we use in our business perform poorly or provide inadequate information, our business or results of
operations may be adversely affected.
Changes in our accounting policies or in accounting standards could materially affect how we report our financial results
and condition.
The value of our goodwill and other intangible assets may decline in the future.
•
•
•
Other External Risks
•
Our business and financial performance could be adversely affected by a U.S. government debt default or the threat of such
a default.
• Weather-related events, pandemics and other natural or man-made disasters could cause a disruption in our operations or
lead to other consequences that could adversely impact our financial results and condition. These impacts could be
intensified by climate change. Heightening focus on climate change may also carry transition risks that could negatively
impact our results of operations and financial condition.
Market Risks
Our businesses have been, and may continue to be, adversely affected by conditions in the financial markets and
economic conditions generally.
We provide traditional commercial, retail and mortgage banking services, as well as other financial services including
asset management, wealth management, securities brokerage, merger-and-acquisition advisory services and other specialty
24
Table of Contents
financing. All of our businesses are materially affected by conditions in the financial markets and economic conditions
generally or specifically in the South, Midwest and Texas, the principal markets in which we conduct business. A worsening of
business and economic conditions generally or specifically in the principal markets in which we conduct business could have
adverse effects on our business, including the following:
•
•
•
•
•
•
•
A decrease in the demand for, or the availability of, loans and other products and services offered by us, including as
a result of changing interest rate conditions;
A decrease in the value of our loans held for sale or other assets secured by consumer or commercial real estate;
An impairment of certain intangible assets, such as goodwill;
A decrease in interest income from variable rate loans, due to declines in interest rates;
An increase in the number of clients and counterparties who become delinquent, file for protection under bankruptcy
laws or default on their loans or other obligations to us, which could result in a higher level of nonperforming assets,
net charge-offs, provisions for credit losses and valuation adjustments on loans held for sale;
A decrease in the supply of deposits or the need to price interest-bearing deposits higher due to competitive forces,
which could result in substantial increase in cost to retain and service deposits; and
A change in the pricing or spread environment could adversely impact the yields received on newly originated loans
or securities.
In the event of severely adverse business and economic conditions generally or specifically in the principal markets in
which we conduct business, there can be no assurance that the federal government and the Federal Reserve would intervene or
make adjustments to fiscal or monetary policy that would cause business and economic conditions to improve. If business and
economic conditions worsen or volatility increases, our business, financial condition and results of operations could be
materially adversely affected.
Volatility and uncertainty related to inflation and the effects of inflation, which has led to increased costs for businesses
and consumers and potentially contribute to poor business and economic conditions generally and may enhance or contribute to
some of the risks of our business. For example, higher inflation, or volatility and uncertainty related to inflation, could reduce
demand for our products, adversely affect the creditworthiness of the Company’s borrowers or result in lower values for our
investment securities and other fixed-rate assets. In response to sustained inflationary pressures, the Federal Reserve has
tightened monetary policy, as described below. To the extent these policies do not mitigate the volatility and uncertainty related
to inflation and the effects of inflation, or to the extent conditions otherwise worsen, we could experience adverse effects on our
business, financial condition and results of operations.
Fluctuations in market interest rates, including the level and shape of the yield curve, may adversely affect our
performance.
Our profitability depends to a large extent on our net interest income, which is the difference between the interest income
received on interest-earning assets (primarily loans, leases, investment securities and cash balances held at the Federal Reserve
Bank) and the interest expense incurred in connection with interest-bearing liabilities (primarily deposits and borrowings). The
level of net interest income is mostly a function of the average balance of interest-earning assets, the average balance of
interest-bearing liabilities and the spread between the yield on such assets and the cost of such liabilities. These factors are
influenced by both the pricing and mix of interest-earning assets and interest-bearing liabilities which, in turn, are impacted by
external factors such as the local economy, competition for loans and deposits, the monetary policy of the FOMC and interest
rates markets.
The cost of our deposits and short-term wholesale borrowings is heavily impacted by market-based liquidity conditions
and interest rates, factors which are influenced directly and indirectly by a mixture of effects including the FOMC’s monetary
policy and economic conditions. Moreover, the market’s expectation of the future course of FOMC policy and economic factors
interact to influence the path for market interest rates and the shape of the yield curve. Yields generated by our loans and
securities and the costs of deposits and wholesale borrowings are driven by both short-term and longer-term interest rates to
different degrees, thus impacting net interest income. If the yields on our interest-bearing liabilities increase at a faster pace than
the yields on our interest-earning assets, our net interest income may decline. Our net interest income could be similarly
affected if the yields on our interest-earning assets decline at a faster pace than the yields on our interest-bearing liabilities.
Finally, interest rate volatility and levels directly impact the value of certain fixed-rate assets and liabilities, which may impact
unrealized gains or unrealized losses in our portfolios.
The monetary policy tightening cycle observed since 2022 has led to increased volatility in fixed income markets. The
Federal Reserve increased the benchmark federal funds interest rate from near zero in early 2022 to a range between 5.25
percent and 5.50 percent with the last increase occurring at its July 26, 2023 meeting. The range of potential rate paths over the
coming year is wide and will ultimately be driven by the path of inflation, labor market performance and economic growth.
Estimates for net interest income exposure to interest rate changes have been reduced recently. While a persistently elevated, or
25
Table of Contents
increasing, rate environment from current levels would continue to support net interest income, elevated rates also increase the
cost of funding and competition for deposits. Additionally, elevated interest rates would increase debt service requirements for
some of our borrowers and may adversely affect those borrowers’ ability to pay as contractually obligated, ultimately resulting
in additional delinquencies or charge-offs. Conversely, should interest rates move lower, net interest income is well supported
by a mostly neutral interest rate risk position aided by the Company’s interest rate hedging program. In this environment,
deposit and funding costs will move lower; however, net interest income may be adversely impacted if those costs cannot move
lower as fast as expected.
Sustained higher interest rates and continued Federal Reserve asset reductions may adversely affect market stability,
market liquidity and the Company’s financial performance and condition. We cannot predict the nature or timing of future
changes in monetary policies or the precise effects such changes may have on our activities and financial results.
For a more detailed discussion of these risks and our management strategies for these risks, see the “Executive
Overview,” “Net Interest Income, Margin and Interest Rate Risk,” “Net Interest Income and Margin,” “Market Risk-Interest
Rate Risk” and “Securities” sections of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Annual Report on Form 10-K.
Transitions away from and the replacement of benchmark rates could adversely impact our business, financial
condition and results of operations.
Certain securities within the investment portfolio, certain hedging transactions and certain of the products that we offer,
such as floating-rate loans and mortgages, determine their applicable interest rate or payment amount by reference to a
benchmark rate, an index, or other financial metric. LIBOR and certain other benchmark rates have been or currently are the
subject of recent national, international, and other regulatory guidance and proposals for reform. All LIBOR settings ceased to
be published as of June 30, 2023. Regions has adopted new products linked to alternative reference rates, such as adjustable-
rate mortgages, consistent with guidance provided by U.S. regulators, ARRC and GSEs. Additionally, Regions transitioned
LIBOR-based products to alternative rates that are consistent with industry standard conventions.
In the fourth quarter of 2023, Bloomberg Index Services Limited announced the permanent cessation of the BSBY index
and all tenors effective November 15, 2024. Regions is in the process of evaluating exposure to BSBY and planning for
cessation.
For a more detailed discussion of our management strategies related to the LIBOR cessation and transition, see the
“LIBOR Transition and Reference Rate Reform” section of Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” of this Annual Report on Form 10-K.
Credit Risks
If we experience greater credit losses in our loan portfolios than anticipated, our earnings may be materially adversely
affected.
As a lender, we are exposed to the risk that our customers will be unable to repay their loans and leases according to their
terms and that any collateral securing the payment of their loans and leases may not be sufficient to assure repayment. Credit
losses are inherent in the business of making loans and could have a material adverse effect on our operating results.
We make various assumptions and judgments about the collectability of our loan portfolio and provide an allowance for
credit losses based on a number of factors. Our management periodically determines the allowance for credit losses based on
available information, including the quality of the loan portfolio, the value of the underlying collateral and the level of non-
accrual loans, taking into account relevant information about past events, current conditions and reasonable and supportable
forecasts of future economic conditions that affect the collectability of our loan portfolio. If, as a result of general economic
conditions, there is a decrease in asset quality or growth in the loan portfolio and management determines that additional
increases in the allowance for credit losses are necessary, we may incur additional expenses which will reduce our net income,
and our business, results of operations or financial condition may be materially adversely affected.
Although our management will establish an allowance for credit losses it believes is appropriate to absorb expected credit
losses over the life of loans in our loan portfolio, this allowance may not be adequate. For example, if a hurricane or other
natural disaster were to occur in one of our principal markets or if economic conditions in those markets were to deteriorate
unexpectedly, additional credit losses not incorporated in the existing allowance for credit losses may occur. Losses in excess of
the existing allowance for credit losses will reduce our net income and could adversely affect our business, results of operations
or financial condition, perhaps materially.
In addition, bank regulatory agencies will periodically review our allowance for credit losses and the value attributed to
non-accrual loans and to real estate acquired through foreclosure. Such regulatory agencies may require us to adjust our
determination of the value for these items. These adjustments could materially adversely affect our business, results of
operations or financial condition.
26
Table of Contents
Any future reductions in our credit ratings may increase our funding costs and place limitations on business activities.
The major ratings agencies regularly evaluate us, and their ratings are based on a number of factors, including our
financial strength and conditions affecting the financial services industry generally. In general, ratings agencies base their
ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix and level
and quality of earnings, and we may not be able to maintain our current credit ratings. The ratings assigned to Regions and
Regions Bank remain subject to change at any time, and it is possible that any ratings agency will take action to downgrade
Regions, Regions Bank or both in the future. Additionally, ratings agencies may also make substantial changes to their ratings
policies and practices, which may affect our credit ratings. In the future, changes to existing ratings guidelines and new ratings
guidelines may, among other things, adversely affect the ratings of our securities or other securities in which we have an
economic interest.
Our credit ratings can have negative consequences that can impact our ability to access the debt and capital markets, as
well as reduce our profitability through increased costs on future debt issuances. If we were to be downgraded below
investment grade, we may not be able to reliably access the short-term unsecured funding markets, and certain customers could
be prohibited from placing deposits with Regions Bank, which could cause us to hold more cash and liquid investments to meet
our ongoing liquidity needs. Such actions could reduce our profitability as these liquid investments earn a lower return than
other assets, such as loans. See the “Liquidity” section within “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” of this Annual Report on Form 10-K for our liquidity policy.
Additionally, if we were to be downgraded to below investment grade, certain counterparty contracts may be required to
be renegotiated or require posting of additional collateral. Refer to Note 20 “Derivative Financial Instruments and Hedging
Activities” to the consolidated financial statements of this Annual Report on Form 10-K for the fair value of contracts subject to
contingent credit features and the collateral postings associated with such contracts. Although the exact amount of additional
collateral is unknown, it is reasonable to conclude that we may be required to post additional collateral related to existing
contracts with contingent credit features.
Changes in the soundness of other financial institutions could adversely affect us.
Adverse developments affecting the overall strength and soundness of other financial institutions, the financial services
industry as a whole and the general economic climate and the U.S. Treasury market could have a negative impact on
perceptions about the strength and soundness of our business even if we are not subject to the same adverse developments. In
addition, adverse developments with respect to third parties with whom we have important relationships could also negatively
impact perceptions about us. These perceptions about us could cause our business to be negatively affected and exacerbate the
other risks that we face.
Regions may be impacted by actual or perceived soundness of other financial institutions, including as a result of the
financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial
institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial
markets and increased expenses, including FDIC insurance premiums, and could affect our ability to attract and retain
depositors and to borrow or raise capital. For example, during 2023 the FDIC took control and was appointed receiver of
Silicon Valley Bank, Signature Bank and First Republic Bank. The failure of other banks and financial institutions and the
measures taken by governments, businesses and other organizations in response to these events could adversely impact
Regions’ business, financial condition and results of operations.
Regions’ ability to engage in routine funding transactions could be adversely affected by the actions and commercial
soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing,
counterparty and other relationships. Regions has exposure to many different industries and counterparties and routinely
executes transactions with counterparties in the financial industry, including brokers and dealers, central counterparties,
commercial banks, investment banks, mutual and hedge funds and other institutional investors and clients. As a result, defaults
by, or even rumors or questions about, one or more financial services institutions or the financial services industry generally, in
the past have led to market-wide liquidity problems and could lead to losses or defaults by Regions or by other institutions.
Many of these transactions expose Regions to credit risk in the event of default of Regions’ counterparty or client. In addition,
Regions’ credit risk may be exacerbated when the collateral held by Regions cannot be liquidated or is liquidated at prices not
sufficient to recover the full amount of Regions’ exposure. Any such losses could materially and adversely affect Regions’
results of operations and financial condition.
We may suffer losses if the value of collateral declines in stressed market conditions.
During periods of market stress or illiquidity, our credit risk may be further increased when we fail to realize the fair value
of the collateral we hold; collateral is liquidated at prices that are not sufficient to recover the full amount owed to us; or
counterparties are unable to post collateral, whether for operational or other reasons. Furthermore, disputes with counterparties
concerning the valuation of collateral may increase in times of significant market stress, volatility or illiquidity, and we could
suffer losses during these periods if we are unable to realize the fair value of collateral or to manage declines in the value of
collateral.
27
Table of Contents
Liquidity Risks
Ineffective liquidity management could adversely affect our financial results and condition.
Effective liquidity management is essential for the operation of our business. We require sufficient liquidity to meet
customer loan requests, customer deposit maturities/withdrawals, payments on our debt obligations as they come due and other
cash commitments under both normal operating conditions and unpredictable circumstances causing industry or general
financial market stress. A substantial majority of our assets are loans, which cannot necessarily be called or sold on timeframes
short enough to meet these liquidity requirements.
In addition, our access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us
could be impaired by factors that affect us specifically or the financial services industry or economy generally. Factors that
could detrimentally impact our access to liquidity sources include increases in funding costs, a downturn in the geographic
markets in which our loans and operations are concentrated, difficult credit markets or unforeseen outflows of cash or collateral,
including as a result of unusual effects in the market. Although we have historically been able to meet the liquidity needs of
customers as necessary, the ability to do so is not assured, especially if a large number of our depositors seek to withdraw their
accounts, regardless of the reason. A failure to maintain adequate liquidity could materially and adversely affect our business,
results of operations and financial condition.
Loss of deposits or a change in deposit mix could increase our funding costs.
Deposits are a low cost and stable source of funding. Regions competes with banks and other financial institutions for
deposits and as a result, Regions could lose deposits in the future, clients may shift their deposits into higher cost products or
Regions may need to raise interest rates to avoid deposit attrition. Funding costs may also increase if deposits lost are replaced
with wholesale funding. Higher funding costs reduce Regions’ net interest margin, net interest income and net income. Any of a
variety of single or combined factors could contribute to adverse movement in deposits or deposit costs, including but not
limited to economic uncertainty, rapid movements in market interest rates or the Federal Reserve's monetary policy, entrance of
competitors, disruptive technology, and/or diminishment of confidence in Regions or banks broadly.
We rely on the mortgage secondary market to manage various risks.
In 2023, we sold 35.1% of the mortgage loans we originated to the Agencies. We rely on the Agencies to purchase loans
that meet their conforming loan requirements in order to reduce our credit risk and provide funding for additional loans we
desire to originate. We cannot provide assurance that the Agencies will not materially limit their purchases of conforming loans
due to capital constraints, a change in the criteria for conforming loans or other factors. Additionally, various proposals have
been made to reform the U.S. residential mortgage finance market, including the role of the Agencies. The exact effects of any
such reforms, if implemented, are not yet known, but they may limit our ability to sell conforming loans to the Agencies. If we
are unable to continue to sell conforming loans to the Agencies, our ability to fund, and thus originate, additional mortgage
loans may be adversely affected, which would adversely affect our results of operations.
Technology Risks
We are at risk of a variety of systems failures or errors and cyber-attacks or other similar incidents that could adversely
affect customer experience and our business and financial performance.
Failure or errors in or breach of our systems or networks, or those of our third-party service providers (or providers to
such third-party service providers), including as a result of cybersecurity or other similar incidents, could disrupt our businesses
or impact our customers. Examples of incidents include, among other things, denial of service attacks, ransomware, malware,
worms, software bugs, hacking, social engineering, phishing attacks, credential stuffing, account takeovers, insider threats,
theft, malfeasance or improper access by employees or service providers, human error, fraud or other similar disruptions. These
incidents could result in the loss, unauthorized disclosure, misuse or misappropriation of confidential, personal, proprietary or
other information, damage to our reputation, increases to our costs and cause customer and financial losses. As a large financial
institution, we depend on our ability to process, record and monitor a large number of customer transactions on a continuous
basis and otherwise collect, transmit, store and process a significant amount of personal information in connection therewith. As
public, regulatory and customers' expectations have increased regarding operational resilience and cybersecurity, our systems,
networks and infrastructure must continue to be safeguarded and monitored for potential failures and disruptions, as well as
cybersecurity or other similar incidents. Our systems and facilities may stop operating properly or become disabled or damaged
as a result of a number of factors, including events that are wholly or partially beyond our control. For example, there could be
electrical or telecommunications outages; pandemics; events arising from local or larger scale political or social matters,
including terrorist acts and civil unrest; and, as described below, cyber-attacks or other similar incidents. Although we have
business continuity plans and other safeguards in place, our business operations may be adversely affected by significant and
widespread disruption to our physical infrastructure or operating systems or networks, or those of our third-party service
providers, that support our businesses and customers.
Cybersecurity risks for large financial institutions, such as us, have increased significantly in recent years in part because
of the proliferation of technology-based products and services and the increased sophistication and activities of organized
28
Table of Contents
crime, hackers, terrorists, nation-states, nation state-supported actors, activists and other external parties. This increase is
expected to continue and further intensify. The techniques used by cyber criminals change frequently, may not be recognized
until launched (or may evade detection for considerable time), can be initiated from a variety of sources, including terrorist
organizations and hostile foreign governments, and may see their frequency increased, and effectiveness enhanced, by the use
of artificial intelligence. These criminals may attempt to fraudulently induce employees, customers or other users of our
systems and networks to disclose sensitive information (including confidential, personal, proprietary and other information) in
order to gain access to data or our systems and networks. Third parties with whom we or our customers do business also present
operational and cybersecurity risks to us, including cybersecurity or other similar incidents or failures or disruptions of their
own systems and networks. While we have successfully defended similar attacks, we could become the subject of a successful
similar style attack through a supply chain compromise. As noted above, our operations rely on the secure collection,
transmission, storage and other processing of confidential, personal, proprietary and other information in our operating systems
and networks. In addition, to access our products and services, our customers may use personal computers, smartphones, tablets
and other mobile devices that are beyond our control environment. Additionally, cybersecurity and other similar incidents or
terrorist activities could disrupt our or our customers’ or other third parties’ business operations. Although these past events
have not resulted in a breach of our client data or account information, such attacks have adversely affected the performance of
Regions Bank’s website, www.regions.com, and, in some instances, prevented customers from accessing Regions Bank’s
secure websites for consumer and commercial applications. In all cases, the attacks primarily resulted in inconvenience;
however, future cyber-attacks or other similar incidents could be more disruptive and damaging, and we may not be able to
anticipate or prevent all such attacks. The United States government has raised concerns about a potential increase in cyber-
attacks and other similar incidents generally as a result of the military conflict between Russia and Ukraine and the related
sanctions imposed by the United States and other countries or the ongoing Israel-Hamas conflict.
Although we believe that we have appropriate information security procedures and controls designed to prevent or limit
the effects of a cybersecurity or other similar incident, our technologies, systems, networks and our customers’ devices may be
the target of cybersecurity or other similar incidents that could result in the unauthorized release, accessing, gathering,
monitoring, loss, destruction, modification, acquisition, transfer, use or other processing of us or our customers’ confidential,
personal, proprietary and other information. We also have insurance coverage, that is reviewed annually, that may, subject to
policy terms and conditions, cover certain losses associated with cybersecurity and other similar incidents, but our insurer may
deny coverage as to any future claim or our insurance coverage may be insufficient to cover all losses from any such attack,
breach or incident, including any related damage to our reputation. In addition, given the proliferation of cyber-events in our
industry, the cost of cyber insurance is expected to continue to increase and may not be available at all or on acceptable terms.
As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify
or enhance our layers of defense or to investigate and remediate any information security vulnerabilities. We may also be
required to incur significant costs in connection with any regulatory investigation or civil litigation, fines, damages or
injunctions resulting from a cybersecurity or other similar incident that impacts us. In addition, our third-party service providers
may be unable to identify vulnerabilities in their systems and networks or, once identified, be unable to promptly provide
required patches or other remedial measures. Further, even if provided, such patches or remedial measures may not fully
address any vulnerability or may be difficult for us to implement. While we perform cybersecurity diligence on our key service
providers, because we do not control our service providers and our ability to monitor their cybersecurity is limited, we cannot
ensure the cybersecurity measures they take will be sufficient to protect any information we share them. Due to applicable laws
and regulations or contractual obligations, we may be held responsible for cybersecurity or other similar incidents attributed to
our service providers as they relate to the information we share with them.
Disruptions or failures in the physical infrastructure or operating systems or networks that support our businesses and
customers, or cybersecurity or other similar incidents of the networks, systems or devices that our customers use to access our
products and services, could result in customer attrition, violation of applicable privacy and cybersecurity laws and regulations,
notifications obligations, regulatory fines, civil litigation, damages, injunctions, penalties or intervention, reputational damage,
reimbursement or other compensation costs, remediation costs, additional cybersecurity protection costs, increased insurance
premiums and/or additional compliance costs, any of which could materially adversely affect our business, results of operations
or financial condition. We could also be adversely affected if we lose access to information or services from a third-party
service provider as a result of a cybersecurity or similar incident or system, network or operational failure or disruption
affecting the third-party service provider. For a more detailed discussion of these risks and specific occurrences, see the
“Information Security Risk” section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Annual Report on Form 10-K.
We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding
privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability.
We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations relating to the
privacy and cybersecurity of the personal information of clients, employees or others, and any failure to comply with these
laws, regulations, rules, standards and contractual obligations could expose us to liability and/or reputational damage. As new
privacy and cybersecurity-related laws, regulations, rules and standards are implemented, the time and resources needed for us
29
Table of Contents
to comply with such laws, regulations, rules and standards as well as our potential liability for non-compliance and reporting
obligations in the case of cybersecurity or other similar incidents, may significantly increase. In addition, our businesses are
increasingly subject to laws, regulations, rules and standards relating to privacy, cybersecurity, surveillance, encryption and
data use in the jurisdictions in which we operate. Compliance with these laws, regulations, rules and standards may require us
to change our policies, procedures and technology for information security and segregation of data, which could, among other
things, make us more vulnerable to operational failures and to monetary penalties for breach of such laws, regulations, rules and
standards.
At the federal level, we are subject to the GLBA which requires financial institutions to, among other things, periodically
disclose their privacy policies and practices relating to sharing personal information and, in some cases, enables retail customers
to opt out of the sharing of certain non-public personal information with unaffiliated third parties. We are also subject to the
rules and regulations promulgated under the authority of the Federal Trade Commission, which regulates unfair or deceptive
acts or practices, including with respect to privacy and cybersecurity. Moreover, the United States Congress has considered, and
is currently considering, various proposals for more comprehensive privacy and cybersecurity legislation, to which we may be
subject if passed. Additionally, the federal banking regulators, as well as the SEC and related self-regulatory organizations,
regularly issue guidance regarding cybersecurity that is intended to enhance cyber risk management among financial
institutions.
Privacy and cybersecurity are also areas of increasing state legislative focus and we are, or may in the future become,
subject to various state laws and regulations regarding privacy and cybersecurity, such as the CCPA. Other states where we do
business, or may in the future do business, or from which we otherwise collect, or may in the future otherwise collect, personal
information of residents have implemented, or are considering implementing, comprehensive privacy and cybersecurity laws
and regulations sharing similarities with the CCPA. Similar laws already exist in a number of other states, and such legislation
continues to expand across the country. In addition, laws in all 50 U.S. states generally require businesses to provide notice
under certain circumstances to individuals whose personal information has been disclosed as a result of a data breach. Certain
state laws and regulations may be more stringent, broader in scope or offer greater individual rights, with respect to personal
information than federal or other state laws and regulations, and such laws and regulations may differ from each other, which
may complicate compliance efforts and increase compliance costs. Aspects of the CCPA and other federal and state laws and
regulations relating to privacy and cybersecurity, as well as their enforcement, remain unclear, and we may be required to
modify our practices in an effort to comply with them.
Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive and
compliant with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other
statements regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity
relating to privacy or cybersecurity. Although we endeavor to comply with our privacy policies, we may at times fail to do so or
be alleged to have failed to do so. The publication of our privacy policies and other documentation that provide promises and
assurances about privacy and cybersecurity can subject us to potential federal or state action if they are found to be deceptive,
unfair, or misrepresents our actual practices. Additional risks could arise in connection with any failure or perceived failure by
us, our service providers or other third parties with which we do business to provide adequate disclosure or transparency to our
customers about the personal information collected from them and its use, to receive, document or honor the privacy
preferences expressed by our customers, to protect personal information from unauthorized disclosure or to maintain proper
training on privacy practices for all employees or third parties who have access to personal information in our possession or
control.
Any failure or perceived failure by us to comply with our privacy policies, or applicable privacy and cybersecurity laws,
regulations, rules, standards or contractual obligations, or any compromise of security that results in unauthorized access to, or
unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information, may result
in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources,
proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments,
awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing could harm our reputation,
distract our management and technical personnel, increase our costs of doing business, adversely affect the demand for our
products and services and ultimately result in the imposition of liability, any of which could have a material adverse effect on
our business, financial condition and results of operations. For further discussion of the privacy and cybersecurity laws,
regulations, rules and standards we are, or may in the future become, subject to, see the “Supervision and Regulation-Privacy
and Cybersecurity” section of Item 1. “Business” of this Annual Report on Form 10-K.
We will continually encounter technological change and must effectively anticipate, develop and implement new
technology.
The financial services industry is undergoing rapid technological change with frequent introductions of new technology-
driven products and services. We have invested in technology to automate functions previously performed manually, to
facilitate the ability of clients to engage in financial transactions and otherwise to enhance the client experience with respect to
our products and services. We expect to make additional investments in innovation and technology to address technological
30
Table of Contents
disruption in the industry and improve client offerings and service. These changes allow us to better serve the our clients and to
reduce costs.
Our continued success depends, in part, upon our ability to address clients’ needs by using technology to provide products
and services that satisfy client demands, including demands for faster and more secure payment services, to create efficiencies
in our operations and to integrate those offerings with legacy platforms or to update those legacy platforms. A failure to
maintain or enhance our competitive position with respect to technology, whether because of a failure to anticipate client
expectations, a failure in the performance of technological developments or an untimely roll out of developments, may cause us
to lose market share or incur additional expense.
Strategic Risks
Industry competition may adversely affect our degree of success.
Our profitability depends on our ability to compete successfully. We operate in a highly competitive industry that could
become even more competitive as a result of legislative, regulatory, market and technological changes, as well as continued
industry consolidation. This consolidation may produce larger, better-capitalized and more geographically diverse companies
that are capable of offering a wider array of financial products and services at more competitive prices. For example, there have
been a number of completed mergers of financial institutions within our market areas, and notwithstanding current regulatory
approval delays there may in the future be additional consolidation. These and future mergers will, if completed, allow the
merged financial institutions to benefit from cost savings and shared resources.
In our market areas, we face competition from other commercial banks, savings and loan associations, credit unions,
internet banks, fintechs, finance companies, mutual funds, insurance companies, brokerage and investment banking firms,
mortgage companies and other financial intermediaries that offer similar services. Many of our non-bank competitors are not
subject to the same extensive regulations we are and, therefore, may have greater flexibility in competing for business.
In addition, technology has lowered barriers to entry and made it possible for non-banks to offer products and services,
such as loans and payment services, that traditionally were banking products, and made it possible for technology companies to
compete with financial institutions in providing electronic, internet-based, and mobile phone–based financial solutions.
Competition with non-banks, including technology companies, to provide financial products and services is intensifying. In
particular, the activity of fintechs has grown significantly over recent years and is expected to continue to grow. Fintechs have
and may continue to offer bank or bank-like products. For example, a number of fintechs have applied for, and in some cases
been granted, bank or industrial loan charters. In addition, other fintechs have partnered with existing banks to allow them to
offer deposit products to their customers. Regulatory changes, such as the revisions to the FDIC’s rules on brokered deposits
intended to reflect recent technological changes and innovations, may also make it easier for fintechs to partner with banks and
offer deposit products. In addition to fintechs, traditional technology companies have begun to make efforts toward providing
financial services directly to their customers and are expected to continue to explore new ways to do so. Many of these
companies, including our competitors, have fewer regulatory constraints, and some have lower cost structures, in part due to
lack of physical locations. Regions provides an array of digital products and services to our customers and we expect a bank’s
digital offerings to be a key competitive differentiator. The move toward digital banking and financial services, and customer
expectations regarding digital offerings, will require us to invest greater resources in technological improvements and may put
us at a disadvantage to banks and non-banks with greater resources to spend on technology.
Our ability to compete successfully depends on a number of additional factors, including customer convenience, quality of
service, personal contacts, the quality of the technology that supports the customer experience and pricing and range of
products. If we are unable to successfully compete for new customers and to retain our current customers, our business,
financial condition or results of operations may be adversely affected, perhaps materially. In particular, if we experience an
outflow of deposits as a result of our customers seeking investments with higher yields or greater financial stability, we may be
forced to rely more heavily on borrowings and other sources of funding to operate our business and meet withdrawal demands,
thereby adversely affecting our net interest margin and financial performance. In addition, we may not be able to effectively
implement new technology-driven products and services or be successful in marketing these products and services to our
customers. As a result, our ability to effectively compete to retain or acquire new business may be impaired, and our business,
financial condition or results of operations, may be adversely affected.
Our operations are concentrated primarily in the South, Midwest and Texas, and adverse changes in the economic
conditions in this region can adversely affect our financial results and condition.
Our operations are concentrated primarily in the South, Midwest and Texas. As a result, local economic conditions in
these areas significantly affect the demand for the loans and other products we offer to our customers (including real estate,
commercial and construction loans), the ability of borrowers to repay these loans and the value of the collateral securing these
loans. Any declines in real estate values in these areas may adversely affect borrowers and the value of the collateral securing
many of our loans, which could adversely affect our currently performing loans, leading to future delinquencies or defaults and
increases in our provision for credit losses. Adverse changes in the economic conditions in these regions could materially
adversely affect our business, results of operations or financial condition.
31
Table of Contents
Weakness in the residential real estate markets could adversely affect our performance.
As of December 31, 2023, consumer residential real estate loans represented approximately 26.3% of our total loan
portfolio. A general decline in home values would adversely affect the value of collateral securing the residential real estate that
we hold, as well as the volume of loan originations and the amount we realize on the sale of real estate loans. These factors
could result in higher delinquencies and greater charge-offs in future periods, which could materially adversely affect our
business, financial condition or results of operations.
Weakness in the commercial real estate markets could adversely affect our performance.
As of December 31, 2023, approximately 9.0% of our loan portfolio consisted of investor real estate loans. The properties
securing income-producing investor real estate loans are typically not fully leased at the origination of the loan. The borrower’s
ability to repay the loan is instead dependent upon additional leasing through the life of the loan or the borrower’s successful
operation of a business. Continued uncertainty in economic conditions may impair a borrower's business operations and slow
the execution of new leases. Such economic conditions may also lead to existing lease turnover. As a result of these factors,
vacancy rates for retail, office and industrial space may increase, and hotel occupancy rates may decline. High vacancy and
lower occupancy rates could also result in rents falling. The combination of these factors could result in deterioration in the
fundamentals underlying the commercial real estate market and the deterioration in value of some of our loans. Any such
deterioration could adversely affect the ability of our borrowers to repay the amounts due under their loans. As a result, our
business, results of operations or financial condition may also be adversely affected. Specifically, the office property segment,
which represents 1.5 percent of our total loan portfolio, is undergoing a structural shift given the rise of a remote work
environment resulting in heightened vacancies and potentially reduced leasing needs. It is anticipated that this heightened risk
environment for the office segment may take several years to resolve.
Risks associated with home equity products where we are in a second lien position could materially adversely affect our
performance.
Home equity products, particularly those in a second lien position, may carry a higher risk of non-collection than other
loans. Home equity lending includes both home equity loans and lines of credit. At December 31, 2023, the Company's home
equity portfolio included approximately $3.2 billion of home equity lines of credit and $2.4 billion of closed-end home equity
loans (primarily originated as amortizing loans). Real estate market values at the time of origination directly affect the amount
of credit extended, and, in addition, past and future changes in these values impact the depth of potential losses. Second lien
position lending carries higher credit risk because any decrease in real estate pricing may result in the value of the collateral
being insufficient to cover the second lien after the first lien position has been satisfied. As of December 31, 2023,
approximately $2.0 billion of our home equity lines and loans were in a second lien position.
Weakness in commodity businesses could adversely affect our performance.
Many of our borrowers operate in industries that are directly or indirectly impacted by changes in commodity prices. This
includes agriculture, livestock, metals, timber, textiles and energy businesses (including oil, gas and petrochemical), as well as
businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment
used in production of commodities. Changes in commodity prices depend on local, regional and global events or conditions that
affect supply and demand for the relevant commodity. These industries have been, and may in the future be, subject to
significant volatility. For example, oil prices have been volatile, both rising and falling, in recent years. Such volatility is
expected to continue in the foreseeable future due to an unpredictable geopolitical and economic environment. As a
consequence of oil and gas price volatility, our energy-related portfolio may be subject to additional pressure on credit quality
metrics including past due, criticized, and non-performing loans, as well as net charge-offs. In addition, legislative changes such
as the elimination of certain tax incentives and the transition to a less carbon dependent economy in response to climate change
and other factors could have significant impacts on this portfolio.
An outbreak or escalation of hostilities between countries or within a country or region could have a material adverse
effect on the U.S. economy and on our businesses.
Aggressive actions by hostile governments or groups, including armed conflict or intensified cyber-attacks, could expand
in unpredictable ways by drawing in other countries or escalating into full-scale war with potentially catastrophic consequences,
particularly if one or more of the combatants possess nuclear weapons. Depending on the scope of the conflict, the hostilities
could result in worldwide economic disruption, heightened volatility in financial markets, severe declines in asset values,
disruption of global trade and supply chains and diminished consumer, business and investor confidence.
Instability in geopolitical matters could have a material adverse effect on our results of operations and financial condition.
The macroeconomic environment in the United States is susceptible to global events and volatility in financial markets. For
example, trade negotiations between the United States and other nations remain uncertain and could adversely impact economic
and market conditions for our and our clients and counterparties. The wars in the Ukraine, Israel and the Gaza Strip presents
destabilizing forces, including higher and more volatile commodity and food prices, which may cause international and
domestic economic deterioration. Financial markets may be adversely affected by the current or anticipated impact of military
conflict, including the wars in the Ukraine, Israel and the Gaza Strip, terrorism or other geopolitical events. This could magnify
32
Table of Contents
inflationary pressure resulting from the pandemic and other sources and extend any prolonged period of higher inflation. Any of
the above consequences could have significant negative effects on the U.S. economy, and, as a result, our operations and
earnings. We could also experience more numerous and aggressive cyber-attacks launched by or under the sponsorship of one
or more of the adversaries in such a conflict.
Operational Risks
We are subject to a variety of operational risks, including the risk of fraud or theft by internal or external parties,
which may adversely affect our business and results of operations.
We are exposed to many types of operational risks, including business resilience, process, third party, information
technology, human resource, model and fraud risks, each of which may be amplified by continued remote work. Our fraud risks
include fraud committed by external parties against the Company or its customers and fraud committed internally by our
associates. Certain fraud risks, including identity theft and account takeover, may increase as a result of customers’ account or
personally identifiable information being obtained through breaches of retailers’ or other third parties’ networks. Examples of
external fraud we face include fraudulent checks, stolen checks and other check-related fraud. We have established processes
and procedures intended to identify, measure, monitor, mitigate, report and analyze these risks; however, there are inherent
limitations to our risk management strategies as there may exist, or develop in the future, risks that we have not appropriately
anticipated, monitored or identified. If our risk management framework proves ineffective, we could suffer unexpected losses,
we may have to expend resources detecting and correcting the failure in our systems and we may be subject to potential claims
from third parties and government agencies. We may also suffer severe reputational damage. Any of these consequences could
adversely affect our business, financial condition or results of operations. In particular, the unauthorized disclosure,
misappropriation, mishandling or misuse of personal, non-public, confidential or proprietary information of customers could
result in significant regulatory consequences, reputational damage and financial loss.
We rely on other companies to provide key components of our business infrastructure.
Third parties provide key components of our business operations such as data processing, recording and monitoring
transactions, online banking interfaces and services, Internet connections and network access. While we have selected these
third-party vendors carefully, performing upfront due diligence and ongoing monitoring activities, we do not control their
actions. Any issues that arise with respect to these third parties, including those resulting from disruptions in services provided
by a vendor (including as a result of a cyber-attack, other information security event or a natural disaster), financial or
operational difficulties for the vendor, issues at third-party vendors to the vendors, failure of a vendor to handle current or
higher volumes, failure of a vendor to provide services for any reason, poor performance of services, failure to comply with
applicable laws and regulations or fraud or misconduct on the part of employees of any of our vendors, could trigger regulatory
notification obligations on us, adversely affect our ability to deliver products and services to our customers, our reputation and
our ability to conduct our business. In certain situations, replacing these third-party vendors could also create significant delay
and expense. Accordingly, use of such third parties creates an unavoidable, inherent risk to our business operations. Many of
our vendors have also been impacted by remote work, market volatility and other factors that increase their risks of business
disruption or that may otherwise affect their ability to perform under the terms of any agreements with us or provide essential
services.
We depend on the accuracy and completeness of information about clients and counterparties.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on
information furnished by or on behalf of clients and counterparties, including financial statements and other financial
information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that
information and, with respect to financial statements, on reports of independent auditors if made available. If this information is
inaccurate, we may be subject to regulatory action, reputational harm or other adverse effects with respect to the operation of
our business, our financial condition and our results of operations.
We are exposed to risk of environmental liability when we take title to property.
In the course of our business, we may foreclose on and take title to real estate. As a result, we could be subject to
environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for
property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental
contamination or may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property.
The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former
owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting
from environmental contamination emanating from the property. If we become subject to significant environmental liabilities,
our business, financial condition or results of operations could be adversely affected.
33
Table of Contents
We can be negatively affected if we fail to identify and address operational risks associated with the introduction of or
changes to products, services and delivery platforms.
When we launch a new product or service, introduce a new platform for the delivery or distribution of products or services
(including mobile connectivity, electronic trading and cloud computing), acquire or invest in a business or make changes to an
existing product, service or delivery platform, we may not fully appreciate or identify new operational risks that may arise from
those changes, or may fail to implement adequate controls to mitigate the risks associated with those changes. Any significant
failure in this regard could diminish our ability to operate one or more of our business or result in potential liability to clients,
counterparties and customers, and result in increased operating expenses. We could also experience higher litigation costs,
including regulatory fines, penalties and other sanctions, reputational damage, impairment of our liquidity, regulatory
intervention or weaker competitive standing. Any of the foregoing consequences could materially and adversely affect our
businesses and results of operations.
Enhanced regulatory and other standards for the oversight of vendors and other service providers can result in higher
costs and other potential exposures.
We must comply with enhanced regulatory and other standards associated with doing business with vendors and other
service providers, including standards relating to the outsourcing of functions as well as the performance of significant banking
and other functions by subsidiaries. We incur significant costs and expenses in connection with our initiatives to address the
risks associated with oversight of our external service providers. Our failure to appropriately assess and manage these
relationships, especially those involving significant banking functions, shared services or other critical activities, could
materially adversely affect us. Specifically, any such failure could result in: potential harm to clients and customers, and any
liability associated with that harm; regulatory fines, penalties or other sanctions; lower revenues, and the opportunity cost from
lost revenues; increased operational costs, or harm to our reputation.
Reputational Risks
We are subject to environmental, social and governance risks that could adversely affect our business, reputation and
the trading price of our common stock.
We are subject to a variety of risks, including reputational risk, associated with environmental, social and governance, or
ESG, issues. As a large financial institution with a diverse base of customers, vendors and suppliers, we may face negative
publicity based on the identity, practices and perceptions of certain entities with whom we choose to do business. The public
holds diverse and potentially conflicting views of those entities, and their activities, including the perceived environmental,
social or economic impacts of those entities or of financial institutions’ relationships with those entities. Because we have
multiple stakeholders, among them shareholders, customers, employees, federal and state regulatory authorities and political
entities, often those stakeholders have differing, and sometimes conflicting, priorities and expectations regarding ESG issues.
For example, certain federal and state laws and regulations related to ESG issues may include provisions that conflict with other
laws and regulations, which may increase our costs or limit our ability to conduct business in certain jurisdictions.
Simultaneous, disparate and divergent sentiments on ESG-related matters from multiple stakeholder groups must be
considered. For example, there is an increasing number of state-level anti-ESG initiatives in the U.S. that may conflict with
other regulatory requirements or our various stakeholders' expectations. Such divergent, sometimes conflicting views on ESG-
related matters increase the risk that any action or lack thereof by us on such matters will be perceived negatively by some
stakeholders. Failing to comply with expectations and standards from investors, customers, regulators, policymakers and other
stakeholders regarding ESG-related issues, or taking action in conflict with one or another of those stakeholders’ expectations,
could also lead to loss of business, adverse publicity, an adverse impact on our reputation, customer complaints or public
protests. Negative publicity may be driven by adverse news coverage in traditional media and may also be spread more broadly
through the use of social media platforms. If our relationships with our customers, vendors and suppliers were to become the
subject of such negative publicity, our ability to attract and retain customers and employees, compete effectively and grow our
business may be negatively impacted. Additionally, a growing number of investors (in particular institutional investors who
hold and manage substantial equity positions, in some cases in nearly all major U.S. listed companies) are integrating ESG
factors into their analysis of the expected risk and return of potential investments. The specific ESG factors considered, as well
as the approach to incorporating the factors into a broader investment process, vary by investor and can shift over time. Our
failure to align with, or remain aligned with, investors’ ESG-related priorities may negatively impact the trading price of our
common stock.
Damage to our reputation could significantly harm our businesses.
Our ability to attract and retain customers and highly-skilled management and employees is impacted by our reputation. A
negative public opinion of us and our business can result from any number of activities, including our lending practices,
corporate governance and regulatory compliance, acquisitions and actions taken by community organizations in response to
these activities. Furthermore, negative publicity regarding us as an employer could have an adverse impact on our reputation,
especially with respect to matters of diversity, pay equity and workplace harassment.
34
Table of Contents
Significant harm to our reputation, or the reputation of any company, could also arise as a result of regulatory or
governmental actions, litigation and the activities of our customers, other participants in the financial services industry or our
contractual counterparties, such as our service providers and vendors.
In addition, a cybersecurity event affecting us or our customers’ data could have a negative impact on our reputation and
customer confidence in us and our cybersecurity practices. Damage to our reputation could also adversely affect our credit
ratings and access to the capital markets.
Additionally, the widespread use of social media platforms by virtually every segment of society facilitates the rapid
dissemination of information or misinformation, which magnifies the potential harm to our reputation.
Legal, Regulatory and Compliance Risks
We are, and may in the future be, subject to litigation, investigations and governmental proceedings that may result in
liabilities adversely affecting our financial condition, business or results of operations or in reputational harm.
We and our subsidiaries are, and may in the future be, named as defendants in various class actions and other litigation,
and may be the subject of subpoenas, reviews, requests for information, investigations, and formal and informal proceedings by
government and self-regulatory agencies regarding our and their businesses and activities (including subpoenas, requests for
information and investigations related to the activities of our customers). Any such matters may result in material adverse
consequences to our results of operations, financial condition or ability to conduct our business, including adverse judgments,
settlements, fines, penalties (including civil money penalties under applicable banking laws), injunctions, restitution, orders,
restrictions on our business activities or other relief. Our involvement in any such matters, even if the matters are ultimately
determined in our favor, could also cause significant harm to our reputation and divert management’s attention from the
operation of our business. Further, any settlement, consent order or adverse judgment in connection with any formal or informal
proceeding or investigation by government or self-regulatory agencies may result in additional litigation, investigations or
proceedings as other litigants and government or self-regulatory agencies (including the inquiries mentioned above) begin
independent reviews of the same businesses or activities. In general, the amounts paid by financial institutions in settlement of
proceedings or investigations, including those relating to anti-money laundering matters or sales practices, have increased
substantially and are likely to remain elevated. Regulators and other governmental authorities may also be more likely to pursue
enforcement actions, or seek admissions of wrongdoing, in connection with the resolution of an inquiry or investigation to the
extent a firm has previously been subject to other governmental investigations or enforcement actions. In some cases,
governmental authorities have required criminal pleas or other extraordinary terms as part of such settlements, which could
have significant collateral consequences for a financial institution, including loss of customers, restrictions on the ability to
access the capital markets and the inability to operate certain businesses or offer certain products for a period of time. In
addition, enforcement matters could impact our supervisory and CRA ratings, which may in turn restrict or limit our activities.
Additional information relating to our litigation, investigations and other proceedings is discussed in Note 23
“Commitments, Contingencies and Guarantees” to the consolidated financial statements of this Annual Report on Form 10-K.
We are subject to extensive governmental regulation, which could have an adverse impact on our operations.
We are subject to extensive state and federal regulation, supervision and examination governing almost all aspects of our
operations, which limits the businesses in which we may permissibly engage. The laws and regulations governing our business
are intended primarily for the protection of our depositors, our customers, the financial system and the FDIC insurance fund,
not our shareholders or other creditors. These laws and regulations govern a variety of matters, including certain debt
obligations, changes in control, maintenance of adequate capital, consumer protection and general business operations and
financial condition (including permissible types, amounts and terms of loans and investments, the amount of reserves against
deposits, restrictions on dividends and repurchases of our capital securities, establishment of branch offices and the maximum
interest rate that may be charged by law). Further, we must obtain approval from our regulators before engaging in many
activities, and our regulators have the ability to compel us to, or restrict us from, taking certain actions entirely. There can be no
assurance that any regulatory approvals we may require or otherwise seek will be obtained in a timely manner or at all.
Regulations affecting banks and other financial institutions are undergoing continuous review and frequently change, and
the ultimate effect of such changes cannot be predicted. Regulations and laws may be modified or repealed at any time, and new
legislation may be enacted that will affect us, including those resulting from any changes to control of branches of the U.S
government or leadership of administrative agencies resulting from upcoming elections.
Any changes in any federal and state law, as well as regulations and governmental policies, income tax laws and
accounting principles, could affect us in substantial and unpredictable ways, including ways that may adversely affect our
business, financial condition or results of operations. Failure to appropriately comply with any such laws, regulations or
principles could result in sanctions by regulatory agencies, civil money penalties or damage to our reputation, all of which
could adversely affect our business, financial condition or results of operations. Our regulatory capital position is discussed in
greater detail in Note 12 "Regulatory Capital Requirements and Restrictions" to the consolidated financial statements of this
Annual Report on Form 10-K.
35
Table of Contents
We are subject to a variety of risks in connection with any sale of loans we may conduct.
In connection with our sale of one or more loan portfolios, we may make certain representations and warranties to the
purchaser concerning the loans sold and the procedures under which those loans have been originated and serviced. If any of
these representations and warranties are incorrect, we may be required to indemnify the purchaser for any related losses, or we
may be required to repurchase part or all of the affected loans. We may also be required to repurchase loans as a result of
borrower fraud or in the event of early payment default by the borrower on a loan we have sold. If we are required to make any
indemnity payments or repurchases and do not have a remedy available to us against a solvent counterparty, we may not be able
to recover our losses resulting from these indemnity payments and repurchases. Consequently, our results of operations may be
adversely affected.
In addition, we must report as held for sale any loans that we have undertaken to sell, whether or not a purchase
agreement for the loans has been executed. We may, therefore, be unable to ultimately complete a sale for part or all of the
loans we classify as held for sale. Management must exercise its judgment in determining when loans must be reclassified from
held for investment status to held for sale status under applicable accounting guidelines. Any failure to accurately report loans
as held for sale could result in regulatory investigations and monetary penalties. Any of these actions could adversely affect our
financial condition and results of operations. Reclassifying loans from held for investment to held for sale also requires that the
affected loans be marked to the lower of cost or fair value. As a result, any loans classified as held for sale may be adversely
affected by changes in interest rates and by changes in the borrower’s creditworthiness. We may be required to reduce the value
of any loans we mark held for sale, which could adversely affect our results of operations.
We may be subject to more stringent capital and liquidity requirements.
Regions and Regions Bank are each subject to capital adequacy and liquidity guidelines and other regulatory requirements
specifying minimum amounts and types of capital that must be maintained. From time to time, the regulators implement
changes to these regulatory capital adequacy and liquidity guidelines. If we fail to meet these minimum capital adequacy and
liquidity guidelines and other regulatory requirements, we or our subsidiaries may be restricted in the types of activities we may
conduct and may be prohibited from taking certain capital actions, such as paying dividends and repurchasing or redeeming
capital securities.
Regions and Regions Bank are each required to comply with applicable capital adequacy standards established by the
Federal Reserve, which are based on the Basel III framework. Proposed changes to applicable capital and liquidity
requirements, such as the Basel III proposal and the long-term debt proposal, could result in increased expenses or cost of
funding, which could negatively affect our financial results or our ability to pay dividends and engage in share repurchases.
For more information concerning our legal and regulatory obligations with respect to Basel III and long-term debt
requirements, please see the “Supervision and Regulation-Regulatory Capital Requirements” discussion within Item 1.
“Business,” and for more information concerning our compliance with capital and liquidity requirements, see Note 12
“Regulatory Capital Requirements and Restrictions” to the consolidated financial statements of this Annual Report on Form 10-
K.
Rulemaking changes and regulatory initiatives implemented by the CFPB may result in higher regulatory and
compliance costs that may adversely affect our results of operations.
Since its formation, the CFPB has finalized a number of significant rules and introduced new regulatory initiatives,
including, without limitation, by way of its enforcement authority and through public statements, that could have a significant
impact on our business and the financial services industry more generally. We may also be required to add additional
compliance personnel or incur other significant compliance-related expenses. Our business, results of operations or competitive
position may be adversely affected as a result.
In addition, the current U.S. presidential administration has called on all regulatory agencies to reduce or eliminate certain
fees relating to a number of services, including banking services. At the same time, the CFPB launched an initiative to reduce
the amounts and types of fees financial institutions may charge, including the issuance of a proposed rule that would
significantly reduce the permissible amount of credit card late fees. Such changes could affect the Company’s ability or
willingness to provide certain products or services, necessitate changes to the Company’s business practices or have an adverse
effect on our results of operations.
We may not be able to complete future acquisitions, may not be successful in realizing the benefits of any future
acquisitions that are completed or may choose not to pursue acquisition opportunities we might find beneficial.
We may, from time to time, evaluate and engage in the acquisition or divestiture of businesses (including their assets or
liabilities, such as loans or deposits). We must generally satisfy a number of meaningful conditions prior to completing any
such transaction, including in certain cases, federal and state bank regulatory approvals.
The process for obtaining required regulatory approvals, particularly for large financial institutions, like Regions, can be
difficult, time-consuming and unpredictable. We may fail to pursue, evaluate or complete strategic and competitively
36
Table of Contents
significant business opportunities as a result of our inability, or our perceived inability, to obtain required regulatory approvals
in a timely manner or at all.
Assuming we are able to successfully complete one or more transactions, we may not be able to successfully integrate and
realize the expected synergies from any completed transaction in a timely manner or at all. In particular, we may be held
responsible by federal and state regulators for regulatory and compliance failures at an acquired business prior to the date of the
acquisition, and these failures by the acquired company may have negative consequences for us, including the imposition of
formal or informal enforcement actions. Completion and integration of any transaction may also divert management attention
from other matters, result in additional costs and expenses or adversely affect our relationships with our customers and
employees, any of which may adversely affect our business or results of operations. Future acquisitions may also result in
dilution of our current shareholders’ ownership interests or may require we incur additional indebtedness or use a substantial
amount of our available cash and other liquid assets. As a result, our financial condition may be affected, and we may become
more susceptible to economic conditions and competitive pressures.
Increases in FDIC insurance assessments may adversely affect our earnings.
Our deposits are insured by the FDIC up to legal limits and, accordingly, we are subject to FDIC deposit insurance
assessments. We generally cannot control the amount of assessments we will be required to pay for FDIC insurance. In 2022,
the FDIC adopted a final rule to increase initial base deposit insurance assessment rate schedules by 2 basis points, which began
with the first quarterly assessment period of 2023. The final rule requires the revised rates to remain in effect until the DIF
reserve ratio meets or exceeds 1.35 percent.
To recoup losses to the DIF resulting from the bank failures of 2023, the FDIC also adopted a special assessment that will
become effective in 2024 and will be collected over eight quarterly assessment periods. The FDIC may require us to pay higher
FDIC assessments than we currently do or may charge additional special assessments or future prepayments if, for example,
there are financial institution failures in the future. Any increase in deposit assessments or special assessments may adversely
affect our business, financial condition or results of operations. See the “Supervision and Regulation-Deposit Insurance”
discussion within Item 1. “Business” and the “Non-Interest Expense” discussion within Item 7. “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for additional information
related to the FDIC’s deposit insurance assessments applicable to Regions Bank.
Unfavorable results from ongoing stress analyses may adversely affect our ability to retain customers or compete for
new business opportunities.
The Federal Reserve conducts supervisory stress testing of us to evaluate our ability to absorb losses in baseline and
severely adverse economic and stressed financial scenarios generated by the Federal Reserve. The Federal Reserve also has
implemented the SCB framework which created a firm specific risk sensitive buffer that is informed by the results of
supervisory stress testing, and is applied to regulatory minimum capital levels to help determine effective minimum ratio
requirements. Firm specific SCB requirements, as well as a summary of the results of certain aspects of the Federal Reserve’s
supervisory stress testing and firm specific results are released publicly.
Although the theoretical stress tests are not meant to assess our current condition or outlook, our customers may
misinterpret and negatively react to the results of these stress tests despite the strength of our financial condition. Any potential
misinterpretations and adverse reactions could limit our ability to attract and retain customers or to effectively compete for new
business opportunities. The inability to attract and retain customers or effectively compete for new business may have a
material and adverse effect on our business, financial condition or results of operations.
Our regulators may also require us to raise additional capital or take other actions, or may impose restrictions on capital
distributions, based on the results of the supervisory stress tests, such as requiring revisions or resubmission of our annual
capital plan, which could adversely affect our ability to pay dividends and repurchase capital securities. In addition, we may not
be able to raise additional capital if required to do so, or may not be able to do so on terms that we believe are advantageous to
Regions or its current shareholders. Any such capital raises, if required, may also be dilutive to our existing shareholders. As
discussed in the “Supervision and Regulation” section of Item 1. of this Annual Report on Form 10-K, the Company was not
required to participate in the 2023 CCAR process. However, the Company did receive its SCB reflecting planned capital
changes including plans to increase its common stock dividend. The Federal Reserve communicated that the Company
exceeded all minimum capital levels under the supervisory stress test and the Company’s SCB for the fourth quarter of 2023
through the third quarter of 2024 continues to be floored at 2.5 percent. Despite exceeding these minimum capital levels, we
may experience unfavorable results from stress test analyses in the future.
We are a holding company and depend on our subsidiaries for dividends, distributions and other payments.
We are a legal entity separate and distinct from our banking and other subsidiaries. Our principal source of cash flow,
including cash flow to pay dividends to our shareholders and principal and interest on our outstanding debt, is dividends from
Regions Bank. There are statutory and regulatory limitations on the payment of dividends by Regions Bank to us, as well as by
us to our shareholders. 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 the holding company. If Regions Bank is unable to make
37
Table of Contents
dividend payments to us and sufficient cash or liquidity is not otherwise available, we may not be able to make dividend
payments to our common and preferred shareholders or principal and interest payments on our outstanding debt. See the
“Shareholders’ Equity” section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of this Annual Report on Form 10-K. In addition, our right to participate in a distribution of assets upon a
subsidiary’s liquidation or reorganization is subject to the prior claims of creditors of that subsidiary, except to the extent that
any of our claims as a creditor of such subsidiary may be recognized. As a result, shares of our capital stock are effectively
subordinated to all existing and future liabilities and obligations of our subsidiaries. At December 31, 2023, our subsidiaries’
total deposits and borrowings were approximately $128.3 billion.
We may not pay dividends on shares of our capital stock.
Holders of shares of our capital stock are only entitled to receive such dividends as our Board may declare out of funds
legally available for such payments. Although we have historically declared cash dividends on our common stock, we are not
required to do so and may reduce or eliminate our common stock dividend in the future. This could adversely affect the market
price of our common stock. Furthermore, the terms of our outstanding preferred stock prohibit us from declaring or paying any
dividends on any junior series of our capital stock, including our common stock, or from repurchasing, redeeming or acquiring
such junior stock, unless we have declared and paid full dividends on our outstanding preferred stock for the most recently
completed dividend period.
We are also subject to statutory and regulatory limitations on our ability to pay dividends on our capital stock. For
example, it is the policy of the Federal Reserve that BHCs should generally pay dividends on common stock only out of
earnings, and only if prospective earnings retention is consistent with the organization’s expected future needs, asset quality and
financial condition. Additionally, we are subject to the Federal Reserve’s SCB requirement whereby supervisory stress testing
informs a buffer above regulatory minimum capital levels that must be maintained to avoid restrictions on capital distributions.
Lastly, if we are unable to satisfy the capital requirements applicable to us for any reason, we may be limited in our ability to
declare and pay dividends on our capital stock.
Anti-takeover and banking laws and certain agreements and charter provisions may adversely affect share value.
Certain provisions of state and federal law and our certificate of incorporation may make it more difficult for someone to
acquire control of us without our Board’s approval. Under federal law, subject to certain exemptions, a person, entity or group
must notify the federal banking agencies before acquiring control of a BHC. Acquisition of 10% or more of any class of voting
stock of a BHC or state member bank, including shares of our common stock, creates a rebuttable presumption that the acquirer
“controls” the BHC or state member bank. Also, as noted under the “Supervision and Regulation” section of Item 1. of this
Annual Report on Form 10-K, a BHC must obtain the prior approval of the Federal Reserve before, among other things,
acquiring direct or indirect ownership or control of more than 5 percent of the voting shares of any bank, including Regions
Bank. One factor the federal banking agencies must consider in certain acquisitions is the systemic impact of the transaction.
This may make it more difficult for large institutions to acquire other large institutions and may otherwise delay the regulatory
approval process, possibly by requiring public hearings. Similarly, under Alabama state law, a person or group of persons must
receive approval from the Superintendent of Banks before acquiring “control” of an Alabama bank or any entity having control
of an Alabama bank. For the purposes of determining whether approval is required, “control” is defined as the power, directly
or indirectly, to vote the lesser of (i) 25% or more of any class of voting securities of an Alabama bank (or any entity having
control of an Alabama bank) or (ii) 10% or more of any class of voting securities of an Alabama bank (or any entity having
control of an Alabama bank) if no other person will own, control or hold the power to vote a majority of that class of voting
securities following the acquisition of such voting securities. Furthermore, there also are provisions in our certificate of
incorporation that may be used to delay or block a takeover attempt. For example, holders of our preferred stock have certain
voting rights that could adversely affect share value. If and when dividends on the preferred stock have not been declared and
paid for at least six quarterly dividend periods or their equivalent (whether or not consecutive), the authorized number of
directors then constituting our Board will automatically be increased by two, and the preferred shareholders will be entitled to
elect the two additional directors. Also, the affirmative vote or consent of the holders of at least two-thirds of all of the then-
outstanding shares of the preferred stock is required to consummate a binding share-exchange or reclassification involving the
preferred stock, or a merger or consolidation of Regions with or into another entity, unless certain requirements are met. These
statutory provisions and provisions in our certificate of incorporation, including the rights of the holders of our preferred stock,
could result in Regions being less attractive to a potential acquirer and thus adversely affect our share value.
38
Table of Contents
Our amended and restated bylaws designate (i) the Court of Chancery of the State of Delaware as the sole and
exclusive forum for certain types of actions and proceedings that may be initiated by our shareholders and (ii) the federal
district courts of the United States as the sole and exclusive forum for any action asserting a cause of action arising under
the Securities Act, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with our
company or our company’s directors, officers or other employees.
Our amended and restated bylaws (our “bylaws”) contain two forum selection provisions. First, our bylaws provide that,
except for claims made under the Securities Act of 1933 (which are the subject of the forum selection provision described in the
following sentence), unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (i)
derivative actions brought on behalf of the Company, (ii) certain actions asserting a claim of breach of a fiduciary duty, (iii)
actions asserting a claim against the Company or a director, officer or other employee of the Company arising pursuant to any
provision of Delaware law, our certificate of incorporation, or our bylaws or (iv) any actions asserting a claim against the
Company or any director, officer or other employee of the Company governed by the internal affairs doctrine, shall be the Court
of Chancery of the State of Delaware or the federal district court for the District of Delaware if the Court of Chancery of the
State of Delaware has no jurisdiction. In addition, our bylaws provide that, unless we consent in writing to the selection of an
alternative forum, the sole and exclusive forum for any action asserting a cause of action arising under the Securities Act of
1933, as amended (the “Securities Act”), or any rule or regulation promulgated thereunder, shall be the federal district courts of
the United States. Our bylaws further provide that our shareholders are deemed to have received notice of and consented to both
of these forum selection provisions.
The forum selection provisions of our bylaws may discourage claims or limit shareholders’ ability to submit claims in a
judicial forum that they find favorable, and may result in additional costs for a stockholder seeking to bring a claim.
Additionally, with respect to our forum selection provision relating to claims made under the Securities Act, we note that, while
Section 27 of the Exchange Act creates exclusive federal jurisdiction over claims brought to enforce a duty or liability created
by the Exchange Act, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits
brought to enforce any duty or liability created by the Securities Act. As noted above, our bylaws provide that, unless we
consent in writing to the selection of an alternative forum, U.S. federal district courts will be the exclusive forum for the
resolution of any complaint asserting a cause of action arising under the Securities Act. While we believe the risk of a court
declining to enforce our forum selection provisions is low, if a court were to determine either forum selection provision to be
illegal, invalid or unenforceable in a particular action, we may incur additional costs in conjunction with our efforts to resolve
the dispute in an alternative jurisdiction or multiple jurisdictions, which could have a negative impact on our results of
operations and financial condition and result in a diversion of the time and resources of our management and board of directors.
We face substantial legal and operational risks in safeguarding personal information.
Our businesses are subject to complex and evolving laws and regulations governing the privacy and protection of personal
information of individuals. Individuals whose personal information may be protected by law can include our customers (and in
some cases our customers’ customers), prospective customers, job applicants, employees, and the employees of our vendors and
third parties. Complying with the laws, rules and regulations applicable to our disclosure, collection, use, sharing and storage of
personal information can increase operating costs, impact the development of new products or services, and reduce operational
efficiency. Any mishandling or misuse or personal information by us or third party affiliated with us could expose us to
litigation or regulatory fines, penalties or other sanctions.
Additional risks could arise from our or third parties’ failure to provide adequate disclosure or transparency to our
customers about the personal information collected from them and the use of such information; to receive, document and honor
the privacy preferences expressed by our customers; to protect personal information from unauthorized disclosure; or to
maintain proper training on privacy practices for all employees or third parties who have access to personal information.
Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that those
measures are inadequate, could cause us to lose existing or potential clients and customers, and thereby reduce our revenues.
Furthermore, any failure or perceived failure by us to comply with applicable privacy or data protection laws, rules and
regulations may subject it to inquiries, examinations and investigations that could result in requirements to modify or cease
certain operations or practices, significant liabilities or regulatory fines, penalties or other sanctions. Any of these could damage
our reputation and otherwise adversely affect our businesses.
In recent years, well-publicized incidents involving the inappropriate collection, use, sharing or storage of personal
information have led to expanded governmental scrutiny of practices relating to the safeguarding of personal information by
companies. That scrutiny has in some cases resulted in, and could in the future lead to, the adoption of stricter laws, rules and
regulations relating to the collection, use, sharing and storage of personal information. We will likely be subject to new and
evolving data privacy laws in the U.S. and abroad, which could result in additional costs of compliance, litigation, regulatory
fines and enforcement actions. These types of laws, rules and regulations could prohibit or significantly restrict financial
services firms such as us from sharing information among affiliates or with third parties such as vendors, and thereby increase
compliance costs, or could restrict our use of personal data when developing or offering products or services to customers.
39
Table of Contents
These restrictions could also inhibit our development or marketing of certain products or services, or increase the costs of
offering them to customers.
Differences in regulation can affect our ability to compete effectively.
The content and application of laws and regulations affecting financial services firms sometimes vary according to factors
such as the size of the firm, the jurisdiction in which it is organized or operates and other criteria. Financial technology
companies and other non-traditional competitors may not be subject to banking regulation, or may be supervised by a national
or state regulatory agency that does not have the same regulatory priorities or supervisory requirements as our regulators. These
differences in regulation can impair our ability to compete effectively with competitors that are less regulated that do not have
similar compliance costs.
Talent Management Risks
Our businesses may be adversely affected if we are unable to hire and retain qualified employees.
Our success depends, in part, on our executive officers and other key personnel. The market for qualified individuals is
highly competitive, and we may not be able to attract and retain qualified personnel or candidates to replace or succeed
members of our senior management team or other key personnel. As a large financial and banking institution, we may be
subject to limitations on compensation practices, which may or may not affect our competitors, by the Federal Reserve, the
FDIC or other regulators. These limitations could further affect our ability to attract and retain our executive officers and other
key personnel, in particular as we are more often competing for personnel with fintechs, technology companies and other less
regulated entities who may not have the same limitations on compensation as we do. The increase in remote work arrangements
and opportunities in regional, national and global labor markets has also increased competition to attract and retain skilled
personnel. Our current or future approach to in-office and remote-work arrangements may not meet the needs or expectations of
our current or prospective employees or may not be perceived as favorable as the arrangements offered by other employers,
which could adversely affect our ability to attract and retain employees.
Our operations rely on its ability, and the ability of key external parties, to maintain appropriately staffed workforces,
and on the competence, trustworthiness, health and safety of employees.
Our ability to operate our businesses efficiently and profitably, to offer products and services that meet the expectations of
our clients and customers, and to maintain an effective risk management framework is highly dependent on our ability to staff
its operations appropriately and on the competence, integrity, health and safety of our employees. We are similarly dependent
on the workforces of other parties on which our operations rely, including vendors and other service providers. Our businesses
could be materially and adversely affected by the ineffective implementation of business decisions; any failure to institute
controls that appropriately address risks associated with business activities; or appropriately train employees with respect to
those risks and controls; staffing shortages, particularly in tight labor markets. In addition, our business could be adversely
impacted by a significant operational breakdown or failure, theft, fraud or other unlawful conduct or other negative outcomes
caused by human error or misconduct by an employee of us or of another party on which our operations depend. Our operations
could also be impaired if the measures taken by us or by governmental authorities to help ensure the health and safety of our
employees are ineffective, or if any external party on which we rely fails to take appropriate and effective actions to protect the
health and safety of its employees.
Estimates and Assumptions Risks
Our reported financial results depend on management’s selection of accounting methods and certain assumptions and
estimates.
Our accounting policies and assumptions are fundamental to our reported financial condition and results of operations.
Our management must exercise judgment in selecting and applying many of these accounting policies and methods so they
comply with GAAP and reflect management’s judgment of the most appropriate manner to report our financial condition and
results. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of
which may be reasonable under the circumstances, yet may result in us reporting materially different results than would have
been reported under a different alternative.
Certain accounting policies are critical to presenting our reported financial condition and results of operations. They
require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different
amounts could be reported under different conditions or using different assumptions or estimates. The Company’s critical
accounting estimates include: the allowance for credit losses; fair value measurements; intangible assets; residential MSRs; and
income taxes. Because of the uncertainty of estimates involved in these matters, we may be required to do one or more of the
following: significantly increase the allowance for credit losses and/or sustain credit losses that are significantly higher than the
allowance provided; recognize significant losses on assets carried at fair value; recognize significant impairment on our
goodwill, other intangible assets or deferred tax asset balances; significantly increase our accrued income taxes; or significantly
decrease the value of our residential MSRs. Any of these actions could adversely affect our reported financial condition and
results of operations.
40
Table of Contents
If the models that we use in our business perform poorly or provide inadequate information, our business or results of
operations may be adversely affected.
We utilize quantitative models, machine learning models and artificial intelligence models to assist in measuring risks and
estimating or predicting certain financial values. Models may be used in processes such as determining the pricing of various
products, grading loans and extending credit, measuring interest rate and other market risks, forecasting financial performance,
predicting losses, improving customer services, maintaining adherence to laws and regulations, assessing capital adequacy,
calculating regulatory capital levels, preventing fraud, strengthening customer authentication processes, generating marketing
analytics, prospecting leads and estimating the value of financial instruments and balance sheet items. Poorly designed,
implemented or managed models present the risk that our business decisions that consider information based on such models
will be adversely affected due to the inadequacy or inaccuracy of that information, which may lead to losses, damage our
reputation and adversely affect our reported financial condition and results of operations. Also, information we provide to the
public or to our regulators based on poorly designed, implemented or managed models could be inaccurate or misleading. Some
of the decisions that our regulators make, including those related to capital distributions to our shareholders, could be affected
adversely due to the perception that the quality of the models used to generate the relevant information is insufficient.
Changes in our accounting policies or in accounting standards could materially affect how we report our financial
results and condition.
From time to time, the FASB and SEC change the financial accounting and reporting standards that govern the
preparation of our financial statements. These changes can be difficult to predict and can materially impact how we record and
report our financial condition and results of operations.
The value of our goodwill and other intangible assets may decline in the future.
As of December 31, 2023, we had $5.7 billion of goodwill and $205 million of other intangible assets. A significant
decline in our expected future cash flows, a significant adverse change in the business climate, slower economic growth or a
significant and sustained decline in the price of our common stock, any or all of which could be materially impacted by many of
the risk factors discussed herein, may necessitate our taking charges in the future related to the impairment of our goodwill.
Future regulatory actions and increases in income tax rates could also have a material impact on assessments of goodwill for
impairment. If we were to conclude that a future write-down of our goodwill is necessary, we would record the appropriate
charge, which could have a material adverse effect on our results of operations.
Identifiable intangible assets other than goodwill consist primarily of relationship assets. Adverse events or circumstances
could impact the recoverability of intangible assets, and, to the extent these intangible assets are deemed unrecoverable, a non-
cash impairment charge would be recorded, which could have a material adverse effect on our results of operations.
Other External Risks
Our business and financial performance could be adversely affected by a U.S. government debt default or the threat of
such a default.
A U.S. government debt default would have material adverse impact on our business and financial performance, including
a decrease in the value of Treasury bonds and other government securities held by us, which could negatively impact our capital
position and our ability to meet regulatory requirements. Other negative impacts could be volatile capital markets, an adverse
impact on the U.S. economy and the U.S. dollar, as well as increased default rates among borrowers in light of increased
economic uncertainty. Some of these impacts might occur even in the absence of an actual default but as a consequence of
extended political negotiations around the threat of such a default and a government shutdown.
Weather-related events, pandemics and other natural or man-made disasters could cause a disruption in our
operations or lead to other consequences that could adversely impact our financial results and condition. These impacts
could be intensified by climate change. Heightening focus on climate change may also carry transition risks that could
negatively impact our results of operations and financial condition.
Weather-related events, health crises, the occurrence or worsening of disease outbreaks or pandemics such as COVID-19,
or other catastrophic events, other natural or man-made disasters, climate change and the transition to a lower-carbon economy,
as well as government actions or other restrictions in connection with such events, pose shorter- and longer-term risks to our
business and/or that of our customers, vendors and suppliers and are expected to increase over time.
A significant portion of our operations is located in the areas bordering the Gulf of Mexico and the Atlantic Ocean,
regions that are susceptible to hurricanes, or in areas of the Southeastern U.S. that are susceptible to tornadoes and other severe
weather events. In particular, in recent years, a number of severe hurricanes impacted areas in our footprint. Many areas in the
Southeastern U.S. have also experienced severe droughts and floods in recent years. Any of these, or any other severe weather
event, could cause disruption to our operations and could have a material adverse effect on our overall business, results of
operations or financial condition. In some cases, we have taken preemptive measures in an effort to mitigate certain of these
adverse effects, such as maintaining insurance that includes coverage for resultant losses and expenses where possible, though
these measures cannot fully mitigate all future risks. We cannot be sure that such insurance will continue to be available to us
41
Table of Contents
on commercially reasonable terms, or at all, or that our insurers will not deny coverage as to any future claim. In addition, such
measures cannot predict the nature, timing or level of severe weather events or prevent the disruption that a catastrophic
earthquake, fire, hurricane, tornado or other severe weather event could cause to the markets that we serve and any resulting
adverse impact on our customers, such as hindering our borrowers’ ability to timely repay their loans and diminishing the value
of any collateral held by us. Man-made disasters and other events connected with the Gulf of Mexico or Atlantic Ocean, such as
oil spills, could have similar effects.
Climate change could intensify the severity of and increase the frequency of adverse effects of weather-related events
impacting us and our customers. Namely, climate change may intensify the severity of and increase the frequency of
earthquakes, fires, hurricanes, tornadoes, droughts, floods and other weather-related events, which could cause even greater
disruption to our business and operations. Longer-term changes, such as increasing average temperatures and rising sea levels,
may damage, destroy or otherwise impact the value or productivity of our properties and other assets, reduce the availability of
or increase the cost of insurance, and/or lead to prolonged disruptions in our operations.
Responding to concerns around climate change provides us with potential new avenues through which we can support our
stakeholders but also exposes us to risks associated with the transition to a lower-carbon economy. Such risks may result from
changes in policies, laws and regulations, technologies, or market preferences relating to climate change. These changes could
materially and negatively impact our business, results of operations, financial condition and our reputation, in addition to
having a similar impact on our customers, vendors and suppliers. Federal and state regulatory authorities, investors and other
third parties have increasingly scrutinized the business activities of financial institutions and the relationship of those activities
to climate change (including such institutions’ involvement or their customers’ involvement in certain industries or projects
associated with climate change, as well as any decisions to conduct or change activities in response to considerations relating to
climate change), which may result in financial institutions facing increased pressure regarding the disclosure and management
of climate risks and related lending and investment activities. As a result, we may face increased scrutiny related to our ability
to demonstrate resilience to potential climate-related risks, including systemic risks posed by operational disruptions and
external demands. Ongoing legislative or regulatory uncertainties and changes regarding climate risk management and
practices, including inconsistent (and sometimes conflicting) perspectives or requirements, may result in higher regulatory,
compliance, credit and reputational risks and costs. In addition, the transition to a lower-carbon economy could indirectly
subject us to specific risks through our borrowers' exposure to changes in commodity prices. For more information see the “We
are subject to environmental, social and governance risks that could adversely affect our business, reputation and the trading
price of our common stock” and “Weakness in commodity businesses could adversely affect our performance” risk factors
above.
42
Table of Contents
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Identification and Assessment. Regions devotes significant financial and non-financial resources to identify and
mitigate threats to the confidentiality, availability and integrity of its information systems. As more fully described below, the
Regions IS Program’s controls and risk management practices are designed to prevent and detect cybersecurity threats in order
to reduce the likelihood that they materially affect Regions' business strategy, operations, or financial condition.
Regions regularly tests and assesses its environment so it can update and maintain its systems and controls to mitigate the
risks from cyber threats and vulnerabilities. These include risk assessments and penetration testing as well as testing against
security controls. Layered security controls are designed and maintained to complement each other and enhance risk mitigation
efforts. Regions will continue to develop and enhance controls, processes and technology to respond to evolving disruptive
technology and to protect its systems from attacks or unauthorized access. In addition, Regions’ TPRM function establishes the
risk-based framework that governs all associates, subsidiaries, and affiliates who are engaged in the sourcing, planning, risk
assessment, due diligence, contracting, ongoing monitoring, and governance of vendor engagements, including those that
present cybersecurity risks for Regions. The TPRM framework includes the initial inherent-risk assessment conducted at
onboarding and the applicable due diligence risk assessments, based on the engagement’s risk profile. Upon completion of the
applicable due diligence, the contract is constructed and negotiated, with efforts made to ensure appropriate terms are in place
to further mitigate the risks presented. Thereafter, each engagement is reassessed on the established cadence associated with
the inherent-risk tier, and performance scorecards are competed to ensure optimal delivery and to denote material changes in the
engagement.
Risk Management. As a company that deals with large volumes of sensitive customer information and financial
transactions, Regions treats cybersecurity risk as a key operational risk within its enterprise-wide risk management framework.
As part of this framework, Regions utilizes the "Three Lines of Defense" concept to clearly designate risk management
activities within the Company, and this concept is applicable to cybersecurity risk (see the “Risk Management” section of
Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on
Form 10-K). To manage cybersecurity risk, the Company has designed and implemented an IS Program that is led by our Chief
Information Security Officer, who has close to two decades of experience in the cybersecurity field, including leadership roles
at multiple financial services organizations. The IS Program includes information security policies, procedures, and controls
designed to prevent, detect, limit and respond to cyber-attack or other similar incidents which might impact Regions'
technologies, systems, and networks. Regions' IS Program is designed and implemented to substantially align with standards
promulgated by the NIST. The Information Security Policy establishes technical, administrative, and physical control directives
that are implemented to protect informational assets from reasonably foreseeable risks and threats. The IS Program is
supplemented by cybersecurity operations that protect the integrity and availability of information systems. As discussed above,
Regions' TPRM function also conducts due diligence and ongoing oversight of the Company’s third-party vendors. The
Company maintains a Cyber Incident Response Plan, which is part of broader business continuity planning and the Crisis
Management Program, to help the Company respond to a possible data breach.
The Company engages with external experts and advisors, as needed, to review, enhance, and support our IS Program. For
example, third parties may be used to assist in the event of a breach or to mitigate certain threats to Regions' environment.
Internally, the Company regularly provides associates with cybersecurity training and education. To bolster these practices,
Regions maintains cybersecurity insurance, which is reviewed annually, to cover potential financial losses from cyber events. In
addition, Regions participates in information sharing organizations to gather and share information with peer banks and other
financial institutions to better prepare and protect its information systems from attack as well as topics including fraud.
Governance. Regions’ system of internal controls also incorporates an organization-wide protocol for the reporting and
escalation of cybersecurity matters, including to management and the Board. The Board also receives updates on the
Company’s enterprise services, which includes resilience, information technology, and cybersecurity. The Board considers both
business and technical resilience, cybersecurity and technological innovation, and privacy considerations, along with related
risk considerations and mitigation efforts, within the Company’s strategic plan. The Board is actively engaged in the oversight
of Regions’ continuous efforts to reinforce and enhance its operational resilience and receives education on the cybersecurity
landscape. The Board oversees the management of cybersecurity and related risks primarily through its Risk Committee, which
is supported at the management level by the ERMC, ORC, and TOROC which fall under the Risk Committee's purview. The
Board's Risk Committee annually reviews and approves the Information Security Policy; reviews information and regular
reports on the topic from members of management on at least a quarterly basis; and recommends actions and other steps to be
taken, as it deems appropriate. Additionally, the Board’s Audit Committee periodically receives reports on the IS Program
prepared by the Chief Information Security Officer and the Company's Risk Management and Internal Audit functions. The
Board’s Technology Committee is charged with oversight of the overall role of technology in executing Regions’ business
strategy and coordinates with the Risk Committee on risk assessment and management associated with technology-related
strategic investments, major technology vendor relationships, and risks associated with information technology and security
43
Table of Contents
activities. The Board annually reviews the information security program and, through its various committees, is briefed at least
quarterly on cybersecurity matters. In addition, our management follows a risk-based escalation process to notify the Audit
Committee and Risk Committee outside of the regular reporting cycle when they identify an emerging risk or material issue.
Cybersecurity Incidents. In 2023, we did not identify any cybersecurity threats or incidents that have materially affected
or are reasonably likely to materially affect our business strategy, results of operations or financial condition. Despite our
efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an
undetected cybersecurity incident. For more information about these risks, see the Technology Risks in Item 1A. "Risk
Factors".
Item 2. Properties
Regions’ corporate headquarters occupy the main banking facility of Regions Bank, located at 1900 Fifth Avenue North,
Birmingham, Alabama 35203.
At December 31, 2023, Regions Bank, Regions’ banking subsidiary, operated 1,271 banking offices. At December 31,
2023, there were no significant encumbrances on the offices, equipment and other operational facilities owned by Regions and
its subsidiaries.
See Item 1. “Business” of this Annual Report on Form 10-K for a list of the states in which Regions Bank’s branches are
located.
Item 3. Legal Proceedings
Information required by this item is set forth in Note 23 "Commitments, Contingencies and Guarantees" in the Notes to
the Consolidated Financial Statements, which are included in Item 8. of this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures.
Not applicable.
Information About Our Executive Officers
Information concerning the Executive Officers of Regions as of February 23, 2024, is set forth below.
Executive Officer
John M. Turner, Jr.
David J. Turner, Jr.
Kate R. Danella
David R. Keenan
C. Dandridge Massey
Age
62
60
45
56
53
Position and
Offices Held with
Registrant and Subsidiaries
President and Chief Executive Officer of registrant
and Regions Bank. Previously served as Head of
Corporate Banking Group of registrant and Regions
Bank and as South Region President of Regions Bank.
Prior to joining Regions, served as President of
Whitney National Bank and Whitney Holding
Corporation.
Senior Executive Vice President and Chief Financial
Officer of registrant and Regions Bank.
Senior Executive Vice President and Head of
Consumer Banking Group of registrant and Regions
Bank. Previously served as Chief Strategy and Client
Experience Officer; Head of Strategic Planning &
Consumer Bank Products and Origination
Partnerships; and as Head of Strategic Planning and
Corporate Development of registrant and Regions
Bank. Previously served as Head of Private Wealth
Management of Regions Bank. Prior to joining
Regions, served as Vice President of Capital Group
Companies.
Senior Executive Vice President and Chief
Administrative and Human Resources Officer of
registrant and Regions Bank. Previously served as
Chief Human Resources Officer of registrant and
Regions Bank.
Senior Executive Vice President and Chief Enterprise
Operations and Technology Officer of registrant and
Regions Bank. Previously served as Head of Digital
and Contact Center Banking and Head of Enterprise
Technology Strategic Services at Truist Bank.
Executive
Officer
Since
2011
2010
2018
2010
2022
44
Table of Contents
Scott M. Peters
Tara A. Plimpton
William D. Ritter
Ronald G. Smith
Russell Zusi
62
55
53
63
49
Senior Executive Vice President and Chief
Transformation Officer of registrant and Regions
Bank. Previously served as Director of Regions
Investment Services, Inc. Previously served as Head
of Consumer Banking Group and as Consumer
Services Group Head of registrant and Regions Bank.
Senior Executive Vice President, Chief Legal Officer
and Corporate Secretary of registrant and Regions
Bank. Previously served as General Counsel of
registrant and Regions Bank. Prior to joining Regions,
served as Vice President and General Counsel of GE
Global Operations and as General Counsel of GE
Energy Connections.
Senior Executive Vice President and Head of Wealth
Management Group of registrant and Regions Bank.
Director of Highland Associates, Inc.
Senior Executive Vice President and Head of
Corporate Banking Group of registrant and Regions
Bank. Director of Regions Equipment Finance
Corporation. Manager of RFC Financial Services
Holding LLC. Previously served as Regional
President, Mid-America Region of Regions Bank.
Senior Executive Vice President and Chief Risk
Officer of registrant and Regions Bank. Prior to
joining Regions, served as Co-head of Global
Compliance and Operational Risk and Global
Technology and Operations Chief Risk Officer, and
previously as Credit Review Executive, of Bank of
America Corp.
2010
2020
2010
2010
2024
45
Table of Contents
PART II
Item 5. Market For Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Regions common stock, par value $.01 per share, is listed for trading on the New York Stock Exchange under the symbol
RF. Information relating to compensation plans under which Regions' equity securities are authorized for issuance is presented
in Part III, Item 12. As of February 21, 2024, there were 35,025 holders of record of Regions common stock (including
participants in the Broadridge Direct Stock Purchase and Dividend Reinvestment Plan for Regions Financial Corporation).
Restrictions on the ability of Regions Bank to transfer funds to Regions at December 31, 2023, are set forth in Note 12
"Regulatory Capital Requirements and Restrictions" to the consolidated financial statements, which are included in Item 8. of
this Annual Report on Form 10-K. A discussion of certain limitations on the ability of Regions Bank to pay dividends to
Regions and the ability of Regions to pay dividends on its common stock is set forth in Item 1. “Business” under the heading
“Supervision and Regulation—Payment of Dividends” of this Annual Report on Form 10-K.
Issuer Purchases of Equity Securities
On April 20, 2022, the Board authorized the repurchase of up to $2.5 billion of the Company's common stock, permitting
purchases from the second quarter of 2022 through the fourth quarter of 2024.
The following table presents information regarding issuer purchases of equity securities during the fourth quarter of
2023. All of these shares were immediately retired upon repurchase and therefore were not included in treasury stock.
Period
October 1-31, 2023
November 1-30, 2023
December 1-31, 2023
Total Fourth Quarter
Total Number of
Shares Purchased
Average Price Paid
per Share(1)
6,437,685 $
5,653,231 $
4,038,243 $
16,129,159 $
14.22
15.66
17.36
15.82
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Approximate
Dollar Value of
Shares that May
Yet Be Purchased Under
Publicly Announced
Plans or Programs
6,437,685 $
5,653,231 $
4,038,243 $
16,129,159 $
2,393,179,589
2,304,697,925
2,234,699,026
2,234,699,026
_____
(1) Average price paid does not reflect the 1 percent excise tax charged on public company share repurchases.
46
Table of Contents
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative total return of Regions common stock against
the cumulative total return of the S&P 500 Index and the S&P 500 Banks Index for the past five years. This presentation
assumes that the value of the investment in Regions’ common stock and in each index was $100 and that all dividends were
reinvested.
Cumulative Total Return
12/31/2018
12/31/2019
12/31/2020
12/31/2021
12/31/2022
12/31/2023
$
100.00 $
100.00
100.00
133.30 $
131.47
140.64
131.12 $
155.65
121.29
182.78 $
200.29
164.28
187.01 $
163.98
132.73
176.35
207.04
147.28
Regions
S&P 500 Index
S&P 500 Banks Index
Item 6. [Reserved]
47
Period EndingRegionsS&P 500 IndexS&P 500 Banks Index12/31/201812/31/201912/30/202012/30/202112/31/202212/31/2023$50$100$150$200$250
Table of Contents
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE OVERVIEW
Management believes the following sections provide an overview of several of the most relevant matters necessary for an
understanding of the financial aspects of Regions's business, particularly regarding its 2023 results. Cross references to more
detailed information regarding each topic within MD&A and the consolidated financial statements are included. This summary
is intended to assist in understanding the information provided, but should be read in conjunction with the entire MD&A and
consolidated financial statements, as well as the other sections of this Annual Report on Form 10-K.
Economic Environment in Regions’ Banking Markets
After full-year 2023 growth of 2.5 percent, Regions' baseline forecast anticipates real GDP growth of 2.6 percent in 2024.
While the Company did not have recession as its base forecast for 2023, the economy outperformed expectations, reflecting
marked improvement on the supply side of the economy that allowed for faster growth and decelerating inflation. Growth is
expected to be somewhat restrained over the first half of 2024 before picking up over the second half of the year.
The labor market proved to be resilient in 2023. While the pace of job growth slowed over the course of the year, it was
driven by a slower pace of hiring as opposed to a rising pace of layoffs. This pattern is expected to continue in 2024, with
further slowing in the pace of job growth putting upward pressure on the unemployment rate, but the Company does not
anticipate a significant, broad-based, and sustained spike in layoffs.
A slowing pace of job growth will lead to further deceleration in growth of aggregate labor earnings, but growth in labor
earnings is expected to continue to outpace inflation, thus providing support for consumer spending. Household balance sheets
remain notably healthy, and the preponderance of fixed-rate debt on household balance sheets has been a buffer against the
effects of higher interest rates. Full-year 2024 growth in real consumer spending is expected to be slightly faster than 2023
growth.
Real business investment in equipment and machinery is expected to remain soft before picking up over the second half of
2024. At the same time, the wave of business spending on structures seen over much of 2023 is subsiding, to the point that real
spending on structures is expected to offer little, if any, support for real GDP growth in 2024. After having been displaced by
spending on structures in 2023, business investment in intellectual property products is expected to return to its usual role as the
fastest growing segment of real business fixed investment.
Higher mortgage interest rates weighed on single family construction and sales in 2023, but sales of new single family
homes proved to be more resilient than anticipated driven by a combination of still-significant pent-up demand for home
purchases and the lack of existing single family homes for sale. While mortgage rates have started to decline, helping to ease
affordability constraints, it will likely not do much to unlock inventories of existing homes for sale. Builders should fare better
in 2024 and real residential fixed investment should be a modest support for top-line real GDP growth in 2024.
Further deceleration in inflation in 2024, driven by a slower pace of economic growth, a modestly rising unemployment
rate, and the avoidance of disruptions to the supply side of the economy would be consistent with the FOMC beginning to cut
the Fed funds rate even with inflation above their 2.0 percent target rate. The real, or, inflation-adjusted, current funds rate is
meaningfully restrictive, and further deceleration in inflation without cuts in the Fed funds rate would effectively make policy
more restrictive. As such, we expect four twenty-five basis point cuts in the Fed funds rate by year-end 2024.
Patterns of economic activity within the Regions footprint are expected to be broadly similar to those seen for the U.S. as
a whole. A number of in-footprint states have seen heightened flows of domestic in-migration since the onset of the pandemic,
which has resulted in more rapid rates of job growth and more rapid growth in housing costs. If, as Regions anticipates, the
broader economy slows and labor market conditions loosen, it could be that migration patterns will shift over coming quarters.
Job growth for the Company's footprint as a whole is expected to be faster than that for the U.S. as a whole. Some of the metro
areas which had, prior to the increase in mortgage interest rates, seen the largest increases in house prices could experience
declining house prices, but continued robust population growth in these markets will help stem the extent of any such declines.
The continued economic uncertainty, as described above, impacted Regions' forecast utilized in calculating the ACL as of
December 31, 2023. See the "Allowance" section for further information.
2023 Results
Regions reported net income available to common shareholders of $2.0 billion or $2.11 per diluted share in 2023
compared to net income available to common shareholders of $2.1 billion or $2.28 per diluted share in 2022.
Net interest income (taxable-equivalent basis) totaled $5.4 billion in 2023 compared to $4.8 billion in 2022. The net
interest margin (taxable-equivalent basis) was 3.90 percent in 2023, reflecting a 54 basis point increase from 2022. The increase
in net interest income was primarily driven by a significant increase in market interest rates and average loan growth. Deposit
mix and pricing normalization combined with higher overall funding costs, which are expected in a rising rate environment,
partially offset the increases in net interest income.
48
Table of Contents
The provision for credit losses totaled $553 million in 2023 compared to $271 million in 2022. The provision for credit
losses was higher than net charge-offs by $156 million in 2023. The increase in the provision for credit losses was driven
primarily by adverse risk migration and continued credit normalization, as well as a build in qualitative adjustments for
incremental risk in higher risk portfolios. Refer to the "Allowance for Credit Losses" section of Management's Discussion and
Analysis for further detail.
Non-interest income was $2.3 billion in 2023 compared to $2.4 billion in 2022. The decrease was primarily driven by
lower capital markets income, service charges on deposit accounts and mortgage income partially offset by an increase in
market valuation adjustments on employee benefit assets. See Table 4 "Non-Interest Income" for further details.
Non-interest expense was $4.4 billion in 2023 and $4.1 billion in 2022. The increase was driven by an increase in FDIC
insurance assessments primarily related to the special assessment, operational losses, and salaries and employee benefits. These
increases were partially offset by a decline in professional, legal and regulatory expenses related to a settled matter with the
CFPB in 2022. See Table 5 "Non-Interest Expense" for further details.
Regions' effective tax rate was 20.5 percent in 2023 compared to 22.0 percent in 2022. See the "Income Taxes" section for
further details.
For more information, refer to the following additional sections within this Form 10-K:
•
•
•
"Operating Results" section of MD&A
“Net Interest Income and Net Interest Margin” discussion within the “Operating Results” section of MD&A
“Interest Rate Risk” discussion within the “Risk Management” section of MD&A
Capital
Capital Actions
Regions participates in supervisory stress testing conducted by the Federal Reserve and its SCB is currently floored at 2.5
percent. See Note 14 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to the consolidated
financial statements for further details regarding CCAR results.
On April 20, 2022, the Board authorized the repurchase of up to $2.5 billion of the Company's common stock, permitting
purchases from the second quarter of 2022 through the fourth quarter of 2024. In the fourth quarter of 2023, Regions
repurchased approximately 16 million shares of common stock under these programs, which reduced shareholders' equity by
$252 million.
For more information, refer to the following additional sections within this Form 10-K:
•
•
•
"Shareholders' Equity" discussion in MD&A
"Regulatory Requirements" section of MD&A
Note 14 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to the consolidated financial
statements
Regulatory Capital
Regions and Regions Bank are required to comply with regulatory capital requirements established by Federal and State
banking agencies. Under the Basel III Rules, Regions is designated as a standardized approach bank. The Basel III Rules
maintain the minimum guidelines for Regions to be considered well-capitalized for Tier 1 capital and Total capital at 6.0% and
10.0%, respectively. At December 31, 2023, Regions’ Tier 1 capital and Total capital ratios were estimated to be 11.57% and
13.35%, respectively.
The Basel III Rules also officially defined CET1. Regions' CET1 ratio at December 31, 2023 was estimated to be 10.26%.
For more information, refer to the following additional sections within this Form 10-K:
•
•
•
“Supervision and Regulation” discussion within Item 1. Business
"Regulatory Requirements" section of MD&A
Note 12 "Regulatory Capital Requirements and Restrictions" to the consolidated financial statements
Loan Portfolio and Credit
During 2023, total loans increased by $1.4 billion or 1.4 percent compared to 2022. The increase was primarily driven by
an increase in the consumer portfolio of $1.2 billion, with the combined balance of commercial and investor real estate loans
also increasing by $198 million. The increase in consumer loans reflects growth in residential first mortgage and in other
consumer loans, which was driven by consumer home improvement loans. Refer to the "Portfolio Characteristics" section for
further discussion.
49
Table of Contents
Net charge-offs totaled $397 million, or 0.40 percent of average loans, in 2023, compared to $263 million, or 0.29 percent
in 2022, with both periods reflecting an increase in consumer charge-offs due to the sale of loan portfolios. In 2023 and 2022,
adjusted net charge-offs (non-GAAP) totaled $362 million, or 0.37 percent, and $200 million, or 0.22 percent, respectively. See
Table 1 "GAAP to Non-GAAP Reconciliations for additional information. Commercial and industrial net charge-offs also
increased from 2022 to 2023. The allowance was 1.73 percent of total loans, net of unearned income at December 31, 2023, an
increase from 1.63 percent at December 31, 2022. The coverage ratio of allowance to non-performing loans excluding held for
sale was 211 percent at December 31, 2023, compared to 317 percent at December 31, 2022.
For more information, refer to the following additional sections within this Form 10-K:
Adjusted Net Charge-offs within the Table 1 "GAAP to Non-GAAP Reconciliations"
"Portfolio Characteristics" section of MD&A
“Allowance for Credit Losses” discussion within the “Critical Accounting Policies and Estimates” section of
MD&A
“Provision for Credit Losses” discussion within the “Operating Results” section of MD&A
“Loans,” “Allowance for Credit Losses,” and “Non-performing Assets” discussions within the “Balance Sheet
Analysis” section of MD&A
Note 4 "Loans" to the consolidated financial statements
Note 5 "Allowance for Credit Losses" to the consolidated financial statements
•
•
•
•
•
•
•
Liquidity
At the end of 2023, Regions Bank had $4.2 billion in cash on deposit with the Federal Reserve Bank and the loan-to-
deposit ratio was 77 percent. Cash and cash equivalents at the parent company totaled $1.9 billion. Cash at the Federal Reserve
declined from December 31, 2022 due to an expected decline in deposits, as well as growth in loans.
At December 31, 2023, the Company’s borrowing capacity with the Federal Reserve was $21.3 billion based on available
collateral. Borrowing availability with the FHLB was $15.1 billion based on available collateral at the same date. Regions also
maintains a shelf registration statement with the U.S. Securities and Exchange Commission that can be utilized by the Company
to issue various debt and/or equity securities. Additionally, Regions' Board has authorized Regions Bank to issue up to $10
billion in aggregate principal amount of bank notes outstanding at any one time.
Regions is required to conduct liquidity stress testing and measure its available sources of liquidity against minimums as
established by Regions' internal liquidity policy. Regions was fully compliant with those requirements as of year-end.
For more information, refer to the following additional sections within this Form 10-K:
•
•
•
•
•
“Supervision and Regulation” discussion within Item 1. Business
“Borrowings” discussion within the “Balance Sheet Analysis” section of MD&A
“Regulatory Requirements” section of MD&A
“Liquidity” discussion within the “Risk Management” section of MD&A
Note 11 "Borrowed Funds" to the consolidated financial statements
2024 Expectations
2024 Expectations (1)
Category
Net Interest Income(2)
Adjusted Non-Interest Income
Adjusted Non-Interest Expense
Average Loans
Average Deposits
Net Charge-Offs / Average Loans
Effective Tax Rate
Expectation
$4.7-$4.8 billion
$2.3-$2.4 billion
approximately ~$4.1 billion
grow low-single digits
stable to modestly lower
40-50 basis points
21-22%
______
(1) Expectation for CET1 is to continue to manage around 10 percent over the near term.
(2) Expectation for net interest income assumes stable or lower short-term interest rates; flat long-term rate held at December 31, 2023 levels.
The reconciliation with respect to these forward-looking non-GAAP measures is expected to be consistent with the actual
non-GAAP reconciliations within Management's Discussion and Analysis of this Form 10-K. For more information related to
the Company's 2024 expectations, refer to the related sub-sections discussed in more detail within Management's Discussion
and Analysis of this Form 10-K.
50
Table of Contents
GENERAL
The following discussion and financial information is presented to aid in understanding Regions’ financial position and
results of operations. The emphasis of this discussion will be on operations for the years 2023 and 2022; in addition, financial
information for prior years will also be presented when appropriate.
Regions’ profitability, like that of many other financial institutions, is dependent on its ability to generate revenue from
net interest income as well as non-interest income sources. Net interest income is primarily the difference between the interest
income Regions receives on interest-earning assets, such as loans, leases, investment securities and cash balances held at the
Federal Reserve Bank, and the interest expense Regions pays on interest-bearing liabilities, principally deposits and
borrowings. Regions’ net interest income is impacted by the size and mix of its balance sheet components and the interest rate
spread between interest earned on its assets and interest paid on its liabilities. Non-interest income includes fees from service
charges on deposit accounts, card and ATM fees, mortgage servicing and secondary marketing, investment management and
trust activities, capital markets and other customer services which Regions provides. Results of operations are also affected by
the provision for credit losses and non-interest expenses such as salaries and employee benefits, equipment and software
expenses, occupancy, professional, legal and regulatory expenses, FDIC insurance assessments, and other operating expenses,
as well as income taxes.
Economic conditions, competition, new legislation and related rules impacting regulation of the financial services
industry and the monetary and fiscal policies of the Federal government significantly affect most, if not all, financial
institutions, including Regions. Lending and deposit activities and fee income generation are influenced by levels of business
spending and investment, consumer income, consumer spending and savings, capital market activities, and competition among
financial institutions, as well as customer preferences, interest rate conditions and prevailing market rates on competing
products in Regions’ market areas.
Regions’ business strategy is focused on providing a competitive mix of products and services, delivering quality
customer service, and continuing to develop and optimize distribution channels that include a branch distribution network with
offices in convenient locations, as well as electronic and mobile banking.
Business Segments
Regions provides traditional commercial, retail and mortgage banking services, as well as other financial services in the
fields of asset management, wealth management, securities brokerage, and other specialty financing. Regions carries out its
strategies and derives its profitability from three reportable segments: Corporate Bank, Consumer Bank, and Wealth
Management, with the remainder in Other.
See Note 22 "Business Segment Information" to the consolidated financial statements for further information on Regions’
business segments.
NON-GAAP MEASURES
The table below presents computations of earnings and certain other financial measures, which excludes certain
adjustments that are included in the financial results presented in accordance with GAAP. These non-GAAP financial measures
include "adjusted net loan charge-offs", "adjusted net loan charge-offs as a percent of average loans, annualized", "adjusted
non-interest expense", "adjusted non-interest income", "adjusted total revenue", and "adjusted total revenue, taxable-equivalent
basis". Regions believes that excluding certain items provides a meaningful base for period-to-period comparison, which
management believes will assist investors in analyzing the operating results of the Company and predicting future performance.
These non-GAAP financial measures are also used by management to assess the performance of Regions’ business because
management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions
believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the
Company on the same basis as that applied by management. Management and the Board utilize these non-GAAP financial
measures as follows:
• Preparation of Regions’ operating budgets
• Monthly financial performance reporting
• Monthly close-out reporting of consolidated results
• Presentations to investors of Company performance
• Metrics for incentive compensation
Net loan charge-offs (GAAP) are presented excluding adjustments to arrive at adjusted net loan-charge offs (non-GAAP).
Adjusted net loan charge-offs as a percentage of average loans (non-GAAP) are calculated as adjusted net loan charge-offs
(non-GAAP) divided by average loans (GAAP) and annualized. Non-interest expense (GAAP) is presented excluding
adjustments to arrive at adjusted non-interest expense (non-GAAP). Net interest income (GAAP) is presented with taxable-
equivalent adjustments to arrive at net interest income on a taxable-equivalent basis (GAAP). Non-interest income (GAAP) is
51
Table of Contents
presented excluding adjustments to arrive at adjusted non-interest income (non-GAAP). Net interest income (GAAP) and
adjusted non-interest income (non-GAAP) are added together to arrive at adjusted total revenue (non-GAAP). Net interest
income on a taxable-equivalent basis (GAAP) and adjusted non-interest income (non-GAAP) are added together to arrive at
adjusted total revenue on a taxable-equivalent basis (non-GAAP).
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited.
Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have
limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported
under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively
accrues directly to shareholders.
The following table provides: 1) a reconciliation of net loan charge-offs (GAAP) to adjusted net loan charge-offs (non-
GAAP), 2) a computation of adjusted net loan charge-offs as a percentage of average loans, annualized (non-GAAP). 3) a
reconciliation of non-interest expense (GAAP) to adjusted non-interest expense (non-GAAP), 4) a reconciliation of non-interest
income (GAAP) to adjusted non-interest income (non-GAAP), 5) a computation of adjusted total revenue (non-GAAP), and 6)
a computation of adjusted total revenue on a taxable-equivalent basis (non-GAAP).
Table 1—GAAP to Non-GAAP Reconciliations
ADJUSTED NET CHARGE-OFFS AND RATIO
Net loan charge-offs (GAAP)
Less: charge-offs associated with the sale of loans (1)
Adjusted net loan charge-offs (non-GAAP)
Average loans, net of unearned income, outstanding for the period (GAAP)
2023
Year Ended December 31
2022
(Dollars in millions)
2021
$
$
$
397
35
362
98,239
$
$
$
263
63
200
92,282
$
$
$
204
—
204
84,802
Net loan charge-offs as a percentage of average loans, annualized (GAAP) (2)
Adjusted net loan charge-offs as a percentage of average loans, annualized (non-GAAP) (2)
0.40 %
0.37 %
0.29 %
0.22 %
0.24 %
0.24 %
_____
(1)
In the fourth quarter of 2023, the Company sold substantially all of its portfolio of a third party relationship. At the end of the third quarter of 2022, the
Company made the strategic decision to sell certain unsecured consumer loans. For both of these transactions, the loans were marked to fair value through
charge-offs.
(2) Amounts have been calculated using whole dollar values.
52
Table of Contents
ADJUSTED REVENUES AND EXPENSES (1)
Non-interest expense (GAAP)
Adjustments:
Contribution to Regions Financial Corporation Foundation
Professional, legal and regulatory expenses (2)
FDIC insurance special assessment
Branch consolidation, property and equipment charges
Early extinguishment of debt
Salaries and employee benefits—severance charges
Adjusted non-interest expense (non-GAAP)
Net interest income (GAAP)
Taxable-equivalent adjustment (GAAP)
Net interest income, taxable-equivalent basis (GAAP)
Non-interest income (GAAP)
Adjustments:
Securities (gains) losses, net
Gains on equity investment
Bank-owned life insurance (3)
Insurance proceeds (2)
Leveraged lease termination gains
Adjusted non-interest income (non-GAAP)
Total revenue (GAAP)
Adjusted total revenue (non-GAAP)
Total revenue, taxable-equivalent basis (GAAP)
Adjusted total revenue, taxable-equivalent basis (non-GAAP)
Year Ended December 31
2023
2022
2021
(Dollars in millions)
A $
4,416
$
4,068
$
3,747
B $
C $
D $
E $
—
(1)
(119)
(7)
4
(31)
4,262
5,320
51
5,371
2,256
5
—
—
—
(2)
F $
2,259
C+E=G $
7,576
C+F=H $
7,579
D+E=I $
7,627
D+F=J $
7,630
—
(179)
—
(3)
—
—
3,886
4,786
47
4,833
2,429
1
—
—
(50)
(1)
2,379
7,215
7,165
7,262
7,212
$
$
$
$
$
$
$
$
$
(3)
(15)
—
(5)
(20)
(6)
3,698
3,914
44
3,958
2,524
(3)
(3)
(18)
—
(2)
2,498
6,438
6,412
6,482
6,456
$
$
$
$
$
$
$
$
$
_________
(1) See the "Executive Overview" for 2024 expectations for adjusted non-interest income and non-interest expense.
(2)
In the third quarter of 2022, the Company incurred settlement expenses related to a previously disclosed matter with the CFPB. The Company received
insurance proceeds related to this settlement. The 2021 professional, legal and regulatory expenses are related to professional and legal expenses for
acquisitions.
(3) The 2021 amount is related to an individual BOLI claim benefit.
CRITICAL ACCOUNTING ESTIMATES AND RELATED POLICIES
In preparing financial information, management is required to make significant estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses for the periods shown. The accounting principles followed by
Regions and the methods of applying these principles conform with GAAP, regulatory guidance, where applicable, and general
banking practices. Estimates and assumptions most significant to Regions are related primarily to the allowance for credit
losses, fair value measurements, intangible assets (goodwill and other identifiable intangible assets), residential MSRs 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 two components: the allowance for loan losses and the reserve
for unfunded credit commitments. Unfunded credit commitments include items such as letters of credit, financial guarantees
and binding unfunded loan commitments. Regions determines its allowance in accordance with GAAP and applicable
regulatory guidance.
See Note 1 "Summary of Significant Accounting Policies" and Note 5 "Allowance for Credit Losses" to the consolidated
financial statements for information about areas of judgment and methodologies used in establishing the allowance.
The allowance is sensitive to a number of internal factors, such as changes in the mix and level of loan balances
outstanding, portfolio performance and assigned risk ratings. The allowance is also sensitive to external factors such as the
general health of the economy, as evidenced by changes in interest rates, inflation, GDP, unemployment rates, changes in real
estate demand and values, volatility in commodity prices, bankruptcy filings, health pandemics, government stimulus, and the
effects of weather and natural disasters such as droughts, floods and hurricanes.
53
Table of Contents
Management considers these variables and all other available information when establishing the final level of the
allowance. These variables and others have the ability to result in actual loan losses that differ from the originally estimated
amounts.
Changes in the factors used by management to determine the appropriateness of the allowance or the availability of new
information could cause the allowance to be increased or decreased in future periods. In addition, bank regulatory agencies, as
part of their examination process, may require changes in the level of allowance based on their judgments and estimates.
Volatility in certain credit metrics is to be expected. Additionally, changes in circumstances related to individually large credits,
commodity prices, or certain macroeconomic forecast assumptions may result in volatility. The scenarios discussed below, or
other scenarios, have the ability to result in actual credit losses that differ, perhaps materially, from the originally estimated
amounts. This analysis is not intended to estimate changes in the overall allowance, which would also be influenced by the
judgment management applies to the modeled loss estimates to reflect uncertainty and imprecision based on then-current
circumstances and conditions.
It is difficult to estimate how potential changes in any one economic factor might affect the overall allowance because a
wide variety of factors and inputs are considered in the allowance estimate. Changes in the factors and inputs may not occur at
the same rate and may not be consistent across all product types. Additionally, changes in factors and inputs may be
directionally inconsistent, such that improvement in one factor may offset deterioration in others. However, to consider the
impact of a hypothetical alternate economic forecast, Regions estimated the allowance using a scenario that was one standard
deviation unfavorable to the expected scenario for each macroeconomic variable. This unfavorable scenario resulted in an
allowance approximately 16 percent higher than the allowance using the expected scenario.
Similar to the scenarios above, it is difficult to estimate how potential changes in credit risk factors might affect the
overall allowance because of the wide variety of credit risk factors that are considered in estimating the allowance. Changes in
risk ratings may not occur at the same rate and may not be consistent across product or industry types. Regions conducted a
separate sensitivity analysis considering deteriorating conditions for commercial and investor real estate portfolio factors by
stressing key portfolio drivers relative to the baseline portfolio conditions. Regions stressed risk ratings by one downgrade for
commercial and investor real estate loans. This scenario generated an increase in the modeled allowance of approximately $185
million for the commercial and investor real estate portfolios.
Fair Value Measurements
A portion of the Company’s assets and liabilities is carried at fair value, with changes in fair value recorded either in
earnings or accumulated other comprehensive income (loss). These include debt securities available for sale, mortgage loans
held for sale, equity investments (with and without readily determinable market values), residential MSRs and derivative assets
and liabilities. 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. Fair value determination is also relevant for certain other assets such as foreclosed property and
other real estate, which are recorded at the lower of the recorded investment in the loan/property or fair value, less estimated
costs to sell the property. For example, the fair value of other real estate is determined based on recent appraisals by third
parties and other market information, less estimated selling costs. Adjustments to the appraised value are made if management
becomes aware of changes in the fair value of specific properties or property types. The determination of fair value also impacts
certain other assets that are periodically evaluated for impairment using fair value estimates, including goodwill and other
identifiable intangible assets.
Fair value is generally defined as the price that would be received to sell an asset or paid to transfer a liability (an exit
price) as opposed to the price that would be paid to acquire the asset or received to assume the liability (an entry price), in an
orderly transaction between market participants at the measurement date under current market conditions. While management
uses judgment when determining the price at which willing market participants would transact when there has been a significant
decrease in the volume or level of activity for the asset or liability in relation to “normal” market activity, management’s
objective is to determine the point within the range of fair value estimates that is most representative of a sale to a third-party
investor under current market conditions. The value to the Company if the asset or liability were held to maturity is not included
in the fair value estimates.
A fair value measure should reflect the assumptions that market participants would use in pricing the asset or liability,
including the assumptions about the risk inherent in a particular valuation technique, the effect of a restriction on the sale or use
of an asset and the risk of nonperformance. Fair value is measured based on a variety of inputs the Company utilizes. Fair value
may be based on quoted market prices for identical assets or liabilities traded in active markets (Level 1 valuations). If market
prices are not available, quoted market prices for similar instruments traded in active markets, quoted prices for identical or
similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions
are observable in the market are used (Level 2 valuations). Where observable market data is not available, the valuation is
generated from model-based techniques that use significant assumptions not observable in the market, but observable based on
Company-specific data (Level 3 valuations). These unobservable assumptions reflect the Company’s own estimates for
assumptions that market participants would use in pricing the asset or liability. Valuation techniques typically include option
54
Table of Contents
pricing models, discounted cash flow models and similar techniques, but may also include the use of market prices of assets or
liabilities that are not directly comparable to the subject asset or liability.
See Note 1 "Summary of Significant Accounting Policies" to the consolidated financial statements for a detailed
discussion of determining fair value, including pricing validation processes.
Intangible Assets
Regions’ intangible assets consist primarily of the excess of cost over the fair value of net assets of acquired businesses
(“goodwill”) and other identifiable intangible assets (primarily relationship assets and agency commercial real estate licenses).
Goodwill totaled $5.7 billion at both December 31, 2023 and December 31, 2022. Goodwill is allocated to each of Regions’
reportable segments (each a reporting unit: Corporate Bank, Consumer Bank, and Wealth Management). Goodwill is tested for
impairment on an annual basis as of October 1 or more often if events and circumstances indicate impairment may exist (refer
to Note 1 "Summary of Significant Accounting Policies" to the consolidated financial statements for further discussion).
The Company completed its annual goodwill impairment test as of October 1, 2023; the Company elected to bypass the
qualitative assessment and performed a quantitative assessment of goodwill at the reporting unit level to determine whether the
fair value exceeded the carrying value. In performing the quantitative assessment, the estimated fair value of the reporting unit
was determined using a blend of both income and market approaches.
The results of the goodwill impairment test did not require Regions to record a goodwill impairment charge as all three
reporting units continued to have a fair value in excess of carrying value.
Other identifiable intangible assets such as relationship assets and agency commercial real estate licenses are reviewed at
least annually (usually in the fourth quarter) for events or circumstances which could impact the recoverability of the intangible
asset. These events could include loss of customer relationships, increased competition, or adverse changes in the economy. To
the extent an other identifiable intangible asset is deemed unrecoverable, an impairment loss would be recorded to reduce the
carrying amount. These events or circumstances, if they occur, could be material to Regions’ operating results for any particular
reporting period but the potential impact cannot be reasonably estimated. As of December 31, 2023, the Company’s review
indicated there was no impairment in the value of the other identifiable intangible assets.
Residential Mortgage Servicing Rights
Regions has elected to measure and report its residential MSRs using the fair value method. Although sales of residential
MSRs do occur, residential MSRs do not trade in an active market with readily observable market prices and the exact terms
and conditions of sales may not be readily available, and are therefore Level 3 valuations in the fair value hierarchy previously
discussed in the "Fair Value Measurements" section. Specific characteristics of the underlying loans greatly impact the
estimated value of the related residential MSRs. As a result, Regions stratifies its residential mortgage servicing portfolio on the
basis of certain risk characteristics, including loan type and contractual note rate, and values its residential MSRs using
discounted cash flow modeling techniques. These techniques require management to make estimates regarding future net
servicing cash flows, taking into consideration historical and forecasted residential mortgage loan prepayment rates, discount
rates, escrow balances and servicing costs. Changes in interest rates, prepayment speeds or other factors impact the fair value of
residential MSRs which impacts earnings. Refer to Note 6 "Servicing of Financial Assets" to the consolidated financial
statements for quantitative disclosures reflecting the effect that changes in management's assumptions would have on the fair
value of residential MSRs.
Refer to Note 6 "Servicing of Financial Assets" to the consolidated financial statements for additional disclosure on
residential mortgage servicing rights.
Income Taxes
Accrued income taxes are reported as a component of either other assets or other liabilities, as appropriate, in the
consolidated balance sheets and reflect management’s estimate of income taxes to be paid or received. The Company is subject
to income tax in the U.S. and multiple state and local jurisdictions. The tax laws and regulations in each jurisdiction are
complex and may be subject to different interpretations by the Company and the relevant government taxing authorities.
Therefore, the Company is required to exercise judgment in determining tax accruals and evaluating the Company’s tax
positions, including evaluating uncertain tax positions.
Deferred income taxes represent the amount of future income taxes to be paid or received and are accounted for using the
asset and liability method with the net balance reported in other assets or other liabilities, as appropriate, in the consolidated
balance sheets. The Company determines the realization of deferred tax assets by considering all positive and negative evidence
available, including the impact of recent operating results, future reversals of taxable temporary differences, future taxable
income exclusive of reversing temporary differences and carryforwards and tax planning strategies. In projecting future taxable
income, the Company utilizes forecasted pre-tax earnings, adjusts for the estimated temporary differences and incorporates
assumptions, including the amounts of income allocable to taxing jurisdictions. Determining whether deferred tax assets are
realizable is subjective and requires the use of significant judgment. A valuation allowance is provided when it is more-likely-
55
Table of Contents
than-not that some portion of the deferred tax asset will not be realized. The Company currently maintains a valuation
allowance for certain state carryforwards.
The Company’s estimate of accrued income taxes, deferred income taxes and income tax expense can also change in any
period as a result of new legislative or judicial guidance impacting tax positions, as well as changes in income tax rates and
changes in operating activities. Any changes, if they occur, can be significant to the Company’s consolidated financial position,
results of operations or cash flows.
See Note 1 "Summary of Significant Accounting Policies" and Note 19 "Income Taxes" to the consolidated financial
statements for further details and discussion.
OPERATING RESULTS
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income is Regions’ principal source of income and is one of the most important elements of Regions’ ability
to meet its overall performance goals. In 2023, balance sheet and net interest income performance were the result of post-
pandemic normalization and tightening monetary policy, including a higher interest rate environment. Both net interest income
and net interest margin are influenced by market interest rates and the FOMC increased the Fed funds rate by 100 basis points
during the year ended December 31, 2023. See the "Executive Overview" for a discussion of recent FOMC activity and
expectations for 2024 net interest income that incorporates anticipated FOMC activity.
Net interest income (taxable-equivalent basis) increased by $538 million in 2023 compared to 2022, and net interest
margin increased by 54 basis points to 3.90 percent in 2023. The increases in net interest income and net interest margin were
driven primarily by significantly higher short-term and long-term market interest rates and average loan growth. The loan
portfolio yield, inclusive of hedging impacts, increased to 5.86 percent in 2023 from 4.46 percent in 2022. The Company's loan
yields are primarily influenced by short-term interest rates such as 30-day term SOFR, which averaged 4.98 percent in 2023
compared to 1.46 percent in 2022. Additionally, fixed-rate lending production which contains significant residential mortgage
fixed-rate exposure, benefited from higher middle and long-term rates. While the Company temporarily slowed reinvestment
within the investment securities portfolio for much of 2023, it had returned to full reinvestment by the fourth quarter. The
investment securities portfolio benefited from rising rates, with the yield increasing to 2.38 percent in 2023 from 2.20 percent in
2022.
Deposit and funding cost normalization, which are expected in a rising rate environment and were further influenced by
bank industry stresses during the year, partially offset the increases in net interest income and net interest margin driven by
loans and investment securities. In 2023, funding costs, which includes deposits and wholesale borrowings utilized during the
year, increased to 1.19 percent compared to 0.23 percent in 2022. The increase in funding costs includes the impact of deposit
remixing as depositors moved into higher interest earning products. Deposit costs increased to 99 basis points for 2023
compared to 14 basis points for 2022.
Additionally, net interest margin benefited from earning asset remixing out of cash balances held with the Federal Reserve
Bank, which are the primary component of interest-bearing deposits in other banks shown in Table 2. In 2022, elevated cash
balances were held to fund anticipated, post-pandemic deposit outflows, reducing the net interest margin in that period. Cash
balances largely returned to normal levels by the end of 2023.
See also the "Market Risk-Interest Rate Risk" section in Management's Discussion and Analysis for additional
information.
56
Table of Contents
Table 2 "Consolidated Average Daily Balances and Yield/Rate Analysis" presents a detail of net interest income (on a
taxable-equivalent basis), the net interest margin, and the net interest spread.
Table 2—Consolidated Average Daily Balances and Yield/Rate Analysis
Assets
Earning assets:
Federal funds sold and securities purchased
under agreements to resell
Debt securities (2)(3)
Loans held for sale
Loans, net of unearned income (4)(5)
Interest-bearing deposits in other banks
Other earning assets
Total earning assets
Unrealized gains/(losses) on securities available for
sale, net (2)
Allowance for loan losses
Cash and due from banks
Other non-earning assets
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Savings
Interest-bearing checking
Money market
Time deposits
Total interest-bearing deposits (6)
Federal funds purchased and securities sold
under agreements to repurchase
Short-term borrowings
Long-term borrowings
Total interest-bearing liabilities
Non-interest-bearing deposits(6)
Total funding sources
Net interest spread (2)
Other liabilities
Shareholders’ equity
Noncontrolling interest
Year Ended December 31
2023
2022
2021
Average
Balance
Income/
Expense
Yield/
Rate(1)
Average
Balance
Income/
Expense
Yield/
Rate(1)
Average
Balance
Income/
Expense
Yield/
Rate(1)
(Dollars in millions; yields on taxable-equivalent basis)
$ — $ —
— % $ — $ —
— % $
3 $ —
0.14 %
31,467
575
749
40
98,239
5,784
6,185
1,389
321
54
137,855
6,948
2.38
6.89
5.86
5.19
3.87
5.02
31,281
640
92,282
18,396
1,379
688
36
4,135
239
51
143,978
5,149
2.20
5.63
4.46
1.30
3.69
3.56
28,604
1,219
84,802
22,810
1,289
533
37
3,496
30
29
138,727
4,125
1.86
3.06
4.11
0.13
2.23
2.97
(3,392)
(1,498)
2,271
17,781
$ 153,017
$ 14,165
23,319
32,364
10,545
80,393
13
1,776
3,437
85,619
46,150
131,769
4,708
16,522
18
$ 153,017
(2,166)
(1,442)
2,321
16,701
$ 159,392
$ 15,940
26,830
31,876
5,578
80,224
10
—
2,328
82,562
56,469
139,031
3,858
16,503
—
$ 159,392
623
(1,795)
2,027
14,687
$ 154,269
$ 13,867
25,128
30,616
5,254
74,865
12
—
2,823
77,700
55,838
133,538
2,525
18,201
5
$ 154,269
19
72
80
26
197
—
—
119
316
—
316
0.12
0.27
0.25
0.47
0.25
3.73
—
5.08
0.38
—
0.23
3.18
16
282
615
342
1,255
1
95
226
1,577
—
1,577
0.12
1.21
1.90
3.24
1.56
5.41
5.26
6.51
1.84
—
1.19
3.18
19
8
8
29
64
—
—
103
167
—
167
0.13
0.03
0.03
0.56
0.09
0.19
—
3.63
0.21
—
0.12
2.75
Net interest income/margin on a taxable-equivalent
basis (7)
$ 5,371
3.90 %
$ 4,833
3.36 %
$ 3,958
2.85 %
_______
(1) Amounts have been calculated using whole dollar values.
(2) Debt securities are included on an amortized cost basis with yield and net interest margin calculated accordingly.
(3)
Interest income on debt securities includes hedging expense of $1 million, hedging income of $41 million, and zero for the years ended December 31,
2023, 2022 and 2021, respectively. Hedging income for the year ended December 31, 2022 reflects strategies designed to accelerate hedge notional
maturities through the use of pay fixed swaps. Benefits migrated to cash flow hedges from loans in the first quarter of 2023.
(4) Loans, net of unearned income include non-accrual loans for all periods presented.
(5)
Interest income on loans, net of unearned income, includes hedging expense of $236 million and hedging income of $140 million and $426 million for the
years ended December 31, 2023, 2022, and 2021, respectively. Interest income on loans, net of unearned income, also includes net loan fees of $130
million, $109 million and $154 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(6) Total deposit costs may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest-bearing
deposits. The rates for total deposit costs equaled 0.99% , 0.14% and 0.05% for the years ended December 31, 2023, 2022 and 2021, respectively.
(7) The computation of taxable-equivalent net interest income is based on the statutory federal income tax rate of 21%, adjusted for applicable state income
taxes net of the related federal tax benefit.
57
Table of Contents
Table 3 "Volume and Yield/Rate Variances" provides additional information with which to analyze the changes in net
interest income.
Table 3— Volume and Yield/Rate Variances
Interest income on:
Debt securities
Loans held for sale
Loans, including fees
Interest-bearing deposits in other banks
Other earning assets
Total earning assets
Interest expense on:
Savings
Interest-bearing checking
Money market
Time deposits
Total interest-bearing deposits
Federal funds purchased and securities sold under agreements to repurchase
Short-term borrowings
Long-term borrowings
Total interest-bearing liabilities
Increase (decrease) in net interest income
2023 Compared to 2022
2022 Compared to 2021
Change Due to
Change Due to
Volume
Yield/
Rate
Net
Volume
Yield/
Rate
Net
(Taxable-equivalent basis—in millions)
$
4 $
57 $
61 $
53 $
102 $
155
(4)
8
4
281
1,368
1,649
(245)
—
36
(3)
(11)
1
41
28
—
95
67
327
3
82
3
1,763
1,799
—
221
534
(3)
210
535
275
1,030
316
1,058
1
—
40
1
95
107
190
1,071
1,261
(23)
324
(7)
2
349
2
1
—
2
5
—
—
(20)
(15)
22
315
216
20
(1)
639
209
22
675
1,024
(2)
63
72
(5)
128
—
—
36
164
—
64
72
(3)
133
—
—
16
149
875
$
(154) $
692 $
538 $
364 $
511 $
______
Notes:
•
•
The change in interest not due solely to volume or yield/rate has been allocated to the volume column and yield/rate column in proportion to the
relationship of the absolute dollar amounts of the change in each.
The computation of taxable-equivalent net interest income is based on the statutory federal income tax rate of 21%, adjusted for applicable state income
taxes net of the related federal tax benefit.
Annual changes in net interest income are due to changes in the interest rate environment, product pricing, balance sheet
mix, and balance sheet growth. Over recent years, changes in the interest rate environment and the impact on product pricing
and mix has been the primary contributor to changes in net interest income. The mix of earning assets can affect the interest rate
spread. Regions’ primary types of earning assets are loans and investment securities. Certain types of earning assets have
historically generated larger spreads; for example, loans typically generate larger spreads than other assets, such as securities or
interest-bearing deposits in other banks. Average earning assets in 2023 totaled $137.9 billion, a decrease of $6.1 billion as
compared to the prior year, primarily due to a decrease in interest-bearing deposits in other banks offset by a growth in loans,
net of unearned income. See the "Loans", "Debt Securities", and "Cash and Cash Equivalents" sections for further details.
Average loans as a percentage of average earning assets was 71 percent and 64 percent in 2023 and 2022, respectively.
The remaining categories of earning assets are shown in Table 2 "Consolidated Average Daily Balances and Yield/Rate
Analysis". The proportion of average earning assets to average total assets, which was 90 percent in both 2023 and 2022,
measures the effectiveness of management’s efforts to invest available funds into the most profitable earning instruments.
The mix of interest-bearing liabilities can also affect the interest spread. Funding for Regions’ earning assets comes from
interest-bearing and non-interest-bearing sources. As previously discussed, in 2023 the Company experienced deposit balance
declines and remixing into higher interest bearing deposit categories. As the percentage of earning assets funded by deposits
declined during the year, the Company utilized short and long-term wholesale borrowings. The changes to interest-bearing
liabilities partially offset increases to net interest income and margin.
58
Table of Contents
PROVISION FOR (BENEFIT FROM) CREDIT LOSSES
The provision for credit losses is used to maintain the allowance for loan losses and the reserve for unfunded credit losses
at a level that in management's judgment is appropriate to absorb expected credit losses over the contractual life of the loan and
credit commitment portfolio at the balance sheet date. During 2023, the provision for credit losses totaled $553 million and net
charge-offs were $397 million. This compares to a provision for credit losses of $271 million and net charge-offs of $263
million in 2022.
For further discussion and analysis of the total allowance for credit losses, see the "Allowance for Credit Losses" and
“Risk Management” sections found later in this report. See also Note 5 "Allowance for Credit Losses" to the consolidated
financial statements.
NON-INTEREST INCOME
Table 4—Non-Interest Income
Year Ended December 31
Change 2023 vs. 2022
2023
2022
2021
Amount
Percent
(Dollars in millions)
Service charges on deposit accounts
$
592 $
641 $
648 $
Card and ATM fees
Capital markets income
Investment management and trust fee income
Mortgage income
Investment services fee income
Commercial credit fee income
Bank-owned life insurance
Market valuation adjustments on employee benefit assets
Insurance proceeds (1)
Securities gains (losses), net
Gain on equity investment
Other miscellaneous income
504
222
313
109
138
105
78
15
—
(5)
—
185
513
339
297
156
122
96
62
(45)
50
(1)
—
199
499
331
278
242
104
91
82
20
—
3
3
223
$
2,256 $
2,429 $
2,524 $
(49)
(9)
(117)
16
(47)
16
9
16
60
(50)
(4)
—
(14)
(173)
(7.6) %
(1.8) %
(34.5) %
5.4 %
(30.1) %
13.1 %
9.4 %
25.8 %
133.3 %
(100.0) %
(400.0) %
NM
(7.0) %
(7.1) %
_______
NM - Not Meaningful
(1) In the third quarter of 2022, the Company settled a previously disclosed matter with the CFPB. The Company received an insurance reimbursement in the
fourth quarter of 2022 related to the settlement.
Service Charges on Deposit Accounts
Service charges on deposit accounts include overdraft fees, treasury management fees and other customer transaction-
related service charges, and, prior to mid-2022, non-sufficient fund fees. Service charges decreased in 2023 compared to 2022,
primarily as a result of overdraft-related policy enhancements that eliminated non-sufficient fund fees in mid-June 2022.
Additionally, in the second quarter of 2023, the Company added an overdraft grace feature, which compliments the overdraft-
related policy enhancements and contributed to the decrease. An increase in fees from treasury management services partially
offset the overall decline in service charges.
On October 25, 2023, the Federal Reserve issued a proposal for public comment that, if finalized, would lower the
maximum interchange fee that a large debit card issuer can receive for a debit card transaction. Under the proposed rule the
maximum interchange fee would be subject to adjustments every other year based upon issuer cost data. The Company is
studying the proposal and evaluating its impact.
On January 17, 2024, the CFPB issued a proposal for public comment that, if finalized, would cap overdraft fees in line
with established benchmarks ranging between $3-$14 or their actual costs. Alternatively, an institution could calculate its own
fee to break even. The Company is studying the proposal and evaluating its impact.
Capital Markets Income
Capital markets income primarily relates to capital raising activities that include securities underwriting and placement,
loan syndication, as well as foreign exchange, derivatives, merger and acquisition and other advisory services. Capital markets
income decreased in 2023 compared to 2022, driven primarily by negative credit/debit valuation adjustments in 2023 due to
rate and spread movements. To a lesser degree, capital markets income was negatively impacted by declines in merger and
acquisition advisory services and syndication revenue. Partially offsetting these decreases were increases in securities
underwriting and placement fees and real estate capital markets revenue in 2023 compared to 2022.
59
Table of Contents
Mortgage Income
Mortgage income is generated through the origination and servicing of residential mortgage loans for long-term investors
and sales of residential mortgage loans in the secondary market. The decrease in mortgage income in 2023 was due primarily to
lower mortgage production and sales as a result of higher market interest rates. The decrease was also a result of amortization of
mortgage servicing rights. Additionally, mortgage income for 2022 included approximately $12 million in gains associated with
the re-securitization and sale of Ginnie Mae loans previously repurchased from their pools. Partially offsetting the declines was
an increase in servicing income associated with a bulk purchase of the rights to service $6.2 billion of residential mortgage
loans in the third quarter of 2023.
Investment Services Fee Income
Investment services fee income represents income earned from investment advisory services. Investment services fee
income increased during 2023 compared to 2022 due primarily to the rising interest rate environment, which has driven
increases in fixed annuity rates and the related investment income. Also contributing were increases in assets under
management due to additional financial advisors.
Bank-owned Life Insurance
Bank-owned life insurance income primarily represents income earned from the appreciation of the cash surrender value
of insurance contracts held and the proceeds of insurance benefits. Bank-owned life insurance income increased during 2023
compared to 2022 driven primarily by improvement in underlying crediting rates as a result of an overall increase in interest
rates.
Market Value Adjustments on Employee Benefit Assets
Market value adjustments on employee benefit assets are the reflection of market value variations related to assets held for
certain employee benefits. The adjustments are offset in salaries and benefits and other non-interest expense.
Insurance Proceeds
Insurance proceeds recognized in 2022 were related to the settlement of a previously disclosed matter with the CFPB.
Other Miscellaneous Income
Other miscellaneous income includes net revenue from affordable housing, valuation adjustments to equity investments,
fees from safe deposit boxes, check fees and other miscellaneous income. Net revenue from affordable housing includes actual
gains and losses resulting from the sale of affordable housing investments, cash distributions from the investments and any
related impairment charges.
NON-INTEREST EXPENSE
Table 5—Non-Interest Expense
Salaries and employee benefits
Equipment and software expense
Net occupancy expense
Outside services
Marketing
Professional, legal and regulatory expenses
Credit/checkcard expenses
FDIC insurance assessments
Visa class B shares expense
Operational losses
Early extinguishment of debt
Branch consolidation, property and equipment charges
Other miscellaneous expenses
_______
NM - Not Meaningful
Salaries and Employee Benefits
Year Ended December 31
Change 2023 vs. 2022
2023
2022
2021
Amount
Percent
$
2,416 $
2,318 $
2,205 $
(Dollars in millions)
412
289
163
110
85
60
228
28
212
(4)
7
410
392
300
157
102
263
66
61
24
56
—
3
326
365
303
156
106
98
62
45
22
46
20
5
314
98
20
(11)
6
8
(178)
(6)
167
4
156
(4)
4
84
$
4,416 $
4,068 $
3,747 $
348
4.2 %
5.1 %
(3.7) %
3.8 %
7.8 %
(67.7) %
(9.1) %
273.8 %
16.7 %
278.6 %
NM
133.3 %
25.8 %
8.6 %
Salaries and employee benefits consist of salaries, incentive compensation, long-term incentives, payroll taxes, and other
employee benefits such as 401(k), pension, and medical, life and disability insurance, as well as, expenses from liabilities held
60
Table of Contents
for employee benefit purposes. Salaries and employee benefits increased during 2023 compared to 2022 primarily due to
increases in base salaries, higher benefit expenses, and, to a lesser degree, an increase in severance costs in the second half of
the year. These increases were offset by a decline in incentive compensation. Full-time equivalent headcount was relatively flat
at December 31, 2023 as compared to December 31, 2022.
Professional, legal and regulatory expenses
Professional, legal, and regulatory expenses consist of amounts related to legal, consulting, other professional fees and
regulatory charges. Professional, legal, and regulatory expenses decreased during 2023 compared to 2022 due to a settled matter
with the CFPB in 2022. See Note 23 "Commitments, Contingencies and Guarantees" in the Annual Report on Form 10-K for
the year ended December 31, 2022 for more detail.
FDIC Insurance Assessments
FDIC insurance assessments increased in 2023 compared to 2022 primarily resulting from a special assessment recorded
in 2023 (discussed below) and a two basis point increase in the quarterly assessment rate schedules charged to all financial
institutions effective for the first quarter of 2023.
Federal law requires that any losses to the FDIC’s DIF related to the protection of uninsured depositors under the
Systemic Risk Exception be repaid by a special assessment on IDIs. In the fourth quarter of 2023, the FDIC finalized a special
assessment related to the two March 2023 bank failures, totaling an estimated $16.3 billion. The rule requires the estimated
amount of the entire special assessment be recognized as the accrual of a liability and related expense in the fourth quarter of
2023 pursuant to accounting guidance. The special assessment for Regions is estimated at approximately $119 million to be
paid in eight quarterly installments beginning in the first quarter of 2024, which was accrued in the fourth quarter and should be
deductible for income taxes.
Operational Losses
Operational losses include losses related to fraud, execution, delivery and process management, and damage to physical
assets. Operational losses increased in 2023 compared to 2022 due to elevated check-related fraud losses experienced primarily
during the second and third quarters of 2023.
Other Miscellaneous Expenses
Other miscellaneous expenses include expenses related to communications, postage, supplies, certain credit-related costs,
foreclosed property expenses, mortgage repurchase costs, and other costs (benefits) related to employee benefit plans. Other
miscellaneous expenses increased in 2023 compared to 2022 primarily due to higher non-service based pension-related
expenses and, to a lesser degree, higher fees associated with licenses and taxes.
INCOME TAXES
The Company’s income tax expense for the year ended 2023 was $533 million compared to $631 million for the same
period in 2022, resulting in effective tax rates of 20.5% and 22.0%, respectively. The decrease in the effective tax rate for 2023
is due to lower pre-tax income for the year as compared to 2022 causing the impact of tax preferential items to increase, as well
as increased tax benefits related to investments in affordable housing in 2023 as compared to 2022. See the "Executive
Overview" for the Company's expectations for the 2024 effective tax rate.
The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, the mix of
income between various tax jurisdictions with differing tax rates, enacted tax legislation, net tax benefits related to affordable
housing investments, bank-owned life insurance income, tax-exempt interest and nondeductible expenses. In addition, the
effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as
the termination of certain leveraged leases, share-based payments, valuation allowance changes and changes to unrecognized
tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.
At December 31, 2023, the Company reported a net deferred tax asset of $741 million compared to $943 million at
December 31, 2022. The change in the net deferred tax position was due primarily to the deferred tax impact of decreases in
unrealized losses on securities for sale and derivative instruments arising during the period.
See Note 1 "Summary of Significant Accounting Policies" and Note 19 "Income Taxes" to the consolidated financial
statements for additional information about income taxes.
61
Table of Contents
BALANCE SHEET ANALYSIS
The following sections provide expanded discussion of significant changes in certain line items in asset, liability, and
shareholders' equity categories.
CASH AND CASH EQUIVALENTS
At December 31, 2023, cash and cash equivalents totaled $6.8 billion compared to $11.2 billion at December 31, 2022.
The decrease was due primarily to a decrease in cash balances on deposit with the Federal Reserve Bank driven by an expected
decline in deposits and growth in loans. See the "Loans", "Deposits", and "Liquidity" sections for more information.
DEBT SECURITIES
Debt securities available for sale, comprising 21 percent of earning assets, constitute approximately 97 percent of the
securities portfolio. Regions maintains a highly-rated securities portfolio consisting primarily of agency MBS. Regions’
investment policy emphasizes credit quality and liquidity. Debt securities rated in the highest category by nationally recognized
rating agencies and debt securities backed by the U.S. Government and government sponsored agencies, both on a direct and
indirect basis, represented approximately 96 percent of the investment portfolio at December 31, 2023. All other debt securities
rated below AAA, not backed by the U.S. Government or government sponsored agencies, or which are not rated represented
approximately 4 percent of total debt securities at December 31, 2023. Debt securities increased $124 million from year-end
2022, as detailed below in Table 6 . In 2023, Regions temporarily slowed reinvestment but returned to full reinvestment in the
fourth quarter of 2023.
The average life of the debt securities portfolio at December 31, 2023 was estimated to be 5.5 years, with a duration of
approximately 4.5 years. These metrics compare with an estimated average life of 5.8 years and a duration of approximately 4.8
years for the portfolio at December 31, 2022.
Debt securities are an important tool used to manage interest rate sensitivity and provide a primary source of liquidity for
the Company, as much of the portfolio is highly liquid. Additionally, some of the securities portfolio is eligible to be used as
collateral for funding of various types of borrowings. See the "Liquidity" section for more information on these arrangements.
See Note 3 "Debt Securities" to the consolidated financial statements for additional information. Also see the "Market Risk-
Interest Rate Risk" section for more information.
The following table details the carrying values of debt securities, including both available for sale and held to maturity as
of December 31:
Table 6—Debt Securities
U.S. Treasury securities
Federal agency securities
Obligations of states and political subdivisions
Mortgage-backed securities:
Residential agency
Residential non-agency
Commercial agency
Commercial non-agency
Corporate and other debt securities
$
2023
2022
(In millions)
$
1,223
1,043
2
17,611
—
7,822
83
1,074
1,187
836
2
17,233
1
8,135
186
1,154
$
28,858
$
28,734
Subsequent to December 31, 2023, the Company sold approximately $1.3 billion of debt securities available for sale,
realizing $50 million in pre-tax losses. Proceeds were reinvested at higher current market yields. The portfolio mix, duration,
and liquidity profile were largely unchanged.
62
Table of Contents
Table 7 "Relative Contractual Maturities" details the contractual maturities of debt securities, including held to maturity
and available for sale, and the related weighted-average yields.
Table 7— Relative Contractual Maturities
U.S. Treasury securities
Federal agency securities
Obligations of states and political subdivisions
Mortgage-backed securities:
Residential agency
Residential non-agency
Commercial agency
Commercial non-agency
Corporate and other debt securities
$
$
91
—
—
—
—
104
—
272
467
Debt Securities Maturing as of December 31, 2023
After Five But
After One But
Within Ten
Within Five
Years
Years
After Ten
Years
Within One
Year
(Dollars in millions)
$
1,123
$
1
$
8
$
597
—
141
—
4,389
—
735
322
—
840
—
2,932
—
62
124
2
16,630
—
397
83
5
Total
1,223
1,043
2
17,611
—
7,822
83
1,074
$
6,985
$
4,157
$
17,249
$
28,858
Weighted-average yield (1)
2.63 %
2.50 %
2.98 %
2.46 %
2.55 %
_________
(1) The weighted-average yields are calculated on the basis of the yield to maturity based on the carrying value of each debt security. The yields presented in
Table 2 are calculated based on the amortized cost of each debt security and yields earned throughout each year. Yields are calculated based on whole
dollar amounts.
LOANS HELD FOR SALE
The following table presents Regions’ loans held for sale by type as of December 31:
Table 8—Loans Held for Sale
Commercial
Residential first mortgage
Consumer and other performing
Non-performing
2023
2022
(In millions)
208 $
184
5
3
400 $
153
160
38
3
354
$
$
Commercial loans held for sale include commercial loans originated for sale to third parties and commercial loans
originally recorded as held for investment when management has the intent to sell. Levels of commercial loans held for sale
fluctuate based on timing of sale to third parties. The levels of residential first mortgage loans held for sale that are part of the
Company's mortgage originations fluctuate depending on the timing of origination and sale to third parties.
LOANS
GENERAL
Loans, net of unearned income, represented 74 percent of interest-earning assets as of December 31, 2023 compared to 71
percent as of December 31, 2022. Lending at Regions is generally organized along three portfolio segments: commercial loans
(including commercial and industrial, and owner-occupied commercial real estate mortgage and construction loans), investor
real estate loans (commercial real estate mortgage and construction loans) and consumer loans (residential first mortgage, home
equity lines and loans, consumer credit card, other consumer—exit portfolios, and other consumer loans). See the "Executive
Overview" for expectations for loans in 2024.
63
Table of Contents
Table 9 illustrates a year-over-year comparison of loans, net of unearned income, by portfolio segment and class as of
December 31, 2023 and 2022 and Table 10 provides information on selected loan maturities as of December 31, 2023:
Table 9—Loan Portfolio
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
Table 10— Loan Maturities
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
2023
2022
(In millions, net of unearned income)
$
50,865 $
4,887
281
56,033
6,605
2,245
8,850
20,207
3,221
2,439
1,341
43
6,245
33,496
$
98,379 $
50,905
5,103
298
56,306
6,393
1,986
8,379
18,810
3,510
2,489
1,248
570
5,697
32,324
97,009
Loans Maturing as of December 31, 2023
Within
One Year
After One
But Within
Five Years
After Five
But Within
15 Years
(In millions)
After 15
Years
Total
$
8,930 $
33,710 $
6,861 $
1,364 $
50,865
270
17
9,217
2,977
493
3,470
15
141
6
1,341
21
171
1,695
1,835
94
35,639
3,396
1,734
5,130
209
1,433
197
—
21
953
2,813
2,614
156
9,631
232
18
250
2,935
1,637
1,624
—
1
1,872
8,069
168
14
1,546
—
—
—
17,048
10
612
—
—
3,249
20,919
$
14,382 $
43,582 $
17,950 $
22,465 $
4,887
281
56,033
6,605
2,245
8,850
20,207
3,221
2,439
1,341
43
6,245
33,496
98,379
64
Table of Contents
Table 11- Loan Distribution by Rate Type
The following table shows the distribution of those loans with maturities greater than one year between predetermined and
variable interest rate loans as of December 31, 2023:
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Other consumer—exit portfolios
Other consumer
Total consumer
Predetermined
Rate
Variable
Rate (1)
(In millions)
$
13,415 $
2,758
166
16,339
226
2
228
17,362
—
2,433
22
5,834
25,651
$
42,218 $
28,520
1,859
98
30,477
3,402
1,750
5,152
2,830
3,080
—
—
240
6,150
41,779
_________
(1) The lending reported in variable rate disclosure is based upon the rate in the underlying lending agreements. For some lending arrangements, Regions
enters into interest rate swap and floor agreements to manage overall cash flow changes related to interest rate risk exposure on variable rate loans. The
agreements effectively modify the Company’s exposure to interest rate risk by utilizing receive fixed/pay variable interest rate swaps and interest rate
floors. The impact of hedging is not considered within this disclosure.
PORTFOLIO CHARACTERISTICS
Loans, net of unearned income, increased $1.4 billion year over year, primarily due to increases in the investor real estate,
residential first mortgage and other consumer portfolio classes. Regions manages loan growth with a focus on risk management
and risk-adjusted return on capital. See the "Executive Overview" section for details on average loan growth expectations for
2024.
The following sections describe the composition of the portfolio segments and classes disclosed in Table 9, explain
changes in balances from year-end 2022 and highlight the related risk characteristics. Regions believes that its loan portfolio is
well diversified by product, client, and geography throughout its footprint. However, the loan portfolio may be exposed to
certain concentrations of credit risk which exist in relation to individual borrowers or groups of borrowers, certain types of
collateral, certain types of industries, and certain loan products. See Note 4 "Loans" and Note 5 "Allowance for Credit Losses"
to the consolidated financial statements for additional discussion.
Commercial
The commercial portfolio segment includes commercial and industrial loans to commercial customers for use in normal
business operations to finance working capital needs, equipment purchases and other expansion projects.
The commercial portfolio also includes owner-occupied commercial real estate mortgage loans to operating businesses,
which are loans for long-term financing on land and buildings, and are repaid by cash generated by business operations. Owner-
occupied commercial real estate construction loans are made to commercial businesses for the development of land or
construction of a building where the repayment is derived from revenues generated from the business of the borrower.
Over half of the Company’s total loans are included in the commercial portfolio segment. These balances are spread
across numerous industries, as noted in Table 12. The Company manages the related risks to this portfolio by setting certain
lending limits for each significant industry. In 2023, total commercial loans decreased $273 million. The decline in commercial
loan activity was the result of soft loan demand and was broad-based across industries as shown in Table 12.
65
Table of Contents
The following tables provide detail of Regions' commercial lending balances in selected industries as of December 31:
Table 12—Commercial Industry Exposure
Loans
2023
Unfunded
Commitments
(In millions)
Total Exposure
Administrative, support, waste and repair
$
1,461 $
916 $
Agriculture
Educational services
Energy
Financial services
Government and public sector
Healthcare
Information
Manufacturing
Professional, scientific and technical services
Real estate (1)
Religious, leisure, personal and non-profit services
Restaurant, accommodation and lodging
Retail trade
Transportation and warehousing
Utilities
Wholesale goods
Other (2)
Total commercial
Agriculture
Educational services
Energy
Financial services
Government and public sector
Healthcare
Information
Manufacturing
Professional, scientific and technical services
Real estate (1)
Religious, leisure, personal and non-profit services
Restaurant, accommodation and lodging
Retail trade
Transportation and warehousing
Utilities
Wholesale goods
Other (2)
Total commercial
239
3,502
1,484
7,562
3,161
3,216
2,791
4,789
2,328
9,166
1,562
1,408
2,764
3,486
3,044
4,006
64
208
827
3,349
8,428
414
2,478
1,250
5,122
1,799
9,219
630
289
2,327
1,858
2,732
3,768
1,511
332
3,311
1,559
6,923
3,196
3,650
2,767
5,323
2,604
9,097
1,611
1,360
2,501
3,303
2,510
4,394
334
251
978
3,132
7,681
456
2,359
1,470
4,941
1,626
8,809
648
356
2,297
1,832
2,793
3,876
2,201
2,377
447
4,329
4,833
15,990
3,575
5,694
4,041
9,911
4,127
18,385
2,192
1,697
5,091
5,344
5,776
7,774
1,575
2,461
583
4,289
4,691
14,604
3,652
6,009
4,237
10,264
4,230
17,906
2,259
1,716
4,798
5,135
5,303
8,270
2,535
Administrative, support, waste and repair
$
1,531 $
930 $
$
56,033 $
47,125 $
103,158
Loans
2022 (3)
Unfunded
Commitments
(In millions)
Total Exposure
$
56,306 $
46,636 $
102,942
_______
(1) Real estate includes REITs, which are unsecured commercial and industrial products that are real estate related. This portfolio, which accounts for
approximately 18 percent of the total commercial exposure, is well diversified, generally has low leverage with strong access to liquidity, and the REITs
included in this portfolio are primarily investment or near investment grade.
(2) Other contains balances related to non-classifiable and invalid business industry codes offset by payments in process and fee accounts that are not
available at the loan level.
(3) As customers' businesses evolve (e.g. up or down the vertical manufacturing chain), Regions may need to change the assigned business industry code
used to define the customer relationship. When these changes occur, Regions does not recast the customer history for prior periods into the new
classification because the business industry code used in the prior period was deemed appropriate. As a result, year over year changes may be impacted.
66
Table of Contents
Investor Real Estate
Loans for real estate development are repaid through cash flows related to the operation, sale or refinance of the property.
This portfolio segment includes extensions of credit to real estate developers or investors where repayment is dependent on the
sale of real estate or income generated from the real estate collateral. A portion of Regions’ investor real estate portfolio
segment consists of loans secured by residential product types (land, single-family and condominium loans) within Regions’
markets. Additionally, this category includes loans made to finance income-producing properties such as apartment buildings,
office and industrial buildings, and retail shopping centers. Total investor real estate loans increased $471 million in
comparison to year-end 2022, primarily due to increases in fundings under previous commitments.
The Company's total non-owner-occupied commercial real estate lending consists of both unsecured commercial and
industrial loans that are real estate related (including REITs) and investor real estate loans and are considered to be well
diversified across property types. The following table provides detail of these loans:
Table 13— Unsecured Commercial Real Estate and Investor Real Estate Exposure
Residential homebuilders
Apartments (2)
Industrial
Condominium
Data center
Diversified
Business offices (3)
Residential land
Retail
Healthcare (4)
Hotel
Commercial land
Other
Total (5)
December 31, 2023
Loan Balance
Percent of Total (1)
(In millions)
$
1,011
4,042
2,180
1
348
2,204
1,517
90
1,467
1,376
760
19
607
$
15,622
6.5 %
25.9 %
13.9 %
— %
2.2 %
14.1 %
9.7 %
0.6 %
9.4 %
8.8 %
4.9 %
0.1 %
3.9 %
100 %
_______
(1) Amounts calculated based on whole dollar values.
(2) Apartments, often referred to as multi-family, represented 4.1 percent of total loans at December 31, 2023. Approximately 90 percent of these loans were
secured, with approximately 80 percent of the secured loans located in the Sunbelt region of the U.S.
(3) Business offices represented 1.5 percent of total loans at December 31, 2023. Approximately 90 percent of these loan were secured, with approximately
60 percent of the secured loans located in the Sunbelt region of the U.S.
(4) Senior housing loans are included within the Healthcare portfolio and represented 1.4 percent of total loans at December 31, 2023.
(5) Owner-occupied commercial real estate is not included as the principal source of repayment is individual businesses, which more closely aligns with the
commercial portfolio credit performance.
Residential First Mortgage
Residential first mortgage loans represent loans to consumers to finance a residence. These loans are typically financed
over a 15 to 30 year term and, in most cases, are extended to borrowers to finance their primary residence. Total residential first
mortgage loans increased $1.4 billion in comparison to year-end 2022 balances, driven by approximately $2.8 billion in new
loan originations retained on the balance sheet in 2023.
Home Equity Lines
Home equity lines are secured by a first or second mortgage on the borrower's residence and allow customers to borrow
against the equity in their homes. Home equity lines decreased $289 million in comparison to year-end 2022 balances, as
payoffs and paydowns continue to outpace production. Substantially all of this portfolio was originated through Regions’
branch network.
Beginning in December 2016, new home equity lines of credit have a 10-year draw period and a 20-year repayment term.
During the 10-year draw period customers do not have an interest-only payment option, except on a very limited basis. From
May 2009 to December 2016, home equity lines of credit had a 10-year draw period and a 10-year repayment term. Prior to
May 2009, the predominant structure was a 20-year draw period with a balloon payment upon maturity. The term “balloon
payment” means there are no principal payments required until the balloon payment is due for interest-only lines of credit.
67
Table of Contents
The following table presents information regarding the future principal payment reset dates for the Company's home
equity lines of credit as of December 31, 2023. The balances presented are based on maturity date for lines with a balloon
payment and draw period expiration date for lines that convert to a repayment period.
Table 14—Home Equity Lines of Credit - Future Principal Payment Resets
2024
2025
2026
2027
2028
2029-2033
2034-2038
Thereafter
Revolving Loans Converted to Amortizing
Total
Home Equity Loans
First Lien
% of Total
Second Lien
% of Total
Total
(Dollars in millions)
$
91
85
116
295
283
666
2
5
44
2.82 % $
2.65 %
3.59 %
9.16 %
8.77 %
20.68 %
0.07 %
0.16 %
1.38 %
61
87
123
243
190
892
3
3
32
1.91 % $
2.70 %
3.83 %
7.54 %
5.90 %
152
172
239
538
473
27.68 %
1,558
0.07 %
0.08 %
1.01 %
5
8
76
$
1,587
49.28 % $
1,634
50.72 % $
3,221
Home equity loans are also secured by a first or second mortgage on the borrower's residence, are primarily originated as
amortizing loans, and allow customers to borrow against the equity in their homes. Substantially all of this portfolio was
originated through Regions’ branch network.
Consumer Credit Quality Data
The Company calculates an estimate of the current value of property secured as collateral for both residential first
mortgage and home equity lending products (“current LTV”). The estimate is based on home price indices compiled by a third
party. The third party data indicates trends for MSAs. Regions uses the third party valuation trends from the MSAs in the
Company's footprint in its estimate. The trend data is applied to the loan portfolios taking into account the age of the most
recent valuation and geographic area.
The following table presents current LTV data for components of the residential first mortgage, home equity lines and
home equity loans classes of the consumer portfolio segment. Current LTV data for some loans in the portfolio is not available
due to mergers and systems integrations. The amounts in the table represent the entire loan balance. For purposes of the table
below, if the loan balance exceeds the current estimated collateral the entire balance is included in the “Above 100%” category,
regardless of the amount of collateral available to partially offset the shortfall.
68
Table of Contents
Table 15—Estimated Current Loan to Value Ranges
December 31, 2023
Residential
First Mortgage
Home Equity Lines of Credit
Home Equity Loans
1st Lien
2nd Lien
(In millions)
1st Lien
2nd Lien
$
57 $
1,822
17,981
347
2 $
3
1,567
15
— $
2
1,619
13
2 $
5
2,055
5
$
20,207 $
1,587 $
1,634 $
2,067 $
—
7
365
—
372
December 31, 2022
Residential
First Mortgage
Home Equity Lines of Credit
Home Equity Loans
1st Lien
2nd Lien
(In millions)
1st Lien
2nd Lien
$
64 $
1,456
17,015
275
2 $
3
1,830
20
— $
3
1,627
25
`
2 $
9
2,205
28
$
18,810 $
1,855 $
1,655 $
2,244 $
1
8
233
3
245
Estimated current LTV:
Above 100%
Above 80% - 100%
80% and below
Data not available
Estimated current LTV:
Above 100%
Above 80% - 100%
80% and below
Data not available
Consumer Credit Card
Consumer credit card lending represents primarily open-ended variable interest rate consumer credit card loans.
Other Consumer—Exit Portfolios
Other consumer—exit portfolios include lending initiatives through third parties consisting of loans made through
automotive dealerships and other point of sale lending. Regions ceased originating new loans related to these businesses prior to
2020 and therefore the portfolio balances have been in run-off. Additionally, in the fourth quarter of 2023, the Company sold
substantially all of its unsecured consumer loans in this portfolio totaling approximately $300 million, which was the primary
driver of the $527 million decrease from year-end 2022.
Other Consumer
Other consumer loans primarily include indirect and direct consumer loans, overdrafts and other revolving loans. Other
consumer loans increased $548 million from year-end 2022 primarily driven by increases in consumer home improvement
loans.
Regions considers factors such as periodic updates of FICO scores, unemployment, home prices, and geography as credit
quality indicators for consumer loans. FICO scores are obtained at origination and refreshed FICO scores are obtained by the
Company quarterly for most consumer loans. For more information on credit quality indicators refer to Note 5 "Allowance for
Credit Losses".
ALLOWANCE
The allowance consists of two components: the allowance for loan losses and the reserve for unfunded credit
commitments. The allowance totaled $1.7 billion as of December 31, 2023 compared to $1.6 billion at December 31, 2022,
which represents management's best estimate of expected losses over the life of the loan and credit commitment portfolios. Key
drivers of the change in the allowance by quarter are presented in Table 16 below. While many of these items overlap regarding
impact, they are included in the category most relevant.
69
Table of Contents
Table 16— Allowance Changes
Allowance for credit losses, December 31, 2022
Cumulative change in accounting guidance (1)
Allowance for credit losses, January 1, 2023
Net charge-offs
Provision:
Economic/Qualitative
Other portfolio changes (2)
Allowance for credit losses, March 31, 2023
Allowance for credit losses, April 1, 2023
Net charge-offs
Provision:
Economic/Qualitative
Other portfolio changes (2)
Allowance for credit losses, June 30, 2023
Allowance for credit losses, July 1, 2023
Net charge-offs
Provision:
Economic/Qualitative
Other portfolio changes (2)
Allowance for credit losses, September 30, 2023
Allowance for credit losses, October 1, 2023
Net charge-offs
Provision:
Economic/Qualitative
Sale of unsecured consumer loans (3)
Other portfolio changes (2)
Allowance for credit losses, December 31, 2023
Allowance for Credit Losses
(In millions)
$
$
$
$
$
$
$
$
$
1,582
(38)
1,544
(83)
19
116
135
1,596
1,596
(81)
30
88
118
1,633
1,633
(101)
15
130
145
1,677
1,677
(132)
(9)
(27)
191
155
1,700
_______
(1) See Note 1 for additional information.
(2) This line item includes the net impact of portfolio growth, portfolio run-off, pay-downs, charge-offs, changes in the mix of total outstanding loans,
(3)
changes to specific reserves and credit quality changes.
In the fourth quarter of 2023, the Company sold substantially all of its portfolio of a third-party relationship with an associated allowance of $27 million at
the time of the sale. As discussed before Table 18 below, there was a $35 million fair value mark recorded through charge-offs, which resulted in a net
provision expense of $8 million associated with the sale.
The table below reflects a range of macroeconomic factors utilized in the Base forecast over the two-year R&S forecast
period as of December 31, 2023. The unemployment rate is the most significant macroeconomic factor among the allowance
models and continues to be at a normalized level with forecasted periods expected to remain relatively consistent.
Table 17— Macroeconomic Factors in the Forecast
Real GDP, annualized % change
Unemployment rate
HPI, year-over-year % change
CPI, year-over-year % change
Pre-R&S
Period
Base R&S Forecast
December 31, 2023
4Q2023
1Q2024
2Q2024
3Q2024
4Q2024
1Q2025
2Q2025
3Q2025
4Q2025
1.2 %
3.8 %
4.6 %
3.2 %
1.3 %
3.8 %
4.1 %
2.7 %
1.4 %
3.9 %
3.1 %
2.6 %
1.8 %
4.0 %
1.5 %
2.4 %
2.1 %
4.1 %
1.5 %
2.4 %
2.4 %
4.1 %
1.9 %
2.5 %
2.5 %
4.1 %
2.5 %
2.6 %
2.5 %
4.0 %
2.8 %
2.5 %
2.3 %
3.9 %
3.0 %
2.5 %
In deriving any forecast, Regions benchmarks its internal forecast with external forecasts and external data available.
Regions' December 2023 baseline forecast indicated overall improvement compared to the September 2023 forecast. Slower
70
Table of Contents
growth in consumer spending and reduced business investment in equipment, machinery and structures were drags on real GDP
growth in the fourth quarter of 2023. The trend of job growth is slowing, and the baseline forecast anticipates further
deceleration into 2024. The unemployment rate is expected to increase modestly over the forecast horizon, with the increase
constrained by the labor force participation rate remaining below pre-pandemic levels. As measured by CPI, inflation is
expected to slow further but remain above the FOMC's 2.0 percent target through 2024. The risks to the baseline forecast are
considered to be balanced. See the Economic Environment in Regions' Banking Markets discussion in the "Executive
Overview" section for additional information.
Credit metrics are monitored throughout each quarter in order to understand external macro-views, trends and industry
outlooks, as well as Regions' internal specific views of credit metrics and trends. In the fourth quarter of 2023, asset quality
continued to normalize, as expected. Commercial and investor real estate criticized balances increased approximately $492
million, which included an increase in classified balances of $135 million compared to the third quarter of 2023. Non-
performing loans, excluding held for sale, and non-performing assets increased approximately $163 million and $164 million,
respectively, compared to the third quarter of 2023. Total net charge-offs increased by 14 basis points to 0.54% of average
loans; however, excluding the impact of charge-offs associated with the fourth quarter sale of unsecured consumer loans,
adjusted net charge-offs (non-GAAP) decreased one basis point compared to the third quarter of 2023. See Table 1 "GAAP to
Non-GAAP Reconciliations" for further details, and Table 20 for more details regarding non-performing assets.
While Regions' quantitative allowance methodologies strive to reflect all risk factors, any estimate involves assumptions
and uncertainties resulting in some level of imprecision. The qualitative framework has a general imprecision component which
is meant to acknowledge that model and forecast errors are inherent in any modeling estimate. In the fourth quarter of 2023, the
general imprecision remained stable.
Based upon the factors discussed above, the December 31, 2023 allowance increased compared to the third quarter of
2023 due to adverse risk migration and continued credit normalization, as well as a build in qualitative adjustments for
incremental risk in higher risk portfolios (see further discussion in Table 20 below). Based on the overall analysis performed,
management deemed an allowance of $1.7 billion to be appropriate to absorb expected credit losses in the loan and credit
commitment portfolios as of December 31, 2023.
Net charge-offs increased $134 million year-over-year, primarily driven by an increase in commercial and industrial net
charge-offs resulting from expected normalization. The increase in other consumer—exit portfolios charge-offs includes $35
million in net charge-offs from the sale of unsecured consumer loans. Additionally, net charge-offs for 2022 include $63
million in net charge-offs in the other consumer portfolio due to the sale of unsecured consumer loans. See Table 1 "GAAP to
Non-GAAP Reconciliations" for further details. As noted, economic trends such as interest rates, unemployment, volatility in
commodity prices, collateral valuations and inflationary pressure will impact the future levels of net charge-offs and may result
in volatility of certain credit metrics in 2024 and beyond. See the "Executive Overview" section for details on expectations for
net charge-offs in 2024.
71
Table of Contents
Details regarding the allowance and net charge-offs, including an analysis of activity from previous years' totals, are
included in Table 18 "Allowance for Credit Losses".
Table 18—Allowance for Credit Losses
Allowance for loan losses at January 1
Cumulative effect from change in accounting guidance (1)
Allowance for loan losses, January 1 (as adjusted for change in accounting guidance) (1)
2023
2022
2021
(Dollars in millions)
$ 1,464
$ 1,479
$ 2,167
(38)
1,426
—
1,479
—
2,167
Loans charged-off:
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Commercial investor real estate mortgage
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Recoveries of loans previously charged-off:
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial investor real estate mortgage
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Net charge-offs (recoveries):
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Commercial investor real estate mortgage
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Provision for (benefit from) loan losses
Initial allowance on acquired PCD loans
Allowance for loan losses at December 31
Reserve for unfunded credit commitments at January 1
Provision for (benefit from) unfunded credit losses
Reserve for unfunded credit commitments at December 31
Allowance for credit losses at December 31
Loans, net of unearned income, outstanding at end of period
Average loans, net of unearned income, outstanding for the period
72
195
2
—
—
1
3
1
52
50
186
490
50
2
—
1
7
1
8
3
21
93
145
—
—
—
—
(4)
—
44
47
165
397
547
—
102
5
—
5
1
5
1
40
18
198
375
47
3
2
5
12
2
8
5
28
112
55
2
—
3
(4)
(7)
(1)
32
13
170
263
248
—
124
3
1
20
2
6
1
43
31
97
328
56
3
3
5
14
4
11
5
23
124
68
—
1
17
(3)
(8)
(3)
32
26
74
204
(493)
9
1,576
1,464
1,479
118
6
124
95
23
118
126
(31)
95
$ 1,700
$ 98,379
$ 1,582
$ 97,009
$ 1,574
$ 87,784
$ 98,239
$ 92,282
$ 84,802
Table of Contents
Net loan charge-offs (recoveries) as a % of average loans, annualized (2):
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total
Ratios (2):
Allowance for credit losses at end of period to loans, net of unearned income
Allowance for loan losses to loans, net of unearned income
Allowance for credit losses at end of period to non-performing loans, excluding loans held for sale
Allowance for loan losses to non-performing loans, excluding loans held for sale
_______
(1) See Note 1 for additional information.
(2) Amounts have been calculated using whole dollar values.
2023
2022
2021
0.28 %
— %
(0.09) %
0.26 %
— %
(0.01) %
(0.01) %
— %
(0.10) %
(0.02) %
3.58 %
12.79 %
2.74 %
0.40 %
1.73 %
1.60 %
211 %
196 %
0.11 %
0.04 %
(0.03) %
0.11 %
0.06 %
— %
0.04 %
(0.02) %
(0.19) %
(0.05) %
2.72 %
1.75 %
2.99 %
0.29 %
1.63 %
1.51 %
317 %
293 %
0.16 %
— %
0.42 %
0.14 %
0.30 %
— %
0.23 %
(0.02) %
(0.20) %
(0.11) %
2.83 %
1.70 %
2.41 %
0.24 %
1.79 %
1.69 %
349 %
328 %
Allocation of the allowance for credit losses by portfolio segment and class is summarized as follows:
Table 19—Allowance Allocation
2023
2022
Loan
Balance
Allowance
Allocation
Allowance to
Loans %(1)
Loan
Balance
Allowance
Allocation
Allowance to
Loans %(1)
Commercial and industrial
$
50,865 $
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
Total
_____
(1) Amounts have been calculated using whole dollar values.
4,887
281
56,033
6,605
2,245
8,850
20,207
3,221
2,439
1,341
43
6,245
33,496
697
110
7
814
169
36
205
100
80
23
138
1
339
681
(Dollars in millions)
1.37 % $
50,905 $
2.25
2.38
1.45
2.56
1.63
2.32
0.50
2.49
0.94
10.24
3.09
5.43
2.03
5,103
298
56,306
6,393
1,986
8,379
18,810
3,510
2,489
1,248
570
5,697
32,324
628
102
7
737
114
28
142
124
77
29
134
39
300
703
1.23 %
2.00
2.29
1.31
1.78
1.38
1.69
0.66
2.18
1.17
10.75
6.84
5.27
2.18
$
98,379 $
1,700
1.73 % $
97,009 $
1,582
1.63 %
73
Table of Contents
NON-PERFORMING ASSETS
The following table presents non-performing assets as of December 31:
Table 20—Non-Performing Assets
Non-performing loans:
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Total consumer
Total non-performing loans, excluding loans held for sale
Non-performing loans held for sale
Total non-performing loans(1)
Foreclosed properties
Total non-performing assets(1)
Accruing loans 90+ days past due:
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Total commercial
Commercial investor real estate mortgage
Total investor real estate
Residential first mortgage(2)
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
Total accruing loans 90+ days past due
Non-performing loans(1) to loans and non-performing loans held for sale
Non-performing loans, excluding loans held for sale(1) to loans
Non-performing assets(1) to loans, foreclosed properties and non-performing loans held for sale
2023
2022
(Dollars in millions)
$
471
$
36
8
515
233
233
22
29
6
57
805
3
808
15
823
11
—
11
23
23
61
20
7
20
—
29
$
$
347
29
6
382
53
53
31
28
6
65
500
3
503
13
516
30
1
31
40
40
47
15
8
15
1
17
$
137
171
0.82 %
0.82 %
0.84 %
103
174
0.52 %
0.52 %
0.53 %
$
$
$
_________
(1) Excludes accruing loans 90+ days past due.
(2) Excludes residential first mortgage loans that are 100% guaranteed by the FHA and all guaranteed loans sold to Ginnie Mae where Regions has the right
but not the obligation to repurchase. Total 90+ days or more past due guaranteed loans excluded were $34 million at December 31, 2023 and $34 million
at December 31, 2022.
Non-performing loans at December 31, 2023 increased $305 million as compared to year-end 2022 levels as a result of
continued asset quality normalization and downgrades within industries previously identified as higher risk such as
information, healthcare, transportation and warehousing, and office industries partially offset by improvement in agriculture.
The same economic trends that impact net charge-offs, as discussed above, will impact the future level of non-performing
assets. Circumstances related to individually large credits could also result in volatility.
74
Table of Contents
The following table provides an analysis of non-accrual loans (excluding loans held for sale) by portfolio segment:
Table 21— Analysis of Non-Accrual Loans
Balance at beginning of year
Additions
Net payments/other activity
Return to accrual
Charge-offs on non-accrual loans(2)
Transfers to held for sale(3)
Balance at end of year
Balance at beginning of year
Additions
Net payments/other activity
Return to accrual
Charge-offs on non-accrual loans(2)
Transfers to held for sale(3)
Transfers to real estate owned
Sales
Balance at end of year
Non-Accrual Loans, Excluding Loans Held for Sale for the Year Ended December 31, 2023
Commercial
Investor
Real Estate
Consumer(1)
Total
382 $
581
(145)
(107)
(188)
(8)
(In millions)
53 $
189
(9)
—
—
—
65 $
—
(8)
—
—
—
515 $
233 $
57 $
500
770
(162)
(107)
(188)
(8)
805
Non-Accrual Loans, Excluding Loans Held for Sale for the Year Ended December 31, 2022
Commercial
Investor
Real Estate
Consumer(1)
Total
$
$
$
368 $
440
(156)
(156)
(97)
(13)
(4)
—
(In millions)
3
$
58
(1)
—
(5)
—
—
(2)
80 $
—
(15)
—
—
—
—
—
451
498
(172)
(156)
(102)
(13)
(4)
(2)
500
$
382 $
53
$
65 $
________
(1) All net activity within the consumer portfolio segment other than sales and transfers to held for sale (including related charge-offs) is included as a single
net number within the net payments/other activity line.
Includes charge-offs on loans on non-accrual status and charge-offs taken upon sale and transfer of non-accrual loans to held for sale.
(2)
(3) Transfers to held for sale are shown net of charge-offs recorded upon transfer.
OTHER EARNING ASSETS
Other earning assets consist primarily of investments in Federal Reserve Bank and FHLB stock, marketable equity
securities, and other miscellaneous earning assets. The balance at December 31, 2023 totaled $1.4 billion, increasing from $1.3
billion at December 31, 2022 primarily due to an increase in marketable equity securities partially offset by a decline in
certificates of deposits held at other institutions. Refer to Note 7 "Other Earning Assets" to the consolidated financial statements
for additional information.
RESIDENTIAL MORTGAGE SERVICING RIGHTS AT FAIR VALUE
Residential MSRs increased approximately $94 million from December 31, 2022 to December 31, 2023. The year-over-
year increase was primarily due to a bulk purchase of the rights to service $6.2 billion of residential mortgage loans in the third
quarter of 2023. Partially offsetting the increase was higher amortization of servicing rights. An analysis of residential MSRs is
presented in Note 6 "Servicing of Financial Assets" to the consolidated financial statements.
DEPOSITS
Regions competes with other banking and financial services companies for a share of the deposit market. Regions’ ability
to compete in the deposit market depends heavily on the pricing of its deposits and how effectively the Company meets
customers’ needs. Regions employs various means to meet those needs and enhance competitiveness, such as providing a high
level of customer service, competitive pricing and convenient branch locations for its customers. Regions also serves customers
through providing centralized, high-quality banking services through the Company's digital channels and contact center.
Deposits are Regions’ primary source of funds, providing funding for 92 percent of average earning assets in 2023 and 95
percent of average earning assets in 2022. Regions' deposit base composition is a key component of the Company's franchise
value. Table 22 "Deposits" provides a year-over-year comparison of deposit balances on a period-ending basis.
The cost of deposits rose in 2023 as expected in an elevated interest rate environment. Deposit costs increased to 99 basis
points for 2023, compared to 14 basis points for 2022. The rate paid on interest-bearing deposits increased to 156 basis points in
2023 compared to 25 basis points for 2022. The increase in deposit costs also reflected remixing as customers moved into
higher interest-bearing categories. See the “Market Risk-Interest Rate Risk” section for further discussion of these balances.
75
Table of Contents
The following table summarizes deposits by category and by segment as of December 31:
Table 22—Deposits
Non-interest-bearing demand
Interest-bearing checking
Savings
Money market—domestic
Time deposits
Consumer Bank segment
Corporate Bank segment
Wealth Management segment
Other (1)(2)
2023
2022
(In millions)
42,368 $
24,480
12,604
33,364
14,972
51,348
25,676
15,662
33,285
5,772
127,788 $
131,743
80,031 $
36,883
7,694
3,180
83,487
37,145
9,111
2,000
127,788 $
131,743
$
$
$
$
____
(1) Other deposits represent non-customer balances primarily consisting of wholesale funding (for example, Eurodollar trade deposits, selected deposits and
brokered time deposits).
(2) Includes brokered deposits totaling $2.4 billion at December 31, 2023 and $1.2 billion at December 31, 2022.
Total deposits at December 31, 2023 decreased approximately $4.0 billion compared to year-end 2022 levels, with all
deposit categories and segments impacted by remixing as customers continued to exhibit rate-seeking behavior. Non-interest-
bearing demand products decreased $9.0 billion to $42.4 billion and represented 33 percent of total deposits at year-end 2023
compared to 39 percent at year-end 2022. Interest-bearing checking also decreased $1.2 billion to $24.5 billion at year-end
2023 and accounted for 19 percent of total deposits at year-end 2023 and 2022. Savings accounts decreased $3.1 billion to
$12.6 billion at year-end 2023 and accounted for 10 percent of total deposits at year-end 2023 compared to 12 percent at year-
end 2022. Money market balances remained stable compared to the prior year.
Growth in time deposits partially offset decreases in other categories with time deposit balances increasing $9.2 billion to
$15.0 billion in 2023, as customers moved into higher interest rate products. The increase in time deposit balances also reflects
additional brokered deposits in the Other segment entered into to maintain diversified funding sources. Time deposits
represented 12 percent of total deposits at year-end 2023 compared to 4 percent at year-end 2022.
Regions' deposits are granular and diversified including insured and collateralized deposits, with consumer deposits
making up more than 60 percent of the total deposit base. Furthermore, corporate deposits include those that are operational in
nature (where the primary use is certain operational services such as clearing, custody, payments or other cash management
activities). A significant amount of the Company's deposit base is insured by the FDIC or collateralized, with approximately
$11.2 billion in deposits collateralized in public funds or in trusts at December 31, 2023. The amount of estimated uninsured
deposits totaled $47.8 billion at December 31, 2023, therefore over 60 percent of total deposits are insured by the FDIC. The
Company's deposits are also granular in nature as evidenced by an average deposit account balance of approximately $18
thousand at December 31, 2023. The estimates of uninsured deposits and average account size were based on methodologies
used in the Company's Call Report, which is prepared on an unconsolidated bank basis.
See the "Executive Overview" section for details on expectations for deposits in 2024. See also the "Liquidity" and
"Market Risk-Interest Rate Risk" sections for further discussion.
Time deposit accounts with balances of $250,000 or more totaled $2.6 billion and $790 million at December 31, 2023 and
2022, respectively.
The following table shows scheduled maturities of estimated uninsured time deposits as of December 31, 2023:
Table 23—Maturity of Uninsured Time Deposits
Uninsured time deposits, maturing in:
3 months or less
Over 3 through 6 months
Over 6 through 12 months
Over 12 months
76
2023
(In millions)
$
$
594
352
508
127
1,581
Table of Contents
BORROWED FUNDS
Total long-term borrowings increased approximately $46 million to $2.3 billion at December 31, 2023 due entirely to
valuation adjustments. Regions and Regions Bank did not issue or redeem any debt in 2023.
During 2023, the Company utilized short-term and long-term FHLB borrowings as a part of its liquidity management. All
of these borrowings were redeemed prior to year-end resulting in a $4 million pre-tax gain associated with the extinguishment.
Funding from the FHLB and Federal Reserve Bank is secured by pledged assets, primarily certain loan portfolios which are
also subject to blanket lien arrangements with the FHLB and Federal Reserve Bank. As of December 31, 2023, Regions' blanket
lien arrangements with these entities covered a total loan balance of approximately $95 billion and included loans from various
loan portfolios. However, borrowing capacity with the FHLB and Federal Reserve Bank is contingent on a subset of the blanket
lien portfolios which are eligible and pledged according to the parameters for each counterparty.
See Note 11 "Borrowed Funds" to the consolidated financial statements for further discussion of both short-term and long-
term borrowings.
RATINGS
Table 24 "Credit Ratings" reflects the debt ratings information of Regions Financial Corporation and Regions Bank by
S&P, Moody’s, Fitch and DBRS as of December 31, 2023.
Table 24—Credit Ratings
Regions Financial Corporation
Senior unsecured debt
Subordinated debt
Regions Bank
Short-term
Long-term bank deposits
Senior unsecured debt
Subordinated debt
Outlook
As of December 31, 2023
S&P
Moody’s
Fitch
DBRS(1)
BBB+
BBB
A-2
N/A
A-
BBB+
Stable
Baa1
Baa1
P-1
A1
Baa1
Baa1
Negative
A-
BBB+
F1
A
A-
BBB+
Stable
A
AL
R-1M
AH
AH
A
Stable
____
(1) On February 1, 2024, DBRS announced plans to withdraw the credit ratings on Regions Financial Corporation and its bank subsidiary, Regions Bank, on or
about March 4, 2024 due to business reasons; however, DBRS may elect to continue coverage based on investor feedback.
As part of an industry-wide evaluation, on August 7, 2023, Moody's affirmed all long-term and short-term ratings and
updated the outlook to negative from stable reflecting several sources of strain on the U.S. banking sector.
In general, ratings agencies base their ratings on many quantitative and qualitative factors, including capital adequacy,
liquidity, asset quality, business mix, probability of government support, and level and quality of earnings. Any downgrade in
credit ratings by one or more ratings agencies may impact Regions in several ways, including, but not limited to, Regions’
access to the capital markets or short-term funding, borrowing cost and capacity, collateral requirements, and acceptability of its
letters of credit, thereby potentially adversely impacting Regions’ financial condition and liquidity. See the “Risk Factors”
section of this Annual Report on Form 10-K for more information.
A security rating is not a recommendation to buy, sell or hold securities, and the ratings are subject to revision or
withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.
Additional information on the credit rating ranking within the overall classification system is located on the website of each
credit rating agency.
SHAREHOLDERS' AND TOTAL EQUITY
Shareholders’ equity was $17.4 billion at December 31, 2023 as compared to $15.9 billion at December 31, 2022. During
2023, net income increased shareholders' equity by $2.1 billion, cash dividends on common stock reduced shareholders' equity
by $822 million, and cash dividends on preferred stock reduced shareholders' equity by $98 million. Changes in AOCI
increased shareholders' equity by $531 million, primarily due to available for sale securities and derivative instruments as a
result of changes in market interest rates during 2023. Common stock repurchased during 2023 decreased shareholders' equity
by $252 million. These shares were immediately retired upon repurchase and therefore were not included in treasury stock. The
cumulative effect from the adoption of new accounting guidance that eliminated TDRs and created modifications to troubled
borrowers increased shareholders' equity by $28 million.
Total equity includes noncontrolling interest of $64 million and $4 million at December 31, 2023 and December 31, 2022,
respectively. The noncontrolling interest represents the unowned portion of a low income housing tax credit fund syndication,
of which Regions held the majority interest at December 31, 2023 and December 31, 2022.
77
Table of Contents
Subsequent to December 31, 2023, the Company purchased 4.3 million shares of common stock for $79 million through
February 21, 2024. These shares were immediately retired upon repurchase and therefore were not included in treasury stock.
See Note 14 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" section for additional
information.
REGULATORY REQUIREMENTS
CAPITAL RULES
Regions and Regions Bank are required to comply with regulatory capital requirements established by Federal and State
banking agencies. These regulatory capital requirements involve quantitative measures of the Company's assets, liabilities and
selected off-balance sheet items, and also qualitative judgments by the regulators. Failure to meet minimum capital
requirements can subject the Company to a series of increasingly restrictive regulatory actions. Under the Basel III Rules,
Regions is designated as a standardized approach bank. Regions is a "Category IV" institution under the Federal Reserve's
Tailoring Rules.
Federal banking agencies allowed a phase-in of the impact of CECL on regulatory capital. At December 31, 2021, the
add-back to regulatory capital was calculated as the impact of initial adoption, adjusted for 25 percent of subsequent changes in
the allowance. The amount is phased-in over a three-year period beginning in 2022. At December 31, 2023, the net impact of
the addback on CET1 was approximately $204 million or approximately 16 basis points. The add-back amount will decrease by
approximately $100 million each year, or approximately 8 basis points, in the first quarters of 2024 and 2025.
Regions participates in supervisory stress testing conducted by the Federal Reserve and its SCB is currently floored at 2.5
percent. See Note 14 "Shareholders' Equity and Accumulated Other Comprehensive Income" to the consolidated financial
statements for further details regarding CCAR results.
See the "Executive Overview" section for details on expectations for CET1.
In July 2023, U.S. federal banking regulators issued a proposal for long-term debt requirements that, if finalized, would
require the Company to maintain minimum long-term debt requirements. If the proposal becomes effective, banks would be
allowed a three-year phase-in period. The Company is studying the proposal and evaluating its impact.
In August 2023, the U.S. banking regulators proposed new rules for U.S. implementation of capital requirements under
Basel IV rules, more recently referred to as the Basel III "Endgame". These proposed rules include broad-based changes to the
risk weighting framework for various credit exposures and operational risk capital requirements. The Company is studying the
proposals and evaluating their impacts.
Additional discussion of the Basel III Rules, their applicability to Regions, recent proposals and final rules issued by the
federal banking agencies and recent laws enacted that impact regulatory requirements is included in the "Supervision and
Regulation" subsection of the "Business" section. Additional discussion and a tabular presentation of the applicable holding
company and bank regulatory capital requirements is included in Note 12 "Regulatory Capital Requirements and Restrictions"
to the consolidated financial statements.
LIQUIDITY
Regions maintains a robust liquidity management framework designed to effectively manage liquidity risk in accordance
with sound risk management principals and regulatory expectations. The framework establishes sustainable processes and tools
to effectively identify, measure, mitigate, monitor, and report liquidity risks beginning with Regions’ Liquidity Management
Policy and the Liquidity Risk Appetite Statements approved by the Board. Processes within the liquidity management
framework include, but are not limited to, liquidity risk governance, cash management, liquidity stress testing, liquidity risk
limits, contingency funding plans, and collateral management. While the framework is designed to comply with liquidity
regulations, the processes are further tailored to be commensurate with Regions’ operating model and risk profile.
See the “Supervision and Regulation—Liquidity Regulation” subsection of the “Business” section, the "Risk Factors"
section and the "Liquidity" section for more information.
RISK MANAGEMENT
Regions is exposed to various risks as part of the normal course of operations. The exposure to risk requires sound risk
management practices that comprise an integrated and comprehensive set of programs and processes that apply to the entire
Company. Accordingly, Regions has established a risk management framework to manage risks and provide reasonable
assurance of the achievement of the Company’s strategic objectives.
The primary risk exposures identified and managed through the Company’s risk management framework are market risk,
liquidity risk, credit risk, operational risk, legal risk, compliance risk, reputational risk and strategic risk.
78
Table of Contents
• Market risk is the risk to the Company’s financial condition resulting from adverse movements in market rates or prices,
such as interest rates, foreign exchange rates or equity prices.
• Liquidity risk is the potential that the Company will be unable to meet its obligations as they come due because of an
inability to liquidate assets or obtain adequate funding (referred to as "funding liquidity risk") or the potential that the
Company cannot easily unwind or offset specific exposures without significantly lowering market prices because of
inadequate market depth or market disruptions (referred to as "market liquidity risk").
• Credit risk is the risk that arises from the potential that a borrower or counterparty will fail to perform on an obligation.
• Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems or from
external events.
• Legal risk is defined as the risk associated with the failure to meet Regions' legal obligations from legislative,
regulatory, or contractual perspectives.
• Compliance risk is the risk to current or anticipated earnings or capital arising from violations of laws, rules, or
regulations, or from non-conformance with prescribed practices, internal policies and procedures, or ethical standards.
• Reputational risk is the potential that negative publicity regarding the Company’s business practices, whether true or
not, will cause a decline in the customer base, costly litigation, or revenue reductions.
• Strategic risk is the risk to current or projected financial condition and resilience from adverse business decisions, poor
implementation of business decisions, or lack of responsiveness to changes in the banking industry and operating
environment.
Several of these primary risk exposures are expanded upon further within the remaining sections of Management's
Discussion and Analysis.
Regions’ risk management framework outlines the Company’s approach for managing risk that includes the following
four components:
• Collaborative Risk Culture - A strong, collaborative risk culture is fundamental to the Company's core values and
operating principles. It ensures focus on risk in all activities and encourages the necessary mindset and behavior to
enable effective risk management and promote sound risk-taking within the bounds of the Company’s risk appetite. The
Company's risk culture requires that risks be promptly identified, escalated, and challenged; thereby, benefiting the
overall performance of the Company. Sustaining a collaborative risk culture is critical to the Company's success and is a
clear expectation of executive management and the Board.
•
•
Sound Risk Appetite - The Company's risk appetite statements define the types and levels of risk the Company is willing
to take to achieve its objectives.
Sustainable Risk Processes - Effective risk management requires sustainable processes and tools to effectively identify,
measure, mitigate, monitor, and report risk.
• Responsible Risk Governance - Governance serves as the foundation for comprehensive management of risks facing the
Company. It outlines clear responsibility and accountability for managing, monitoring, escalating, and reporting both
existing and emerging risks.
Clearly defined roles and responsibilities are critical to the effective management of risk and are central to the four
components of the Company’s approach to risk management. Regions utilizes the Three Lines of Defense concept to clearly
designate risk management activities within the Company.
•
•
•
1st Line of Defense activities include the proactive identification, management (including mitigation and risk
acceptance), and ownership of risks.
2nd Line of Defense activities provide for objective oversight of the Company’s risk-taking activities and assessment of
the Company’s aggregate risk levels.
3rd Line of Defense activities provide for independent reviews and assessments of risk management practices across the
Company.
The Board provides the highest level of risk management governance. The principal risk management functions of the
Board are to oversee processes for evaluating the adequacy of internal controls, risk management, financial reporting and
compliance with laws and regulations. The Board has designated an Audit Committee of outside directors to focus on
oversight of management's establishment and maintenance of appropriate disclosure controls and procedures over financial
reporting. See the "Financial Disclosures and Internal Controls" section of Management's Discussion and Analysis for
additional information. The Board has also designated a Risk Committee of outside directors to focus on Regions’ overall risk
profile. The Risk Committee annually approves an Enterprise Risk Appetite Statement that reflects core business principles
and strategic vision by including quantitative limits and qualitative statements that are organized by risk type. This statement is
79
Table of Contents
designed to be a high-level document that sets the tone for the Board’s risk appetite, which is the maximum amount of risk the
Company is willing to accept in pursuit of its business objectives. By establishing boundaries around risk taking and business
decisions, and by incorporating the needs and goals of its shareholders, regulators, customers and other stakeholders, the
Company’s risk appetite is aligned with its strategic priorities and goals.
The Risk Management Group, led by the Company’s Chief Risk Officer, ensures the consistent application of Regions’
risk management approach within the structure of the Company’s operating, capital and strategic plans. The primary activities
of the Risk Management Group include:
•
•
Interpreting internal and external signals that point to possible risk issues for the Company;
Identifying risks and determining which Company areas and/or products will be affected;
• Ensuring there are mechanisms in place to specifically determine how risks will affect the Company as a whole and the
individual area and or product;
• Assisting business groups in analyzing trends and ensuring Company areas have appropriate risk identification and
mitigation processes in place; and
• Reviewing the limits, parameters, policies, and procedures in place to ensure the continued appropriateness of risk
controls.
As part of its ongoing assessment process, the Risk Management Group makes recommendations to management and the
Risk Committee of the Board regarding adjustments to these controls as conditions or risk tolerances change. In addition, the
Internal Audit division provides an independent assessment of the Company’s internal control structure and related systems
and processes.
Management, with the assistance of the Risk Management Group, follows a formal process for identifying, measuring
and documenting key risks facing each business group and determining how those risks can be controlled or mitigated, as well
as how the controls can be monitored to ensure they are effective. The Risk Committee receives reports from management to
ensure operations are within the limits established by the Enterprise Risk Appetite Statement.
Some of the more significant processes used by management to manage and control risks are described in the remainder
of this report. External factors beyond management’s control may result in losses despite the Risk Management Group’s
efforts.
EFFECTS OF INFLATION
The majority of assets and liabilities of a financial institution are monetary in nature; therefore, a financial institution
differs greatly from most commercial and industrial companies, which have significant investments in fixed assets or
inventories that are greatly impacted by inflation. While the implications differ for a bank, inflation does have influence on the
growth of total assets and deposits in the banking industry and the resulting level of profitability and capitalization. Inflation
also affects the level of market interest rates, and therefore, the pricing of financial instruments.
Management believes the most significant potential impact of inflation on financial results is a direct result of Regions’
ability to manage the impact of changes in interest rates. The Company’s interest rate risk positioning was mostly neutral as of
December 31, 2023, and therefore, net interest income increases or declines only modestly from higher or lower interest rates.
Hedging activity has reduced the exposure to net interest income late in the rising interest rate cycle as intended. Refer to Table
25 "Interest Rate Sensitivity" for additional details on Regions’ interest rate sensitivity.
Additionally, inflation has the potential to impact credit risk. Periods of inflation could influence asset prices and business
input costs which could affect the ability of borrowers to repay loans. The Company has sound credit risk management
practices to maintain a credit portfolio through the economic cycle. Refer to the "Credit Risk" section for further details on
Regions' credit risk management process.
EFFECTS OF DEFLATION
A period of deflation would affect all industries, including financial institutions. Deflation potentially could lead to lower
profits, higher unemployment, lower production and deterioration in overall economic conditions. In addition, deflation could
depress economic activity and impair bank earnings through reduced balance sheet growth and less favorable product pricing,
as well as impairment in the ability of borrowers to repay loans.
Management believes the most significant potential impact of deflation on financial results relates to Regions’ ability to
maintain a sufficient amount of capital to cushion against future market and credit related losses. However, the Company can
utilize certain risk management tools to help it maintain its balance sheet strength even if a deflationary scenario were to
develop.
80
Table of Contents
MARKET RISK—INTEREST RATE RISK
Regions’ primary market risk is interest rate risk. This includes uncertainty with respect to absolute interest rate levels as
well as relative interest rate levels, which are impacted by both the shape and the slope of the various yield curves that affect the
financial products and services that the Company offers. As its primary tool to analyze this risk, Regions measures the change
in its net interest income in various interest rate scenarios compared to a base case scenario. Net interest income sensitivity to
market rate movements is a useful short-term indicator of Regions’ interest rate risk.
In addition to net interest income simulations, Regions also utilizes an EVE analysis as a measurement tool to estimate
risk exposure over a longer-term horizon. EVE measures the extent to which the economic value of assets, liabilities and
derivative instruments may change in response to fluctuations in interest rates. Importantly, EVE values only the current
balance sheet, excluding the growth assumptions used in net interest income sensitivity analyses. Additionally, the results are
highly dependent on imprecise assumptions for products with embedded prepay optionality and indeterminate maturities. The
uncertainty surrounding important assumptions used in EVE analysis may limit its efficacy.
Sensitivity Measurement—Financial simulation models are Regions’ primary tools used to measure interest rate exposure.
Using a wide range of sophisticated simulation techniques provides management with extensive information on the potential
impact to net interest income caused by changes in interest rates. Models are structured to simulate cash flows and accrual
characteristics of Regions’ balance sheet. Assumptions are made about the direction and magnitude of interest rate movements,
the slope of the yield curve, and the changing composition of the balance sheet that results from both strategic plans and
customer behavior. Among the assumptions are expectations of balance sheet growth and composition, the pricing and maturity
characteristics of existing business and the characteristics of future business. Interest rate-related risks are expressly considered,
such as pricing spreads, the pricing of deposit accounts, prepayments and other option risks. Regions considers these factors, as
well as the degree of certainty or uncertainty surrounding their future behavior.
The primary objective of asset/liability management at Regions is to coordinate balance sheet composition with interest
rate risk management to sustain reasonable and stable net interest income throughout various interest rate cycles. In computing
interest rate sensitivity, Regions compares a set of alternative interest rate scenarios to the results of a base case scenario
derived using “market forward rates.” See the "Executive Overview" section for details on expectations for net interest income
in 2024. The set of alternative interest rate scenarios includes instantaneous parallel rate shifts of various magnitudes. In
addition to parallel rate shifts, multiple curve steepening and flattening scenarios are contemplated. Regions includes
simulations of gradual interest rate movements phased in over a six-month period that may more realistically mimic the speed
of potential interest rate movements.
Exposure to Interest Rate Movements—Regions' balance sheet is naturally asset sensitive, with net interest income
increasing with higher interest rates, and decreasing with lower interest rates. This is the result of approximately half of the loan
portfolio floating contractually with market rate indices, and funding from a large, mostly stable retail deposit portfolio.
Importantly, the stability and rate sensitivity of Regions' deposit portfolio has been proven over multiple interest rate cycles.
With this natural balance sheet profile, the ability to utilize discretionary asset duration strategies within the investment
portfolio and through derivative hedges is critical in mitigating the Bank’s naturally asset sensitive position.
As of December 31, 2023, Regions evidenced a mostly balanced, or "neutral" asset/liability position, with an asset
duration of approximately 2.6 years and a liability duration of approximately 2.8 years, using historically-informed
approximations. The securities portfolio duration was approximately 4.5 years and is appropriate for Regions' risk profile in
order to offset the long-duration deposit liabilities. While the derivative hedging portfolio is recorded on the balance sheet
including current unrealized losses, deposit value increases have more than offset these losses through the rising rate
environment. The additional value of deposits in a higher rate environment is realized in the form of lower-cost funding when
compared with wholesale sources. While balance sheet analysis, particularly EVE analysis, does contemplate the economic
value of deposits, the estimated fair value of deposits is equal to their carrying value for certain financial statement footnote
disclosures, consistent with industry practices. See Note 21 "Fair Value Measurements" to the consolidated financial statements
for additional information.
As of December 31, 2023, Regions' net interest income profile was mostly neutral to both gradual and instantaneous
parallel yield curve shifts as compared to the base case for the 12-month measurement horizon ending December 2024. The
estimated exposure associated with the rising and falling rate scenarios in Table 25 below reflects the combined impacts of
movements in short-term and long-term interest rates. An increase or reduction in short-term interest rates (such as the Fed
Funds rate, the rate of Interest on Excess Reserves, and SOFR) will drive the yield on assets and liabilities contractually tied to
such rates higher or lower. In either scenario, it is expected that changes in funding costs and balance sheet hedging income will
offset the change in asset yields, resulting in little change to net interest income.
Net interest income remains exposed to intermediate and long-term yield curve tenors. While this was a headwind to net
interest income during a low rate environment, it represents a tailwind to net interest income growth as the yield curve rises and
remains elevated. Elevated, or increasing intermediate and long-term interest rates (such as intermediate to longer-term U.S.
Treasuries, swaps and mortgage rates) will drive yields higher on certain fixed-rate, newly originated or renewed loans, increase
81
Table of Contents
prospective yields on certain investment portfolio purchases, and reduce amortization of premium expense on existing securities
in the investment portfolio. The opposite is true in an environment where intermediate and long-term interest rates fall.
The interest rate sensitivity analysis presented below in Table 25 is informed by a variety of assumptions and estimates
regarding the progression of the balance sheet in both the baseline scenario as well as the scenarios of instantaneous and gradual
shifts in the yield curve. Though there are many assumptions which affect the estimates for net interest income, those pertaining
to deposit pricing, deposit mix and overall balance sheet composition are particularly impactful. Given the uncertainties
associated with monetary policy on industry liquidity levels and the cost of that liquidity, management evaluates the impacts
from these key assumptions through sensitivity analysis. Sensitivity calculations are hypothetical and should not be considered
predictive of future results.
The Company’s baseline balance sheet assumptions include management's best estimate for balance sheet changes in the
coming 12 months. In 2023, Regions experienced a decline in deposit balances, both from the normalization of balances
acquired from stimulative policies, as well as from late-cycle rate seeking behavior by higher-balance customers, yet those
declines slowed during the second half of the year. The baseline scenario projects deposit balances to be stable to modestly
lower over the forecast horizon. Additional deposit balance outflow of $1 billion would reduce net interest income by $21
million over 12 months in the parallel, instantaneous +100 basis point scenario in Table 25. Conversely, if an additional $1
billion are retained, a positive benefit of $21 million would be expected over 12 months in the parallel, instantaneous +100
basis point scenario Table 25.
While the base case estimates mostly stable deposit balances in aggregate, additional remixing of approximately $2 billion
to $3 billion out of low-cost deposit categories and into high-cost deposit categories is anticipated through mid-2024. In rising
rate scenarios only, management assumes that the mix of deposits will further change versus the base case as informed by
analyses of prior rate cycles. Currently, however, much of the anticipated mix shift has already occurred or is expected to occur
within the baseline scenario, mitigating the amount of additional remixing in higher rate scenarios. The magnitude of the
remixing shift is rate dependent and equates to approximately $1.6 billion over 12 months in the parallel, instantaneous +100
basis point scenario in Table 25. Furthermore, over the 12 month horizon, an increase of $1 billion in deposit remixing would
decrease net interest income by approximately $27 million, and a decrease of $1 billion in deposit remixing would increase net
interest income by $27 million in the parallel, instantaneous +100 basis point scenario.
The interest-bearing deposit beta is calibrated using the experience from prior rate cycles and is dynamic across both
interest rate level and time. The base case scenario anticipates a peak in deposit rates by mid-year 2024. The parallel,
instantaneous +100 basis point shock scenario in Table 25 incorporates an incremental beta between 40 and 45 percent when
compared to the base case scenario, while the parallel, instantaneous -100 basis point shock scenario incorporates an
incremental beta between 35 and 40 percent when compared to the base case scenario. Incremental deposit pricing
outperformance or underperformance of 5 percent in a parallel, instantaneous 100 basis point shock would increase or decrease
net interest income by approximately $42 million.
The table below summarizes Regions' positioning over the next 12 months in various parallel yield curve shifts (i.e.,
including all yield curve tenors). The scenarios are inclusive of all interest rate hedging activities. More information regarding
hedges is disclosed in Table 26 and its accompanying description.
Table 25—Interest Rate Sensitivity
Gradual Change in Interest Rates
+ 200 basis points
+ 100 basis points
- 100 basis points
- 200 basis points
Instantaneous Change in Interest Rates
+ 200 basis points
+ 100 basis points
- 100 basis points
- 200 basis points
Estimated Annual Change
in Net Interest Income
December 31, 2023(1)(2)
(in millions)
$
$
54
30
(50)
(109)
—
13
(55)
(128)
________
(1) Disclosed interest rate sensitivity levels represent the 12-month forward looking net interest income changes as compared to market forward rate cases
and include expected balance sheet growth and remixing.
(2) All active cash flow hedges, including forward starting hedges, are reflected within the measurement horizon. See Table 27 for additional information
regarding hedge start and maturity dates.
82
Table of Contents
Regions' comprehensive interest rate risk management approach uses derivatives and debt securities to manage its interest
rate risk position.
During the fourth quarter of 2023, the Company added $250 million of 3 year maturity, forward starting swaps hedging
floating rate loan cash flows, with a receive fixed rate of 3.26 percent becoming active in 2028. Additionally, the Company
added $1.2 billion of pay fixed fair value swaps on available for sale securities and $252 million of receive fixed fair value
swaps on brokered CDs. The pay fixed fair value swaps had a weighted average fixed rate of 4.9 percent with a weighted
average maturity of fourteen months, and the received fixed fair value swaps had a weighted average fixed rate of 4.9 percent
with a weighted average maturity of twelve months. All trades were executed with overnight SOFR as the floating leg
benchmark rate.
Subsequent to December 31, 2023, the Company terminated approximately $500 million of receive fixed cash flow
swaps with a fixed rate of 2.86% and original maturity of January 2025.
Interest rate movements may also have an impact on the value of Regions’ securities portfolio, which can directly impact
the carrying value of shareholders’ equity.
Derivatives—Regions uses financial derivative instruments for management of interest rate sensitivity. ALCO, which
consists of members of Regions’ senior management team, in its oversight role for the management of interest rate sensitivity,
approves the use of derivatives in balance sheet hedging strategies. Derivatives are also used to offset the risks associated with
customer derivatives, which include interest rate, credit, and foreign exchange risks. The most common derivatives Regions
employs are forward rate contracts, forward sale commitments, futures contracts, interest rate swaps, interest rate options (caps,
floors and collars), and contracts with a combination of these instruments.
Forward rate contracts are commitments to buy or sell financial instruments at a future date at a specified price or yield.
Futures contracts subject Regions to market risk associated with changes in interest rates. Because futures contracts are cash
settled daily, there is minimal credit risk associated with futures. Interest rate swaps are contractual agreements typically
entered into to exchange fixed for variable (or vice versa) streams of interest payments. The notional principal is not exchanged
but is used as a reference for the size of interest settlements. Interest rate options are contracts that allow the buyer to purchase
or sell a financial instrument at a predetermined price and time. Forward sale commitments are contractual obligations to sell
market instruments at a future date for an already agreed-upon price. Foreign currency contracts involve the exchange of one
currency for another on a specified date and at a specified rate. These contracts are executed on behalf of the Company's
customers and are used by customers to manage fluctuations in foreign exchange rates. The Company is subject to the credit
risk that another party will fail to perform.
Regions has made use of interest rate swaps and options in balance sheet hedging strategies to effectively convert a
portion of its fixed-rate funding position to a variable-rate position, to effectively convert a portion of its fixed-rate debt
securities available for sale portfolio to a variable-rate position, and to effectively convert a portion of its floating-rate loan
portfolios to fixed-rate. Regions also uses derivatives to economically 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 of the loans in this held-for-sale portfolio. Futures contracts and
forward sale commitments are used to protect the value of the loan pipeline and loans held for sale from changes in interest
rates and pricing.
83
Table of Contents
The following table presents additional information about hedging interest rate derivatives used by Regions to manage
interest rate risk:
Table 26—Hedging Derivatives by Interest Rate Risk Management Strategy
Derivatives in fair value hedging relationships:
Receive variable/pay fixed swaps - debt securities available for sale(1)(2)(3)
Receive fixed/pay variable swaps - borrowings and time deposits(3)
Derivatives in cash flow hedging relationships:
Receive fixed/pay variable swaps - floating-rate loans(1)(2)(3)
Interest rate options(4)
Total derivatives designated as hedging instruments
December 31, 2023
Weighted-Average
Notional
Amount
Maturity
(Years)
Receive Rate
Pay Rate
(Dollars in millions)
$
$
$
1,323
1,652
29,550
2,000
34,525
1.4
2.5
3.1
4.5
5.3 %
1.3 %
4.8 %
5.4 %
3.0 %
4.8 %
_________
(1) Floating rates represent the most recent fixing for active derivatives and the first forward fixing for future starting derivatives.
(2)
(3) All floating rates are SOFR based and may include SOFR conversion spread.
(4)
Includes forward starting notional. For more information on notional by year, see Table 27.
Interest rate options have an average cap strike of 6.22% and a floor of 1.86%.
The following table presents the average asset hedge notional amounts that are active during each of the remaining
quarterly and annual periods. Asset hedge notional amounts mature prior to the end of 2032, with an immaterial amount of
notional maturing in early 2032.
Table 27—Schedule of Notional for Asset Hedging Derivatives
Quarter Ended
Average Active Notional Amount
Years Ended
12/31/2023
2024
2025
2026
2027
2028
2029
2030
2031
(in millions)
Asset Hedging Relationships:
Receive fixed/pay variable swaps
Receive variable/pay fixed swaps
Net receive fixed/pay variable swaps
Interest rate options
$
$
$
18,018 $ 20,411 $ 18,989 $ 16,653 $ 12,205 $ 6,611 $
636 $
252 $
259
1,029
300
249
15
23
23
23
1
23
17,759 $ 19,382 $ 18,689 $ 16,404 $ 12,190 $ 6,588 $
613 $
229 $
(22)
— $ 1,001 $ 1,999 $ 2,000 $ 2,000 $
999 $
1 $ — $ —
_________
(1) All cash flow hedges are reflected within the 12-month measurement horizon and included in income sensitivity levels as disclosed in Table 25.
Regions manages the credit risk of these instruments in much the same way as it manages credit risk of the loan portfolios
by establishing credit limits for each counterparty and through collateral agreements for dealer transactions. For non-dealer
transactions, the need for collateral is evaluated on an individual transaction basis and is primarily dependent on the financial
strength of the counterparty. Credit risk is also reduced significantly by entering into legally enforceable master netting
agreements. When there is more than one transaction with a counterparty and there is a legally enforceable master netting
agreement in place, the exposure represents the net of the gain and loss positions with and collateral received from and/or
posted to that counterparty. Most hedging interest rate swap derivatives traded by Regions are subject to mandatory clearing.
The counterparty risk for cleared trades effectively moves from the executing broker to the clearinghouse allowing Regions to
benefit from the risk mitigation controls in place at the respective clearinghouse. The “Credit Risk” section in this report
contains more information on the management of credit risk.
Regions also uses derivatives to meet the needs of its customers. Interest rate swaps, interest rate options and foreign
exchange forwards are the most common derivatives sold to customers. Other derivative instruments with similar characteristics
are used to hedge 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 income.
The primary objective of Regions’ hedging strategies is to mitigate the impact of interest rate changes, from an economic
perspective, on net interest income and other financing income and the net present value of its balance sheet. The overall
effectiveness of these hedging strategies is subject to market conditions, the quality of Regions’ execution, the accuracy of its
valuation assumptions, counterparty credit risk and changes in interest rates.
See Note 20 "Derivative Financial Instruments and Hedging Activities" to the consolidated financial statements for a
tabular summary of Regions’ year-end derivatives positions and further discussion.
84
Table of Contents
Regions accounts for residential MSRs at fair market value with any changes to fair value being recorded within mortgage
income. Regions enters into derivative transactions to economically mitigate the impact of market value fluctuations related to
residential MSRs. Derivative instruments entered into in the future could be materially different from the current risk profile of
Regions’ current portfolio.
LIQUIDITY
Liquidity is an important factor in the financial condition of Regions and affects Regions’ ability to meet the needs of the
Company and its customers. Regions’ goal in liquidity management is to maintain diverse liquidity sources and reserves
sufficient to satisfy the cash flow requirements of depositors and borrowers, under normal and stressed conditions. Accordingly,
Regions maintains a variety of liquidity sources to fund its obligations, as further described below. See also Note 23
"Commitments, Contingencies and Guarantees" to the consolidated financial statements for additional discussion of the
Company’s funding requirements. Furthermore, Regions performs specific procedures, including scenario analyses and stress
testing to evaluate and maintain appropriate levels of available liquidity in alignment with liquidity risk.
Regions' operation of its business provides a generally balanced liquidity base which is comprised of customer assets,
consisting principally of loans, and funding provided by customer deposits and borrowed funds. Maturities in the loan portfolio
provide a steady flow of funds, and are supplemented by Regions' deposit base.
Cash reserves, liquid assets and secured borrowing capabilities aid in the management of liquidity in normal and stressed
conditions, and/or meeting the need of contingent events such as obligations related to potential litigation. As part of its normal
management practice, Regions maintains collateral and operational readiness to utilize secured funding sources such as the
FHLB and the Federal Reserve Bank on a same-day basis (subject to any practical constraints affecting these market
participants). While the securities portfolio is a primary source of liquidity, the secured borrowing capabilities, in addition to
cash reserves on hand, assist in alleviating the Company's need to sell securities for funding purposes. Liquidity needs can also
be met by borrowing funds in national money markets, though Regions does maintain limits on short-term unsecured funding
due to the volatility that can affect such markets.
The following table summarizes the Company's available sources of liquidity as of December 31, 2023:
Table 28—Liquidity Sources
Cash at the Federal Reserve Bank(1)
Unencumbered investment securities(2)
FHLB borrowing availability
Federal Reserve Bank borrowing availability through the discount window
Total liquidity sources
Availability as of December 31, 2023
(in billions)
$
$
4.2
18.9
15.1
21.3
59.5
____
(1) Includes small in transit items that may not yet be reflected in the Fed master account closing balance.
(2) Unencumbered investment securities comprise securities that are eligible as collateral for secured transactions through market channels or are eligible to be
pledged to the FHLB or the Federal Reserve Discount Window.
The balance with the Federal Reserve Bank is the primary component of the balance sheet line item “interest-bearing
deposits in other banks.” At December 31, 2023, Regions had approximately $4.2 billion in cash on deposit with the Federal
Reserve Bank and other depository institutions, a decrease from approximately $9.2 billion at December 31, 2022, partially
driven by the expected decline in deposits during the period. Refer to the "Cash and Cash Equivalents" and "Deposits" sections
for more information.
The securities portfolio also serves as a primary source and storehouse of liquidity. Proceeds from maturities and
principal and interest payments of securities provide a continual flow of funds available for cash needs (see Note 3 "Debt
Securities" to the consolidated financial statements). Furthermore, the highly liquid nature of the available for sale securities
portfolio (for example, the agency guaranteed MBS portfolio) can be readily used as a source of cash through various secured
borrowing arrangements. Regions' securities portfolio consists of U.S. Treasury securities, federal agency securities, MBS and
corporate and other debt. In evaluating the liquidity within the securities portfolio, unencumbered investment securities are
primarily comprised of U.S Treasury securities and agency MBS. Unencumbered investment securities also includes certain
corporate bonds considered to be highly liquid and other securities, primarily non-agency commercial MBS.
Regions’ financing arrangement with the FHLB adds additional flexibility in managing the Company's liquidity position.
As of December 31, 2023, Regions had borrowing capacity as shown in Table 28 and no outstanding borrowings. FHLB
borrowing capacity was determined based on eligible securities and loan amounts, as of December 31, 2023, that can be
pledged as collateral for future borrowing capacity. Additionally, investment in FHLB stock is required in relation to the level
of outstanding borrowings. The FHLB has been and is expected to continue to be a reliable and economical source of funding.
85
Table of Contents
Regions has additional borrowing availability with the Federal Reserve Bank through the discount window as shown in
Table 28. Federal Reserve Bank borrowing capacity is determined based on eligible loan amounts that can be used as collateral
for future borrowing capacity.
Regions maintains a shelf registration statement with the SEC that can be utilized by Regions to issue various debt and/or
equity securities. Additionally, Regions' Board has authorized Regions Bank to issue up to $10 billion in aggregate principal
amount of bank notes outstanding at any one time. Refer to Note 11 "Borrowed Funds" to the consolidated financial statements
for additional information.
Regions may, from time to time, consider opportunistically retiring outstanding issued securities, including subordinated
debt in privately negotiated or open market transactions for cash or common shares. Regulatory approval would be required for
retirement of some instruments. See Note 14 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to
the consolidated financial statements for additional information.
Regions' liquidity policy requires the holding company to maintain cash sufficient to cover the greater of (1) 18 months of
debt service and other cash needs or (2) a minimum cash balance of $500 million. Cash and cash equivalents at the holding
company totaled $1.9 billion at December 31, 2023. Overall liquidity risk limits are established by the Board through its Risk
Appetite Statement and Liquidity Policy. The Company's Board, LROC and ALCO regularly review compliance with the
established limits.
LIBOR TRANSITION AND REFERENCE RATE REFORM
The Company successfully transitioned from LIBOR to alternative reference rates by June 30, 2023. Impacted
instruments were transitioned in accordance with the LIBOR Act with certain instruments transitioning on applicable reset dates
through June 30, 2024. As part of this transition, the Company applied certain optional expedients and exceptions allowed in
previously adopted accounting relief for hedges.
In the fourth quarter of 2023, Bloomberg Index Services Limited announced the permanent cessation of the BSBY index
and all tenors effective November 15, 2024. Regions is in the process of evaluating exposure to BSBY and planning for
cessation, and will not rely on accounting relief during transition.
MARKET RISK—PREPAYMENT RISK
Regions, like most financial institutions, is subject to changing prepayment speeds on mortgage-related assets under
different interest rate environments. Prepayment risk is a significant risk to earnings and specifically to net interest income. For
example, mortgage loans and other financial assets may be prepaid by a borrower, so that the borrower may refinance its
obligations at lower rates. As loans and other financial assets prepay in a falling rate environment, Regions must reinvest these
funds in lower-yielding assets. Prepayments of assets carrying higher rates reduce Regions’ interest income and overall asset
yields. Conversely, in a rising rate environment, these assets will prepay at a slower rate, resulting in opportunity cost by not
having the cash flow to reinvest at higher rates. Prepayment risk can also impact the value of securities and the carrying value
of equity. Regions’ greatest exposures to prepayment risks primarily rest in its MBS portfolio, the mortgage fixed-rate loan
portfolio and the residential MSR, all of which tend to be sensitive to interest rate movements. Each of these assets is also
exposed to prepayment risk due to factors which are not necessarily the result of interest rates, but rather due to changes in
policies or programs related, either directly or indirectly, to the U.S. Government's governance over certain lending and
financing within the mortgage market. Such policies can work to either encourage or discourage financing dynamics and
represent a risk that is extremely difficult to forecast and may be the result of non-economic factors. The Company attempts to
monitor and manage such exposures within reasonable expectations while acknowledging all such risks cannot be foreseen or
avoided. Further, Regions has prepayment risk that would be reflected in non-interest income in the form of servicing income
on the residential MSRs. Regions actively monitors prepayment exposure as part of its overall net interest income forecasting
and interest rate risk management.
CREDIT RISK
Regions’ objective regarding credit risk is to maintain a credit portfolio that provides for stable credit costs with
acceptable volatility through an economic cycle. Regions has various processes to manage credit risk as described below. In
order to assess the risk profile of the loan portfolio, Regions considers risk factors within the loan portfolio segments and
classes, the current U.S. economic environment and that of its primary banking markets, as well as counterparty risk. See the
"Portfolio Characteristics" section found earlier in this report for further information regarding the risk characteristics of each
loan type. See further discussion of the current U.S. economic environment in the "Economic Environment in Regions' Banking
Markets" section.
86
Table of Contents
Management Process
Credit risk is managed by maintaining a sound credit risk culture, throughout all lines of defense, which ensures that the
levels and types of risk taken are aligned with Regions' credit risk appetite. The credit quality of borrowers and counterparties
has a significant impact on Regions' earnings; however, the nature of the risk differs by each of the defined businesses which
engage in multiple forms of commercial, investor real estate and consumer lending. Regions categorizes the credit risks it faces
by asset quality, counterparty exposure, and diversification levels which provides a structure to assess credit risk and guides
credit decision-making. Credit policies, another key component of Regions' culture, are designed and adjusted, as needed, to
promote sound credit risk management. These policies guide lending activities in a manner consistent with Regions' strategy
and provide a framework for achieving asset quality and earnings objectives.
Effective credit risk management requires coordinated identification, measurement, mitigation, monitoring and reporting
of credit risk exposure, credit quality, and emerging risk trends. Accordingly, Regions has implemented a credit risk
governance structure that provides oversight from the Board to the organizational units in order to maintain open channels of
communication.
Occasionally, borrowers and counterparties do not fulfill their obligations and Regions must take steps to mitigate and
manage losses. Teams are in place to appropriately identify and manage nonperforming loans, collections, loan modifications,
and loss mitigation efforts. Regions maintains an allowance for credit losses that management considers adequate to absorb
expected losses in the portfolio.
For a discussion of the process and methodology used to calculate the allowance for credit losses refer to the “Critical
Accounting Estimates and Related Policies” section found earlier in this report, Note 1 “Summary of Significant Accounting
Policies” and Note 5 "Allowance for Credit Losses" to the consolidated financial statements. Details regarding the allowance
for credit losses, including an analysis of activity from the previous year’s total, are included in Table 18 "Allowance for Credit
Losses". Also, refer to Table 19 "Allowance Allocation" for details pertaining to management’s allocation of the allowance to
each loan category.
Responsibility and accountability for effectively managing all risks, including credit risk, in the various business units lies
with the first line of defense. Risk Management, in the second line of defense, oversees, assesses and effectively challenges the
risk-taking activities of the first line of defense. Finally, Credit Risk Review provides ongoing oversight, as a third line of
defense function, of the credit portfolios to ensure Regions’ activities, and controls, are appropriate for the size, complexity and
risk profile of the Company.
Counterparty Risk
Counterparty risk is the risk that the counterparty to a transaction or contract could be unable or unwilling to fulfill its
contractual or legal obligations. Exposure may be to a financial institution (such as a commercial bank, an insurance company,
a broker dealer, etc.) or a corporate client.
Regions has a centralized approach to approval, management, and monitoring of counterparty exposure. The
Counterparty Risk Management Group is responsible for the independent credit risk management of financial institution
counterparties and their affiliates. Market Risk Management is responsible for the measurement and stress testing of
counterparty exposures. The Corporate and Commercial Credit groups are responsible for the independent credit risk
management of client side counterparties.
Financial institution exposure may result from a variety of transaction types generated in one or more departments of the
Company. Aggregate exposure limits are established to manage the exposure generated by various areas of the Company.
Counterparty client credit risk arises when Regions sells a risk management product to hedge risks in the client’s business.
Exposures to counterparties are aggregated across departments and regularly reported to senior management.
INFORMATION SECURITY RISK
Regions faces information security risks, such as evolving and adaptive cyber-attacks that are conducted regularly against
financial institutions in attempts to compromise or disable information systems. In the event of a cyber-attack or other data
breach, Regions may be required to incur significant expenses, including with respect to remediation costs, costs of
implementing additional preventative measures, addressing any reputational harm and addressing any related regulatory
inquiries or civil litigation arising from the event.
See Part I Item1C. Cybersecurity found earlier in this report for further information.
87
Table of Contents
FINANCIAL DISCLOSURE AND INTERNAL CONTROLS
Regions maintains internal controls over financial reporting, which generally include those controls relating to the
preparation of the consolidated financial statements in conformity with GAAP. Regions’ process for evaluating internal
controls over financial reporting starts with understanding the risks facing each of its functions and areas, how those risks are
controlled or mitigated, and how management monitors those controls to ensure that they are in place and effective. These risks,
control procedures and monitoring tools are documented in a standard format. This format not only documents the internal
control structures over all significant accounts, but also places responsibility on management for establishing feedback
mechanisms to ensure that controls are effective.
Regions also has processes to ensure appropriate disclosure controls and procedures are maintained. These controls and
procedures as defined by the SEC are generally designed to ensure that financial and non-financial information required to be
disclosed in reports filed with the SEC is reported within the time periods specified in the SEC’s rules and forms, and that such
information is communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding
required disclosure.
Regions’ Disclosure Review Committee, which includes representatives from the legal, tax, finance, risk management,
accounting, investor relations, and treasury departments, meets quarterly to review recent internal and external events to
determine whether all appropriate disclosures have been made in reports filed with the SEC. In addition, the CEO and CFO
meet quarterly with the SEC Filings Review Committee, which includes senior representatives from accounting, legal, risk
management, treasury, and the business groups. The SEC Filings Review Committee provides a forum in which senior
executives disclose to the CEO and CFO any known significant deficiencies or material weaknesses in Regions’ internal
controls over financial reporting, and provide reasonable assurance that the financial statements and other contents of the
Company’s Form 10-K and 10-Q filings are accurate, complete, and timely. As part of this process, certifications of internal
control effectiveness are obtained from Regions’ associates who are responsible for maintaining and monitoring effective
internal controls over financial reporting. These certifications are reviewed and presented to the CEO and CFO as support of the
Company’s assessment of internal controls over financial reporting. The Form 10-K is presented to the Audit Committee of the
Board of Directors for approval, and the Forms 10-Q are reviewed by the Audit Committee. Financial results and other
financial information are also reviewed with the Audit Committee on a quarterly basis.
As required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, the CEO and the CFO review and make
certifications regarding the accuracy of Regions’ periodic public reports filed with the SEC, as well as the effectiveness of
disclosure controls and procedures and internal controls over financial reporting. With the assistance of the financial review
committees noted in the previous paragraph, Regions continually assesses and monitors disclosure controls and procedures and
internal controls over financial reporting, and makes refinements as necessary.
COMPARISON OF 2022 WITH 2021
Refer to the “2022 Results” and "Operating Results" sections of Management's Discussion and Analysis of the Annual
Report on Form 10-K for the year ended December 31, 2022, for comparisons of 2022 with 2021.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
This information is set forth in the Risk Management section of Item 7 and is incorporated herein by reference.
88
Table of Contents
Item 8. Financial Statements and Supplementary Data
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
We, as members of the Management of Regions Financial Corporation and subsidiaries (the “Company”), are responsible
for establishing and maintaining effective internal control over financial reporting. Regions’ internal control system was
designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and
fair presentation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted
accounting principles. Internal control over financial reporting includes self-monitoring mechanisms, and actions are taken to
correct deficiencies as they are identified.
All internal controls systems, no matter how well designed, have inherent limitations and may not prevent or detect
misstatements in the Company’s financial statements, including the possibility of circumvention or overriding of controls.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
Regions’ management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2023. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (“COSO”) in its 2013 Internal Control—Integrated Framework. Based on our assessment, we
believe and assert that, as of December 31, 2023, the Company’s internal control over financial reporting is effective based on
those criteria.
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
by
/S/ JOHN M. TURNER, JR.
John M. Turner, Jr.
President and Chief Executive Officer
/S/ DAVID J. TURNER, JR.
David J. Turner, Jr.
Chief Financial Officer
89
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Regions Financial Corporation
Opinion on Internal Control over Financial Reporting
We have audited Regions Financial Corporation and subsidiaries’ internal control over financial reporting as of December 31,
2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Regions Financial
Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated
statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the three years
in the period ended December 31, 2023, and the related notes and our report dated February 23, 2024 expressed an unqualified
opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of
Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Birmingham, Alabama
February 23, 2024
90
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Regions Financial Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Regions Financial Corporation and subsidiaries (the
Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income (loss),
changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the
related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated February 23, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the account or disclosures to which it relates.
91
Table of Contents
Description of
the Matter
Allowance for credit losses
The Company’s loan and lease portfolio and the associated allowance for credit losses (ACL), were
$98.4 billion and $1.7 billion as of December 31, 2023, respectively. The provision for credit losses
was $553 million for the year ended December 31, 2023. As discussed in Notes 1 and 5 to the
consolidated financial statements, the ACL is established to absorb expected credit losses over the
contractual life of the loans measured at amortized cost, including unfunded commitments.
Management’s measurement of expected losses is driven by loss forecasting models which utilize
relevant quantitative information about historical experience, current conditions and the reasonable
and supportable economic forecast that affects the collectability of the reported amount.
Management’s estimate for the expected credit losses is established through these quantitative factors,
as well as qualitative considerations to account for the imprecision inherent in the estimation process.
As a result, management may adjust the ACL for the potential impact of qualitative factors through
their established framework. Management’s qualitative framework provides for specific model and
general imprecision adjustments for such factors as the economic forecast imprecision, potential
model imprecision, process imprecision and specific issues or events that Management believes are
not adequately captured in the modeled outcomes.
Auditing management’s ACL estimate and related provision for credit losses involved a high degree
of complexity in evaluating the expected loss forecasting models and subjectivity in evaluating
management’s measurement of the economic forecast used during the reasonable and supportable
period and the qualitative factors.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
Company’s process for establishing the ACL, including management’s controls over: 1) expected loss
forecasting models including model validation, monitoring, the completeness and accuracy of key
inputs and assumptions used in the models; 2) the development and application of the reasonable and
supportable economic forecast; 3) the identification and measurement of qualitative factors.
With respect to expected loss forecasting models, with the support of specialists, we evaluated the
conceptual soundness of the model methodology and replicated a sample of models. We also tested
the appropriateness of key inputs and assumptions used in these models by agreeing a sample of inputs
to supporting information.
Regarding the reasonable and supportable economic forecast, with the support of specialists, we
assessed the forecasted economic scenario by, among other procedures, evaluating management’s
methodology for developing the forecast and comparing a sample of key economic variables
developed to external sources.
With respect to the identification of qualitative factors, we evaluated the potential impact of
imprecision in the quantitative models and hence the need to consider a qualitative adjustment to the
ACL for factors which may not be directly measured in the modeled calculations. Regarding
measurement of the qualitative factors, we evaluated the methodology applied and data utilized by
management to estimate the appropriate level of the qualitative factors. We also considered if
qualitative adjustments were consistent with external macroeconomic factors and the results produced
by the Company’s Credit Review, Internal Audit and Model Validation groups.
We evaluated the overall ACL amount, including model estimates and qualitative factor adjustments,
and whether the recorded ACL appropriately reflects expected credit losses on the loan portfolio and
unfunded credit commitments. We reviewed historical loss statistics, peer-bank information,
subsequent events and transactions and considered whether they corroborate or contradict the
Company’s measurement of the ACL.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1971.
Birmingham, Alabama
February 23, 2024
92
Table of Contents
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
2023
2022
(In millions, except share data)
$
2,635 $
Cash and due from banks
Interest-bearing deposits in other banks
Assets
Debt securities held to maturity (estimated fair value of $716 and $751, respectively)
Debt securities available for sale (amortized cost of $30,864 and $31,367, respectively)
Loans held for sale (includes $201 and $196 measured at fair value, respectively)
Loans, net of unearned income
Allowance for loan losses
Net loans
Other earning assets
Premises, equipment and software, net
Interest receivable
Goodwill
Residential mortgage servicing rights at fair value
Other identifiable intangible assets, net
Liabilities and Equity
$
$
Other assets
Total assets
Deposits:
Non-interest-bearing
Interest-bearing
Total deposits
Borrowed funds:
Long-term borrowings
Total borrowed funds
Other liabilities
Total liabilities
Equity:
4,166
754
28,104
400
98,379
(1,576)
96,803
1,417
1,642
614
5,733
906
205
8,815
152,194 $
42,368 $
85,420
127,788
2,330
2,330
4,583
1,997
9,230
801
27,933
354
97,009
(1,464)
95,545
1,308
1,718
511
5,733
812
249
9,029
155,220
51,348
80,395
131,743
2,284
2,284
5,242
134,701
139,269
Preferred stock, authorized 10 million shares, par value $1.00 per share:
Non-cumulative perpetual, including related surplus, net of issuance costs; issued—1,403,500
shares
1,659
1,659
Common stock, authorized 3 billion shares, par value $0.01 per share:
Issued including treasury stock—963,375,681 and 975,524,168 shares, respectively
Additional paid-in capital
Retained earnings
Treasury stock, at cost— 41,032,676 shares
Accumulated other comprehensive income (loss), net
Total shareholders’ equity
Noncontrolling interest
Total equity
Total liabilities and equity
10
11,757
8,186
(1,371)
(2,812)
17,429
64
17,493
$
152,194 $
10
11,988
7,004
(1,371)
(3,343)
15,947
4
15,951
155,220
See notes to consolidated financial statements.
93
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31
Table of Contents
Interest income on:
Loans, including fees
Debt securities
Loans held for sale
Other earning assets
Total interest income
Interest expense on:
Deposits
Short-term borrowings
Long-term borrowings
Total interest expense
Net interest income
Provision for (benefit from) credit losses
Net interest income after provision for credit losses
Non-interest income:
Service charges on deposit accounts
Card and ATM fees
Investment management and trust fee income
Capital markets income
Mortgage income
Securities gains (losses), net
Other
Total non-interest income
Non-interest expense:
Salaries and employee benefits
Equipment and software expense
Net occupancy expense
Other
Total non-interest expense
Income before income taxes
Income tax expense
Net income
Net income available to common shareholders
Weighted-average number of shares outstanding:
Basic
Diluted
Earnings per common share:
Basic
Diluted
2023
2022
(In millions, except per share data)
2021
$
5,733 $
4,088 $
749
40
375
6,897
1,255
96
226
1,577
5,320
553
4,767
592
504
313
222
109
(5)
521
2,256
2,416
412
289
1,299
4,416
2,607
533
688
36
290
5,102
197
—
119
316
4,786
271
4,515
641
513
297
339
156
(1)
484
2,429
2,318
392
300
1,058
4,068
2,876
631
$
$
$
2,074 $
1,976 $
2,245 $
2,146 $
936
938
935
942
2.11 $
2.11
2.29 $
2.28
3,452
533
37
59
4,081
64
—
103
167
3,914
(524)
4,438
648
499
278
331
242
3
523
2,524
2,205
365
303
874
3,747
3,215
694
2,521
2,400
956
963
2.51
2.49
See notes to consolidated financial statements.
94
Table of Contents
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income
Other comprehensive income (loss), net of tax:
Unrealized losses on securities transferred to held to maturity:
Unrealized losses on securities transferred to held to maturity during the period (net of zero, zero and
zero tax effect, respectively)
Less: reclassification adjustments for amortization of unrealized losses on securities transferred to
held to maturity (net of ($1), ($1) and ($2) tax effect, respectively)
Net change in unrealized losses on securities transferred to held to maturity, net of tax
Unrealized gains (losses) on securities available for sale:
Unrealized holding gains (losses) arising during the period (net of $168, ($927) and ($212) tax
effect, respectively)
Less: reclassification adjustments for securities gains (losses) realized in net income (net of ($1),
zero and $1 tax effect, respectively)
Net change in unrealized gains (losses) on securities available for sale, net of tax
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Unrealized holding gains (losses) on derivatives arising during the period (net of ($43), ($292) and
($89) tax effect, respectively)
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income
(net of ($60), $36 and $108 tax effect, respectively)
Net change in unrealized gains (losses) on derivative instruments, net of tax
Defined benefit pension plans and other post employment benefits:
Net actuarial gains (losses) arising during the period (net of ($21), $7 and $46 tax effect,
respectively)
Less: reclassification adjustments for amortization of actuarial loss and settlements realized in net
income (net of ($11), ($11) and ($16) tax effect, respectively)
Net change from defined benefit pension plans and other post employment benefits, net of tax
Other comprehensive income (loss), net of tax
Comprehensive income (loss)
Year Ended December 31
2023
2022
2021
(In millions)
$
2,074 $
2,245 $
2,521
—
(1)
1
501
(4)
505
(124)
(176)
52
(61)
(34)
(27)
531
—
(2)
2
(2,725)
(1)
(2,724)
(866)
104
(970)
33
(27)
60
(3,632)
—
(5)
5
(629)
2
(631)
(265)
318
(583)
134
(49)
183
(1,026)
1,495
See notes to consolidated financial statements.
$
2,605 $
(1,387) $
95
Table of Contents
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Shareholders' Equity
Preferred Stock
Common Stock
Shares Amount
Shares Amount
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock,
At Cost
(In millions, except per share data)
Accumulated
Other
Comprehensive
Income (Loss),
Net
Non-
controlling
Interest
Total
BALANCE AT JANUARY 1, 2021
2 $ 1,656
960 $
10 $
12,731 $
3,770 $
(1,371) $
1,315 $ 18,111 $
Net income
—
—
—
Other comprehensive income (loss), net of
tax
Cash dividends declared
Preferred stock dividends
Net proceeds from issuance of Series E
preferred stock
Redemption of Series A preferred stock
—
—
—
—
—
Impact of common stock share repurchases
—
Impact of common stock transactions under
compensation plans, net
—
—
—
—
—
— —
390
—
(387)
—
—
—
(21)
3
—
—
—
—
—
—
—
—
—
—
—
—
—
(100)
(467)
25
2,521
—
(620)
(108)
—
(13)
—
—
—
—
—
—
—
—
—
—
—
2,521
(1,026)
(1,026)
—
—
—
—
—
—
(620)
(108)
390
(500)
(467)
25
BALANCE AT DECEMBER 31, 2021
2 $ 1,659
942 $
10 $
12,189 $
5,550 $
(1,371) $
289 $ 18,326 $
Net income
—
—
—
Other comprehensive income (loss), net of
tax
Cash dividends declared
Preferred stock dividends
—
—
—
Impact of common stock share repurchases
—
Impact of common stock transactions under
compensation plans, net
Other
—
—
—
—
—
—
— —
—
—
—
(8)
—
—
—
—
—
—
—
—
—
—
—
—
—
(230)
29
—
2,245
—
(692)
(99)
—
—
—
—
—
—
—
—
—
—
—
2,245
(3,632)
(3,632)
—
—
—
—
—
(692)
(99)
(230)
29
—
BALANCE AT DECEMBER 31, 2022
2 $ 1,659
934 $
10 $
11,988 $
7,004 $
(1,371) $
(3,343) $ 15,947 $
Cumulative effect from change in
accounting guidance
Net income
Other comprehensive income (loss), net of
tax
Cash dividends declared
Preferred stock dividends
—
—
—
—
—
—
—
—
—
—
—
—
—
— —
Impact of common stock share repurchases
—
Impact of common stock transactions under
compensation plans, net
Other
—
—
—
—
—
(16)
6
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(252)
21
—
28
2,074
—
(822)
(98)
—
—
—
—
—
—
—
—
—
—
—
—
—
531
—
—
—
—
—
28
2,074
531
(822)
(98)
(252)
21
—
BALANCE AT DECEMBER 31, 2023
2 $ 1,659
924 $
10 $
11,757 $
8,186 $
(1,371) $
(2,812) $ 17,429 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
4
4
—
—
—
—
—
—
—
60
64
See notes to consolidated financial statements.
96
Table of Contents
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
2023
Year Ended December 31
2022
(In millions)
2021
Operating activities:
Net income
Adjustments to reconcile net income to net cash from operating activities:
$
2,074 $
2,245 $
2,521
Provision for (benefit from) credit losses
Depreciation, amortization and accretion, net
Securities (gains) losses, net
Deferred income tax expense
Originations and purchases of loans held for sale
Proceeds from sales of loans held for sale
(Gain) loss on sale of loans, net
Early extinguishment of debt
Net change in operating assets and liabilities:
Other earning assets
Interest receivable and other assets
Other liabilities
Other
Net cash from operating activities
Investing activities:
Proceeds from maturities of debt securities held to maturity
Proceeds from sales of debt securities available for sale
Proceeds from maturities of debt securities available for sale
Purchases of debt securities available for sale
Net (payments for) proceeds from bank-owned life insurance
Proceeds from sales of loans
Purchases of loans
Net change in loans
Purchases of mortgage servicing rights
Net purchases of other assets
Payment for acquisition of businesses, net of cash received
Net cash from investing activities
Financing activities:
Net change in deposits
Net change in short-term borrowings
Proceeds from long-term borrowings
Payments on long-term borrowings
Cash dividends on common stock
Cash dividends on preferred stock
Net proceeds from issuance of preferred stock
Payment for redemption of preferred stock
Repurchases of common stock
Taxes paid related to net share settlement of equity awards
Other
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of period
553
236
5
32
(4,496)
4,440
(45)
(4)
(109)
194
(659)
87
2,308
47
70
2,930
(2,610)
(5)
485
(426)
271
353
1
22
(4,630)
5,221
(30)
—
(124)
(2,242)
2,092
(77)
3,102
98
1,309
4,433
(8,991)
(4)
1,793
(876)
(1,755)
(10,325)
(157)
(186)
—
(288)
(90)
—
(1,607)
(12,941)
(524)
371
(3)
165
(6,747)
7,728
(273)
20
13
(231)
(76)
66
3,030
222
83
5,848
(8,360)
(2)
522
(1,314)
1,481
(72)
(91)
(1,182)
(2,865)
(3,955)
(7,329)
13,836
—
2,000
(2,000)
(787)
(98)
—
—
(252)
(35)
—
(5,127)
(4,426)
11,227
—
—
—
(663)
(99)
—
—
(230)
(24)
—
(8,345)
(18,184)
29,411
(102)
647
(1,779)
(608)
(108)
390
(500)
(467)
(22)
3
11,290
11,455
17,956
$
6,801 $
11,227 $
29,411
See notes to consolidated financial statements.
97
Table of Contents
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Regions Financial Corporation (“Regions” or the “Company”) provides a full range of banking and bank-related services
to individual and corporate customers through its subsidiaries and branch offices located across the South, Midwest and Texas
as well as delivering specialty capabilities nationwide. Regions is subject to the regulations of certain government agencies and
undergoes periodic examinations by certain of those regulatory authorities.
The accounting and reporting policies of Regions and the methods of applying those policies that materially affect the
consolidated financial statements conform with GAAP and with general financial services industry practices. In preparing the
financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the balance sheet dates and revenues and expenses for the periods presented. Actual results could differ from the
estimates and assumptions used in the consolidated financial statements including, but not limited to, the estimates and
assumptions related to the allowance for credit losses, fair value measurements, intangibles, residential MSRs and income taxes.
Regions has evaluated all subsequent events for potential recognition and disclosure through the filing date of this Annual
Report on Form 10-K.
During 2023, the Company adopted new accounting guidance related to several topics. All prior period amounts impacted
by guidance that required retrospective application have been revised.
Certain amounts in prior period financial statements have been reclassified to conform to the current period presentation,
except as otherwise noted. These reclassifications are immaterial and have no effect on net income, comprehensive income
(loss), total assets, total liabilities, total shareholders’ equity or cash flows as previously reported.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Regions, its subsidiaries and certain VIEs. Significant
intercompany balances and transactions have been eliminated. Regions considers a voting rights entity to be a subsidiary and
consolidates it if Regions has a controlling financial interest in the entity. VIEs are consolidated if Regions has the power to
direct the activities of the VIE that significantly impact financial performance and has the obligation to absorb losses or the
right to receive benefits that could potentially be significant to the VIE (i.e., Regions is the primary beneficiary). The
determination of whether Regions is the primary beneficiary of a VIE is reassessed on an ongoing basis. Investments in
companies which are not VIEs but in which Regions has more than minor influence over the operating and financial policies,
are accounted for using the equity method of accounting. Investments in VIEs, where Regions is not the primary beneficiary of
a VIE, are accounted for using either the proportional amortization method or the equity method of accounting. These
investments are included in other assets. The maximum potential exposure to losses relative to investments in VIEs is generally
limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity. Loans to these
entities are underwritten in substantially the same manner as are other loans and are generally secured. Refer to Note 2 for
additional disclosures regarding Regions’ significant VIEs.
CASH EQUIVALENTS AND CASH FLOWS
Cash equivalents represent assets that can be converted into cash immediately. At Regions, these assets include cash and
due from banks, interest-bearing deposits in other banks, and federal funds sold and securities purchased under agreements to
resell. Cash flows from loans, either originated or acquired, are classified at that time according to management’s intent to
either sell or hold the loan for the foreseeable future. When management’s intent is to sell the loan, the cash flows of that loan
are presented as operating cash flows. When management’s intent is to hold the loan for the foreseeable future, the cash flows
of that loan are presented as investing cash flows.
The following table summarizes supplemental cash flow information for the years ended December 31:
Cash paid during the period for:
Interest on deposits and borrowed funds
Income taxes, net
Non-cash transfers:
2023
2022
(In millions)
2021
$
1,441 $
376
303 $
336
Loans held for sale and loans transferred to other real estate
Loans transferred to loans held for sale
Loans held for sale transferred to loans
Properties transferred to held for sale
21
15
18
79
21
22
24
6
98
185
367
14
240
277
38
Table of Contents
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND SECURITIES SOLD UNDER
AGREEMENTS TO REPURCHASE
Securities purchased under agreements to resell and securities sold under agreements to repurchase are treated as
collateralized financing transactions. It is Regions’ policy to take possession of securities purchased under resell agreements
either through direct delivery or a tri-party agreement.
DEBT SECURITIES
Management determines the appropriate accounting classification of debt securities at the time of purchase, based on
intent, and periodically re-evaluates such designations. Debt securities are classified as held to maturity when the Company has
the intent and ability to hold the securities to maturity. Debt securities held to maturity are presented at amortized cost. Debt
securities not classified as held to maturity are classified as available for sale and may be sold prior to maturity. Debt securities
available for sale are presented at estimated fair value with changes in unrealized gains and losses, net of taxes, reported as a
component of accumulated other comprehensive income (loss). See the “Fair Value Measurements” section below for
discussion of determining fair value.
The amortized cost of debt securities classified as held to maturity and available for sale is adjusted for amortization of
premiums and accretion of discounts to maturity, or first call date when applicable, using the effective interest method. Such
amortization or accretion is included in interest income on securities. Realized gains and losses are included in net securities
gains (losses). The cost of securities sold is based on the specific identification method.
For debt securities available for sale, the Company reviews its securities portfolio for impairment and determines if
impairment is related to credit loss or non-credit loss. In making the assessment of whether a loss is from credit or other factors,
management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a
rating agency, and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss
exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the
security. If the present value of cash flows is less than the amortized cost basis, a credit loss exists and an allowance is created,
limited by the amount that the fair value is less than the amortized cost basis.
Subsequent activity related to the credit loss component (e.g. write-offs, recoveries) is recognized as part of the allowance
for credit losses on debt securities available for sale. Securities held to maturity are evaluated under the allowance for credit
losses model. For securities which have an expectation of zero nonpayment of the amortized cost basis (e.g. U.S. Treasury
securities or agency securities), the expected credit loss is zero. Refer to Note 3 for further detail and information on securities.
LOANS HELD FOR SALE
Regions’ loans held for sale primarily includes commercial loans, investor real estate loans, and residential real estate
mortgage loans. Loans held for sale are recorded at either estimated fair value, if the fair value option is elected, or the lower of
cost or estimated fair value.
Regions has elected to account for residential real estate mortgages originated with the intent to sell at fair value. Intent is
established for these conforming residential real estate mortgage loans when Regions enters into an interest rate lock
commitment. Gains and losses on these residential mortgage loans held for sale for which the fair value option has been elected
are included in mortgage income. Management has elected the fair value option for certain commercial loans originated with
the intent to sell and gains and losses on those loans are included in capital markets income.
Regions also transfers loans that were originally recorded as held for investment to held for sale when management has
the intent to sell in the near term. These loans held for sale are recorded at the lower of cost or estimated fair value. The amount
is then considered the new cost basis of the loan. At the time of transfer, write-downs on the loans that are credit related are
recorded as charge-offs. All other write-downs and gains and losses on the sale of these loans are included in other non-interest
expense or other non-interest income (dependent on the type of loan). See the “Fair Value Measurements” section below for
discussion of determining estimated fair value.
LOANS
Regions' loans balance is comprised of commercial, investor real estate and consumer loans. Loans that management has
the intent and ability to hold for the foreseeable future or until maturity or payoff are considered loans held for investment (or
portfolio loans). Loans held for investment are carried at amortized cost (the principal amount outstanding, net of premiums,
discounts, unearned income and deferred loan fees and costs). Regions elected to exclude accrued interest receivable balances
from the amortized cost basis. Interest receivable is included as a separate line item on the balance sheet. Interest income on all
types of loans is accrued based on the contractual interest rate and the principal amount outstanding using methods that
approximate the interest method, except for those loans classified as non-accrual. Premiums and discounts on purchased loans
and non-refundable loan origination and commitment fees, net of direct costs of originating or acquiring loans, are deferred and
recognized over the contractual or estimated lives of the related loans as an adjustment to the loans’ constant effective yield,
which is included in interest income on loans. Direct financing, sales-type and leveraged leases are included within the
99
Table of Contents
commercial portfolio segment. See Note 4 for further detail and information on loans and Note 13 for further detail and
information on leases.
Regions determines past due or delinquency status of a loan based on contractual payment terms.
Commercial and investor real estate loans are placed on non-accrual if any of the following conditions occur: 1) collection
in full of contractual principal and interest is no longer reasonably assured (even if current as to payment status), 2) a partial
charge-off has occurred, unless the loan has been brought current under its contractual terms (original or restructured terms) and
the full originally contracted principal and interest is considered to be fully collectible, or 3) the loan is delinquent on any
principal or interest for 90 days or more unless the obligation is secured by collateral having a net realizable value (estimated
fair value less costs to sell) sufficient to fully discharge the obligation and the loan is in the legal process of collection. Factors
considered regarding full collection include assessment of changes in borrower’s cash flow, valuation of underlying collateral,
ability and willingness of guarantors to provide credit support, and other conditions. Charge-offs on commercial and investor
real estate loans are primarily based on the facts and circumstances of the individual loan and occur when available information
confirms the loan is not or will not be fully collectible. Factors considered in making these determinations are the borrower’s
and any guarantor’s ability and willingness to pay, the status of the account in bankruptcy court (if applicable), and collateral
value. Commercial and investor real estate loan relationships of $250,000 or less are subject to charge-off or charge down to
estimated fair value at 180 days past due, based on collateral value. Certain equipment finance loans are subject to charge-off at
120 days past due.
Non-accrual and charge-off decisions for consumer loans are dictated by the FFIEC's Uniform Retail Credit Classification
and Account Management Policy which establishes standards for the classification and treatment of consumer loans. The
charge-off process drives consumer non-accrual status. If a consumer loan secured by real estate in a first lien position
(residential first mortgage or home equity) becomes 180 days past due, Regions evaluates the loan for non-accrual status and
potential charge-off based on collateral value. For home equity loans and lines of credit in a second lien position, the non-
accrual evaluation is performed at 120 days past due and the potential charge-off evaluation is performed at 180 days past due.
If a loan is secured by collateral having a net realizable value sufficient to fully discharge the obligation, then a partial write-
down is not necessary and the loan remains on accrual status, provided it is in the process of legal collection. If a partial charge-
off is necessary as a result of the evaluation, then the remaining balance is placed on non-accrual. Consumer loans not secured
by real estate are generally charged-off at either 120 days past due for closed-end loans, 180 days past due for open-end loans
other than credit cards or the end of the month in which the loan becomes 180 days past due for credit cards.
When loans are placed on non-accrual status, the accrual of interest, amortization of loan premium, accretion of loan
discount and amortization/accretion of deferred net loan fees/costs are discontinued. When a commercial or investor real estate
loan is placed on non-accrual status, uncollected interest accrued in the current year is reversed and charged to interest income.
Uncollected interest accrued from prior years on commercial and investor real estate loans placed on non-accrual status in the
current year is charged against the allowance for loan losses. When a consumer loan is placed on non-accrual status, all
uncollected interest accrued is reversed and charged to interest income due to immateriality. Interest collections on commercial
and investor real estate non-accrual loans are applied as principal reductions. Interest collections on consumer non-accrual loans
are recorded using the cash basis, due to immateriality.
All loans on non-accrual status may be returned to accrual status and interest accrual resumed if all of the following
conditions are met: 1) the loan is brought contractually current as to both principal and interest, 2) future payments are
reasonably expected to continue being received in accordance with the terms of the loan and repayment ability can be
reasonably demonstrated, and 3) the loan has been performing for at least six months.
Purchased Loans
Purchased loans are recorded at their fair value at the acquisition date. Purchased loans are evaluated and classified as
either PCD, which indicates that the loan has experienced more than insignificant credit deterioration since origination, or non-
PCD loans. For PCD loans, the sum of the loans' purchase price and allowance for credit losses, which is determined using the
same methodology as originated loans, becomes their initial amortized cost basis. For non-PCD loans, the difference between
the fair value and the par value is considered the fair value mark. The non-credit discount or premium related to PCD loans and
the fair value mark on non-PCD loans is accreted or amortized into interest income over the contractual life of the loan using
the effective interest method. Subsequent changes in the allowance to the PCD and non-PCD loans are recognized in the
provision for credit losses.
Modifications to Borrowers Experiencing Financial Difficulty
On January 1, 2023, the Company adopted new accounting guidance that eliminated the recognition and measurement
guidance for TDRs while enhancing disclosure requirements for certain loan refinancings and restructurings made to borrowers
experiencing financial difficulty, also referred to as modifications to troubled borrowers. Modifications to troubled borrowers
are considered in the allowance the same as all other portfolio loans as described in the allowance section below. The guidance
also requires disclosure of current-period gross write-offs by year of origination. Regions applied the guidance prospectively,
except Regions used the modified-retrospective transition method related to the recognition and measurement of TDRs. The
100
Table of Contents
cumulative effect of the modified-retrospective application was a decrease in the allowance of $38 million and an increase to
retained earnings of $28 million, net of taxes.
Modifications to troubled borrowers are loans where the borrower is experiencing financial difficulty at the time of
modification and are undertaken in order to improve the likelihood of repayment. Modification types classified as modifications
to troubled borrowers include interest rate reductions, other than insignificant term extensions, other than insignificant payment
deferrals, principal forgiveness, or any combination of these. Further details are as follows:
•
•
•
•
Interest rate reduction modifications include instances where the absolute interest rate is reduced as part of the
modification. In instances where the rate index changes for variable-rate loans, Regions evaluates whether or not the
absolute interest rate decreases from the original rate to the updated rate.
Term extensions are maturity extensions, many of which occur through renewals or restructurings.
Payment deferrals include modifications wherein the contractual payment term is extended. Examples of payment deferral
modifications include, but are not limited to, re-agings, payment delays or holidays, lengthening of amortization terms,
allowing for an interest-only payment period, and capitalizing interest payments in loan restructurings.
Regions rarely grants principal forgiveness modifications.
Modifications to troubled borrowers are subject to policies governing accrual/non-accrual evaluation consistent with all
other loans of the same product types. As such, modifications to troubled borrowers may include loans remaining on non-
accrual, moving to non-accrual, or continuing on accrual status, depending on the individual facts and circumstances.
TDRs
Prior to January 1, 2023, the Company accounted for loans in which the borrower was experiencing financial difficulty at
the modification date and wherein Regions had granted a concession to the borrower as a TDR. Refer to Note 1 in the Annual
Report on Form 10-K for the year ended December 31, 2022 for a description of accounting policies related to TDRs.
ALLOWANCE
The allowance is intended to cover expected credit losses over the contractual life of loans measured at amortized cost,
including unfunded commitments. Management’s measurement of expected credit losses is based on relevant information about
past events, including historical experience, current conditions, and R&S forecasts that affect the collectability of the reported
amount. For periods beyond which Regions makes or obtains such R&S forecasts, Regions reverts to historical credit loss
information. Regions maintains an appropriate level of allowance that falls within an acceptable range of estimated losses,
measured in accordance with GAAP. Management's determination of the appropriateness of the allowance is based on many
factors, including, but not limited to, an evaluation and rating of the loan portfolio; historical loan loss experience; current
economic conditions; collateral values securing loans; levels of problem loans; volume, growth, quality and composition of the
loan portfolio; regulatory guidance; R&S economic forecasts; and other relevant factors. Changes in any of these factors,
assumptions, or the availability of new information, could require that the allowance be adjusted in future periods, perhaps
materially. Loss forecasting models are built on historical loss information and then applied to the current portfolio. Outputs
from the loss forecasting models in combination with Regions' qualitative framework, and other analyses are used to inform
management in its estimation of Regions' expected credit losses. Actual losses could vary, perhaps materially, from
management’s estimates. The entire allowance is available to cover all charge-offs that arise from the loan portfolio.
Regions does not estimate an allowance on interest receivable balances because the Company has non-accrual polices in
place that provide for the accrual of interest to cease on a timely basis when all contractual amounts due are not expected.
Regions' allowance calculation is a significant estimate. Regions uses its best judgment to assess economic conditions and
loss data in estimating the allowance and these estimates are subject to periodic refinement based on changes in underlying
external or internal data. Therefore, assumptions and decisions driving the estimate may change as conditions change. These
assumptions and estimates are detailed below.
R & S forecast period
During the two-year R&S forecast period, Regions incorporates forward-looking information by utilizing its internally
developed and approved Base economic forecast. The scenario is developed by the Chief Economist and approved through a
formal governance process. The Base forecast considers market forward/consensus information and is consistent with the
Company's organization-wide economic outlook. When appropriate, additional scenarios, including externally created
scenarios, are considered as part of the determination of the allowance.
Reversion period
Regions utilizes an exponential reversion approach that reverts to TTC rates derived from the simple average of all
historical quarterly observations for PD, LGD, EAD and prepayment rates. The length of the reversion period differs by class of
financing receivable.
101
Table of Contents
Historical loss period
Regions does not adjust historical loss information for existing economic conditions or expectations of future economic
conditions for periods that are beyond the R&S period. Regions utilizes internal historical loss information; however, there are
certain loan portfolios that also benefit from the use of external or other reference data due to identified limitations with internal
historical data.
Contractual life
Regions estimates expected credit losses over the contractual life of a loan. Regions defines contractual life for non-
revolving loans as contractual maturity, net of estimated prepayments and excluding expected extensions, renewals and
modifications unless an extension or renewal options are included in the original or modified contract at the reporting date and
are not unconditionally cancellable by Regions.
Prior to 2023, the Company also deviated from contractual maturity for loans where the Company had a reasonable
expectation at the reporting date that it would execute a TDR with the borrower ("RETDR"). See Note 1 in the Annual Report
on Form 10-K for the year ended December 31, 2022 for a discussion of RETDRs.
Contractual life of credit card receivables
Regions estimates the life of credit card receivables based on the amount and timing of payments expected to be collected.
Regions' credit card allowance estimate only considers the amount of debt outstanding at the reporting date (the current
position) because undrawn balances are unconditionally cancellable. Regions classifies credit card accounts into one of three
payment patterns: dormant, transacting or revolving. The dormant accounts are idle, carry no balance, and do not contribute to
the allowance. The transacting account holders tend to pay the entire balance due every month and are, therefore, subject to
practically no interest charges. For transactor accounts, the current position balance is expected to be paid off in one quarter.
The revolving accounts tend to be subject to interest charges, and their current position balance liquidates over time. The
majority of Regions' credit card portfolio balances are categorized as revolvers for the purpose of the allowance.
Collateral-dependent loans
A loan is considered to be collateral-dependent if the borrower is experiencing financial difficulty and management
expects substantial repayment of the loan through the sale or operation of the collateral. Regions' collateral-dependent consumer
loans are loans secured by collateral (primarily real estate) that meet the partial charge-down requirements disclosed within this
section. Regions defines significant commercial and investor real estate non-accrual loans wherein repayment is expected to be
substantially from the sale or operation of collateral as collateral dependent.
For any collateral-dependent loans that meet Regions' specific allowance criteria (see below), Regions will calculate the
allowance based on the fair value of collateral, less estimated cost to sell (if applicable). For collateral-dependent consumer,
commercial and investor real estate loans that do not meet Regions' specific allowance criteria (as described below), Regions
considers the value of the collateral through the LGD component of the loss model based on collateral type.
Credit enhancements
Regions' estimate of credit losses reflects how credit enhancements, other than those that are freestanding contracts,
mitigate expected credit losses on financial assets. In the event that a credit enhancement arrangement is considered to be a
freestanding contract, Regions excludes the credit enhancement from the related loan when estimating expected credit losses.
Unfunded commitments and other off-balance sheet items
Regions records a liability or allowance for credit losses for the unfunded portion of a loan commitment in the event that
Regions does not have the unconditional right to cancel the commitment. For an unfunded commitment to be considered
unconditionally cancellable, Regions must be able to, at any time, with or without cause, refuse to extend credit. The liability is
measured over the full contractual period for which Regions is exposed to credit risk through a current obligation to extend
credit. In determining the liability, management considers the likelihood that funding will occur, and if funded, the related
expected credit losses under the allowance model.
Regions' off-balance sheet unfunded commitments in the form of home equity lines, standby letters of credit, commercial
letters of credit and commercial revolving products that are deemed to be conditionally cancellable will include unfunded
balances within the allowance estimate. Future advances from certain unfunded commitments and other revolving products
where Regions does have the unconditional right to cancel these agreements will not be included.
CALCULATION OF ALLOWANCE FOR CREDIT LOSSES
Pooled allowances
The allowance is measured on a collective (pool) basis when similar risk characteristics exist. Segmentation variables for
commercial and investor real estate segments include product, loan size, collateral type, risk rating and term. Segmentation
variables considered for consumer segments include product, FICO, LTV, age, etc. The allowance is estimated for most
102
Table of Contents
portfolios and classes using econometric models to estimate expected credit losses. In general, discounted cash flow models are
not used for the purpose of estimating expected losses for the purpose of the ACL. Most of the econometric models include PD,
LGD, and EAD components. Less complex estimation methods are used for smaller loan portfolios.
Specific allowances
Due to their size, complexity and individualized risk characteristics and monitoring, the allowance for significant non-
accrual commercial and investor real estate loans and unfunded commitments is measured on an individual basis. Loans
evaluated individually are not included in the collective evaluation. Regions generally measures the allowance for these loans
based on the present value of estimated cash flows, considering all facts and circumstances specific to the borrower and market
and economic conditions. The allowance measurement for collateral-dependent loans that meet the individually evaluated
threshold is based on the fair value less cost to sell, if applicable.
TDRs and RETDRs
In periods prior to 2023, loans identified as TDRs and RETDRs were included in their respective loan pools (if they did
not qualify for specific evaluation) and losses were determined by allowance models. The effect of the interest rate concession
on these loans was considered through a post-model adjustment.
Qualitative framework
While quantitative allowance methodologies strive to reflect all risk factors, any estimate involves assumptions and
uncertainties resulting in some level of imprecision. Imprecision exists in the estimation process due to the inherent time lag
between obtaining information, performing the calculation, as well as variations between estimates and actual outcomes.
Regions adjusts the allowance considering quantitative and qualitative factors which may not be directly measured in the
modeled calculations. Regions' qualitative framework provides for specific quantitatively supported model adjustments and
general imprecision adjustments. Specific model adjustments capture highly specific issues or events that Regions believes are
not adequately captured in model outcomes. General imprecision adjustments address other sources of imprecision that are not
specifically identifiable or quantifiable to a particular loan portfolio and have not been captured by the model or by a specific
model adjustment. Regions considers general imprecision in three dimensions; economic forecast imprecision, model
imprecision, and process imprecision.
Refer to Note 5 for further discussion regarding the calculation of the allowance for credit losses.
LEASES
LESSEES
Regions' lease portfolio is primarily composed of property leases that are classified as operating leases. Property leases,
which primarily include office locations and retail branches, typically have original lease terms ranging from 1 year to 20 years,
some of which may also include an option to extend the lease beyond the original lease term. In some circumstances, Regions
may also have an option to terminate the lease early with advance notice. Regions includes renewal and termination options
within the lease term if deemed reasonably certain of exercise. As most leases do not state an implicit rate, Regions utilizes the
incremental borrowing rate based on information available at the lease commencement date to determine the present value of
lease payments. Leases with a term of 12 months or less are not recorded on the balance sheet. Regions continues to recognize
lease payments as an expense over the lease term as appropriate.
Operating leases vary in term and, from time to time, include incentives and/or rent escalations. Examples of incentives
include periods of “free” rent and leasehold improvement incentives. Regions recognizes incentives and escalations on a
straight-line basis over the lease term as a reduction of or increase to rent expense, as applicable, within net occupancy expense
in the consolidated statements of income. See Note 13 for additional information.
LESSORS
Regions engages in both direct financing and sales-type leasing. Regions also has a portfolio of leveraged leases. These
arrangements provide equipment financing for leased assets, such as vehicles and aircraft. At the commencement date, Regions
(lessor) enters into an agreement with the customer (lessee) to lease the underlying equipment for a specified lease term. The
lease agreements may provide customers the option to terminate the lease by buying the equipment at fair market value at the
time of termination or at the end of the lease term. Regions' equipment finance asset management group performs due diligence
procedures on the lease residual and overall equipment values as part of the origination process. Regions performs lease
residual value reviews on an ongoing basis. In order to manage the residual value risk inherent in some of its direct financing
leases, Regions purchases residual value insurance from an independent third party.
103
Table of Contents
Sales-type, direct financing, and leveraged leases are recorded within loans on the consolidated balance sheet. The net
investment in direct financing leases is the sum of all minimum lease payments and estimated residual values, less unearned
income. Lease contracts are structured with either fixed or variable lease payment terms. Variable lease payments are based on
an index provided within the leasing agreement. Unearned income is recognized over the terms of the leases to produce a
constant effective yield. The net investment in leveraged leases is the sum of all lease payments (less non-recourse debt
payments) and estimated residual values, less unearned income. Income from leveraged leases is recognized over the term of
the leases based on the unrecovered equity investment. See Note 13 for additional information.
OTHER EARNING ASSETS
Other earning assets consist of investments in Federal Reserve Bank stock, FHLB stock, marketable equity securities and
other miscellaneous earning assets. Ownership of Federal Reserve Bank and FHLB stock is a requirement for all banks seeking
membership into and access to the services provided by these banking systems. These shares are accounted for at amortized
cost, which approximates fair value. Marketable equity securities are recorded at fair value with changes in fair value reported
in net income. See Note 7 for additional information.
PREMISES, EQUIPMENT AND SOFTWARE
Premises and equipment are stated at cost, less accumulated depreciation and amortization, as applicable. Land is carried
at cost. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Leasehold
improvements are amortized using the straight-line method over the estimated useful lives of the improvements (or the terms of
the leases, if shorter). Generally, premises and leasehold improvements are depreciated or amortized over 7-40 years. Furniture
and equipment are generally depreciated or amortized over 3-10 years. Software is generally depreciated over 3 years (or over a
longer estimated life of 5-20 years for larger software systems). Premises, equipment, and software are evaluated for
impairment at least annually, or more often if events or circumstances indicate that the carrying value of the asset may not be
recoverable. Maintenance and repairs are charged to non-interest expense in the consolidated statements of income.
Improvements that either add functionality or extend the useful life of the asset are capitalized to the carrying value and
depreciated. See Note 8 for detail of premises and equipment.
INTANGIBLE ASSETS
Intangible assets include goodwill, which is the excess of cost over the fair value of net assets of acquired businesses, and
other identifiable intangible assets. Other identifiable intangible assets primarily include relationship assets, which are
amortized over their expected useful lives, and agency commercial real estate licenses, which are non-amortizing.
The Company’s goodwill is tested for impairment on an annual basis in the fourth quarter, or more often if events or
circumstances indicate that there may be impairment. Regions assesses the following indicators of goodwill impairment for
each reporting period:
• Recent operating performance,
• Changes in market capitalization,
• Regulatory actions and assessments,
• Changes in the business climate (including legislation, legal factors and competition),
• Company-specific factors (including changes in key personnel, asset impairments, and business dispositions), and
• Trends in the banking industry.
Adverse changes in the economic environment, declining operations of the reporting unit, or other factors could result in a
decline in the implied estimated fair value of goodwill. Accounting guidance permits the Company to first assess qualitative
factors to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying value. If, based on the
weight of the evidence, the Company determines it is more likely than not that the fair value exceeds book value, then an
impairment test is not necessary. If the Company elects to bypass the qualitative assessment, or concludes that it is more likely
than not that the fair value is less than the carrying value, a goodwill impairment test is performed. The Company compares the
estimated fair value of a reporting unit with its carrying amount, including goodwill. If the estimated fair value of a reporting
unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. If the carrying amount of a reporting
unit exceeds its estimated fair value, an impairment loss is recognized in non-interest expense in an amount equal to that excess.
For purposes of performing the qualitative assessment, Regions' evaluation may include, but is not limited to, events and
circumstances since the last impairment analysis, recent operating performance including reporting unit performance, changes
in market capitalization, regulatory actions and assessments, changes in the business climate, company-specific factors, and
trends in the banking industry to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying
amount.
For purposes of performing the goodwill impairment test, if applicable, Regions uses both income and market approaches
to value its reporting units. The income approach, which is the primary valuation approach, consists of discounting projected
104
Table of Contents
long-term future cash flows, which are derived from internal forecasts and economic expectations for the respective reporting
units. The significant inputs to the income approach include expected future cash flows, the long-term target equity ratios, and
the discount rate. The market approaches incorporate comparable public company information, valuation multiples, and
consideration of a market control premium along with data related to comparable observed purchase transactions in the
financial services industry for the reporting units.
Other identifiable intangible assets are reviewed at least annually (usually in the fourth quarter) for events or
circumstances that could impact the recoverability of the intangible asset. These events could include loss of relationships,
increased competition, or adverse changes in the economy. To the extent other identifiable intangible assets are deemed
unrecoverable, impairment losses are recorded in non-interest expense and reduce the carrying amount of the asset.
Refer to Note 9 for further detail and discussion of the results of the goodwill and other identifiable intangibles
impairment tests.
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS
Regions accounts for transfers of financial assets as sales when control over the transferred assets is surrendered. Control
is generally considered to have been surrendered when 1) the transferred assets are legally isolated from the Company or its
consolidated affiliates, even in bankruptcy or other receivership, 2) the transferee has the right to pledge or exchange the assets
with no conditions that constrain the transferee and provide more than a trivial benefit to the Company, and 3) the Company
does not maintain the obligation or unilateral ability to reclaim or repurchase the assets. If these sale criteria are met, the
transferred assets are removed from the Company’s balance sheet and a gain or loss on sale is recognized. If not met, the
transfer is recorded as a secured borrowing, and the assets remain on the Company’s balance sheet, the proceeds from the
transaction are recognized as a liability, and gain or loss on sale is deferred until the sale criterion are achieved.
Regions has elected to account for its residential MSRs using the fair value measurement method. Under the fair value
measurement method, residential MSRs are measured at estimated fair value each period with changes in fair value recorded as
a component of mortgage income. The fair value of residential MSRs 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 of residential mortgages in the servicing portfolio could result in significant valuation adjustments, thus creating
potential volatility in the carrying amount of residential MSRs. The valuation method relies on an OAS to consider prepayment
risk and equate the asset's discounted cash flows to its market price. See the “Fair Value Measurements” section below for
additional discussion regarding determination of fair value.
Regions is a DUS lender. The DUS program provides liquidity to the multi-family housing market. Regions' related
commercial MSRs are recorded in other assets at the lower of cost or estimated fair value and are amortized in proportion to,
and over the estimated period that net servicing income is expected to be received based on projections of the amount and
timing of estimated future net cash flows. The amount and timing of estimated future net cash flows are updated based on actual
results and updated projections. Regions periodically evaluates these commercial MSRs for impairment. Regions has a one-
third loss share guarantee associated with the majority of the DUS servicing portfolio. The other two-thirds loss share guarantee
is retained by Fannie Mae. The estimated fair value of the loss share guarantee is recorded in other liabilities.
Refer to Note 6 for further information on servicing of financial assets.
FORECLOSED PROPERTY AND OTHER REAL ESTATE
Other real estate and certain other assets acquired in satisfaction of indebtedness (“foreclosure”) are carried in other assets
at the lower of the recorded investment in the loan or estimated fair value less estimated costs to sell the property. At the date of
transfer from the loan portfolio, if the recorded investment in the loan exceeds the property’s estimated fair value less estimated
costs to sell, a write-down is recorded against the allowance. Regions allows a period of up to 60 days after the date of transfer
to record finalized write-downs as charge-offs against the allowance in order to properly accumulate all related invoices and
updated valuation information, if necessary. Subsequent to transfer, Regions obtains valuations from professional valuation
experts and/or third party appraisers on at least an annual basis. See the “Fair Value Measurements” section below for
additional discussion regarding determination of fair value. Subsequent to transfer and the additional 60 days, any further write-
downs are recorded as other non-interest expense. Gain or loss on the sale of foreclosed property and other real estate is
included in other non-interest expense.
From time to time, assets classified as premises and equipment are transferred to held for sale for various reasons. These
assets are carried in other assets at the lower of the recorded investment in the asset or estimated fair value less estimated cost to
sell based upon the property’s appraised value at the date of transfer. Any adjustments to property held for sale are recorded as
other non-interest expense.
105
Table of Contents
OTHER INVESTMENT ASSETS
Regions has investments of approximately $262 million and $223 million at December 31, 2023 and 2022, respectively,
that are recognized in other assets and accounted for using either the equity method of accounting or the measurement
alternative to fair value for equity investments without a readily determinable fair value.
Equity method investments consist primarily of investments in SBICs and private equity funds. Under the equity method
of accounting, Regions records its proportionate share of the profits or losses of the investment entity as an adjustment to the
carrying value of the investment and as a component of other non-interest income. Dividends and distributions received or
receivables from these investments are recorded as reductions to the carrying value of the investments. The net balances of
equity method investments were approximately $192 million and $153 million at December 31, 2023 and 2022, respectively.
Equity investments that do not meet the criteria to be accounted for under the equity method and do not have a readily
determinable fair value are accounted for at cost under the measurement alternative to fair value with adjustments for
impairment and observable price changes as applicable. Dividends received or receivable and observable price changes from
these investments are included as components of other non-interest income. These investments consist primarily of investments
in strategic partners and certain CRA projects. The carrying amounts of these investments was $70 million at both December
31, 2023 and 2022.
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The Company enters into derivative financial instruments to manage interest rate risk, facilitate asset/liability management
strategies and manage other exposures. These instruments primarily include interest rate swaps, options on interest rate swaps,
options including interest rate caps, floors and collars, forward rate contracts and forward sale commitments. All derivative
financial instruments are recognized as other assets or other liabilities, as applicable, at estimated fair value. Regions enters into
master netting agreements with counterparties and/or requires collateral to cover exposures. Where legally enforceable, these
master netting agreements give the Company, in the event of default by the counterparty, the right to liquidate securities held as
collateral and to offset receivables and payables with the same counterparty. For purposes of the consolidated balance sheets,
the Company offsets derivative assets and liabilities and cash collateral held with the same counterparty where it has such a
legally enforceable master netting agreement. In at least some cases, counterparties post collateral at a zero threshold regardless
of credit rating. The majority of interest rate derivatives traded by Regions with dealing counterparties are subject to mandatory
clearing through a central clearinghouse. The variation margin payments made for derivatives cleared through a central
clearinghouse are legally characterized as settlements of the derivatives. The counterparty risk for cleared trades effectively
moves from the executing broker to the clearinghouse allowing Regions to benefit from the risk mitigation controls in place at
the respective clearinghouse.
Interest rate swaps are agreements to exchange interest payments based upon notional amounts. Interest rate swaps subject
Regions to market risk associated with changes in interest rates, changes in interest rate volatility, as well as the credit risk that
the counterparty will fail to perform. Option contracts involve rights to buy or sell financial instruments on a specified date or
over a period at a specified price. These rights do not have to be exercised. Some option contracts such as interest rate floors,
involve the exchange of cash based on changes in specified indices. Interest rate floors are contracts to hedge interest rate
declines based on a notional amount, generally associated with a principal balance at risk. Interest rate floors subject Regions to
market risk associated with changes in interest rates, changes in interest rate volatility, as well as the credit risk that the
counterparty will fail to perform. Forward rate contracts are commitments to buy or sell financial instruments at a future date at
a specified price or yield. Regions primarily enters into 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. Forward sale commitments are sales of securities at a specified price at a future date.
Forward sale commitments subject Regions to market risk associated with changes in market value, as well as the credit risk
that the counterparty will fail to perform.
The Company elects to account for certain derivative financial instruments as accounting hedges which, based on the
exposure being hedged, are either fair value or cash flow hedges.
Fair value hedge relationships mitigate exposure to the change in fair value of the hedged risk in an asset, liability or firm
commitment. Certain fair value hedges may be entered into using the portfolio layer method, which allows the Company to
hedge the interest rate risk of prepayable financial assets by designating as the hedged item a stated amount of a closed portfolio
that is expected to be outstanding for the designated hedge period(s). Under the fair value hedging model, gains or losses
attributable to the change in fair value of the derivative instrument, as well as the gains and losses attributable to the change in
fair value of the hedged item, are recognized in interest income or interest expense in the same income statement line item with
the hedged item in the period in which the change in fair value occurs. To the extent the changes in fair value of the derivative
do not offset the changes in fair value of the hedged item, the difference is recognized. The corresponding adjustment to the
hedged asset or liability is included in the basis of the hedged item, while the corresponding change in the fair value of the
derivative instrument is recorded as an adjustment to other assets or other liabilities, as applicable.
106
Table of Contents
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions.
For cash flow hedge relationships, the entire change in the fair value of the hedging instrument would be recorded in
accumulated other comprehensive income (loss) except for amounts excluded from the assessment of hedge effectiveness.
Amounts recorded in accumulated other comprehensive income (loss) are recognized in earnings in the same income statement
line item where the earnings effect of the hedged item is presented in the period or periods during which the hedged item
impacts earnings.
The Company formally documents all hedging relationships, as well as its risk management objective and strategy for
entering into various hedge transactions. The Company performs periodic qualitative and quantitative 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.
If a hedge relationship is de-designated or if hedge accounting is discontinued because the hedged item no longer exists,
or does not meet the definition of a firm commitment, or because it is probable that the forecasted transaction will not occur, the
derivative will continue to be recorded as an other asset or other liability in the consolidated balance sheets at its estimated fair
value, with changes in fair value recognized in other non-interest expense. Any asset or liability that was recorded pursuant to
recognition of the firm commitment is removed from the consolidated balance sheets and recognized in other non-interest
expense. Gains and losses that were unrecognized and aggregated in accumulated other comprehensive income (loss) pursuant
to the hedge of a forecasted transaction are recognized immediately in other non-interest expense.
Derivative contracts for which the Company has not elected to apply hedge accounting are classified as other assets or
liabilities with gains and losses related to the change in fair value recognized in capital markets income or mortgage income, as
applicable, in the statements of income during the period. These positions, as well as non-derivative instruments, are used to
mitigate economic and accounting volatility related to customer derivative transactions, the mortgage pipeline and the fair value
of residential MSRs.
Regions enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the
interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Accordingly, such
commitments are recorded at estimated fair value with changes in fair value recorded in mortgage income or capital markets
income, as applicable. Regions also has corresponding forward sale commitments related to these interest rate lock
commitments, which are recorded at estimated fair value with changes in fair value recorded in mortgage income or capital
markets income, as applicable. See the “Fair Value Measurements” section below for additional information related to the
valuation of interest rate lock commitments.
Regions enters into various derivative agreements with customers desiring protection from possible future market
fluctuations. Regions manages the market risk associated with these derivative agreements. The contracts in this portfolio for
which the Company has elected not to apply hedge accounting are marked-to-market through capital markets income and
included in other assets and other liabilities.
Concurrent with the election to use fair value measurement for residential MSRs, Regions began using various derivative
instruments to mitigate the impact of changes in the fair value of residential MSRs in the statements of income. This effort may
involve the use of various derivative instruments, including, but not limited to, forwards, futures, swaps, options, and TBA's
designed as derivative instruments. These derivatives are carried at estimated fair value, with changes in fair value reported in
mortgage income.
Derivative assets and liabilities are included in other assets and liabilities as operating cash flows in the consolidated
statements of cash flows.
On March 5, 2021, the FCA announced that LIBOR would not be available for use after December 31, 2021 and would
not be published after June 30, 2023. In the third quarter of 2020, Regions adopted temporary accounting relief for affected
transactions that reference LIBOR. In the second quarter of 2023, the Company entered into additional trades to transition
remaining derivative exposures from LIBOR to SOFR. As part of this transition, the Company applied certain optional practical
expedients exceptions in the previously-adopted accounting relief for hedges, specifically in applying contract modification
guidance on hedges for the change in reference rate. See Note 1 in Regions' Annual Report on Form 10-K for the year ended
December 31, 2020 for details.
Refer to Note 20 for further discussion and details of derivative financial instruments and hedging activities.
INCOME TAXES
The Company accounts for income taxes using the asset and liability method. Accrued income taxes and the net balance
of deferred tax assets and liabilities are reported in other assets or other liabilities in the consolidated balance sheets, as
appropriate. The Company reflects the expected amount of income tax to be paid or refunded during the year as current income
tax expense or benefit, as applicable. Deferred tax assets and liabilities are determined based on differences between the
financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that the
Company expects will apply at the time when the deferred tax assets and liabilities are expected to be realized. Deferred tax
107
Table of Contents
assets are also recorded for any tax attributes, such as tax credits and net operating loss carryforwards. The Company
determines the realization of deferred tax assets by considering all positive and negative evidence available, and a valuation
allowance is recorded for any deferred tax assets that are not more-likely-than-not to be realized. Any effect of a change in
federal and state tax rates on deferred tax assets and liabilities is recognized in income tax expense in the period that includes
the enactment date.
The Company will evaluate and recognize income tax benefits related to any uncertain tax positions using the recognition
and cumulative-probability measurement thresholds. If the Company does not believe that it is more likely than not that an
uncertain tax position will be sustained, the Company records a liability for the uncertain tax position. If a tax benefit is more-
likely-than-not of being sustained based on the technical merits, the Company utilizes the cumulative probability measurement
and records an income tax benefit equivalent to the largest amount of tax benefit that is greater than 50 percent likely to be
realized upon ultimate settlement with a taxing authority. The Company recognizes interest and penalties related to
unrecognized tax benefits within current income tax expense.
The Company applies the proportional amortization method in accounting for its qualified affordable housing
investments. This method recognizes the amortized cost of the investment as a component of income tax expense.
The deferral method of accounting is used for investments that generate investment tax credits. Under this method, the
investment tax credits are recognized as a reduction of the related asset.
Refer to Note 19 for further discussion regarding income taxes.
TREASURY STOCK AND SHARE REPURCHASES
The purchase of the Company’s common stock is recorded at cost. At the date of repurchase, shareholders' equity is
reduced by the repurchase price, which, in 2023, includes any required excise tax payments on share repurchases. The Inflation
Reduction Act of 2022 provides for a stock buyback excise tax equal to one percent of the fair market value of stock
repurchased during the period less the fair market value of any stock issued during the period, including compensatory stock
issuances. Treasury stock would be reduced by the cost of such stock with the excess of repurchase price over par or stated
value recorded in additional paid-in capital. If the Company subsequently reissues treasury shares, treasury stock is reduced by
the cost of such stock with differences recorded in additional paid-in capital or retained earnings, as applicable.
Pursuant to past practice, shares repurchased were immediately retired, and therefore were not included in treasury stock.
The Company's policy related to these share repurchases is to reduce its common stock based on the par value of the shares
repurchased and to reduce its additional paid-in capital for the excess of the repurchase price over the par value.
SHARE-BASED PAYMENTS
Regions sponsors stock plans which most commonly include restricted stock (i.e., unvested common stock) units,
restricted stock awards and performance stock units. The Company accounts for share-based payments under the fair value
recognition provisions whereby compensation cost is measured based on the estimated fair value of the award at the grant date
and is recognized in the consolidated financial statements on a straight-line basis over the requisite service period for service-
based awards. The fair value of restricted stock units, restricted stock awards or performance stock units is determined based on
the closing price of Regions common stock on the date of grant. Historical data is also used to estimate future employee
attrition, which is considered in calculating estimated forfeitures. Estimated forfeitures are adjusted when actual forfeitures
differ from estimates, resulting in the recognition of compensation cost only for awards that vest. The effect of a change in
estimated forfeitures is recognized through a cumulative catch-up adjustment that is included in salaries and employee benefits
expense in the period of the change in estimate. As compensation cost is recognized, a deferred tax asset is recorded that
represents an estimate of the future tax deduction from exercise or release of restrictions. At the time the share-based awards
are exercised, cancelled, have expired, or restrictions are released, the Company may be required to recognize an adjustment to
tax expense depending on the market price of the Company’s common stock.
See Note 16 for further discussion and details of share-based payments.
108
Table of Contents
EMPLOYEE BENEFIT PLANS
Regions uses an expected long-term rate of return applied to the fair market value of assets as of the beginning of the year
and the expected cash flows during the year for calculating the expected investment return on all pension plan assets. At a
minimum, amortization of the net gain or loss included in accumulated other comprehensive income resulting from experience
different from that assumed and from changes in assumptions is included as a component of net periodic benefit cost if, as of
the beginning of the year, that net gain or loss exceeds 10 percent of the greater of the projected benefit obligation or the market
value of plan assets. If amortization is required, the minimum amortization is that excess divided by the average remaining
service period of active participating employees expected to receive benefits under the plans. Regions records the service cost
component of net periodic pension and postretirement benefit cost in salaries and employee benefits expense. The other
components of net periodic pension and postretirement benefit cost are recorded in other non-interest expense. Regions uses a
third-party actuary to compute the remaining service period of active participating employees. This period reflects expected
turnover, pre-retirement mortality, and other applicable employee demographics.
See Note 17 for further discussion and details of employee benefit plans.
REVENUE RECOGNITION
The Company records revenue when control of the promised products or services is transferred to the customer (or
performance obligations have been met), in an amount that reflects the consideration Regions expects to be entitled to receive in
exchange for those products or services. Related to contract costs, Regions expenses sales commissions and any related contract
costs when incurred because the amortization period would be one year or less. Related to remaining performance obligations,
Regions does not disclose the value of unsatisfied performance obligations for 1) contracts with an original expected length of
one year or less and 2) contracts for which revenue is recognized at the amount to which Regions has the right to invoice for
services performed.
Interest Income
The largest source of revenue for Regions is interest income. Interest income is recognized using the interest method
driven by nondiscretionary formulas based on written contracts, such as loan agreements or securities contracts.
Service Charges on Deposit Accounts
Service charges on deposit accounts include overdraft fees and other service charges. When a depositor presents an item
for payment in excess of available funds, overdraft fees are earned when Regions, at its discretion, provides the necessary funds
to complete the transaction. Prior to mid-2022, service charges on deposit accounts also included non-sufficient fund fees,
which were earned when a depositor presented an item for payment in excess of available funds and an item was returned
unpaid.
Regions generates other service charges by providing depositors proper safeguard and remittance of funds as well as by
providing optional services for depositors, such as check imaging or treasury management, that are performed upon the
depositor’s request. Charges for the proper safeguard and remittance of funds are recognized monthly, as the customer retains
funds in the account. Regions recognizes revenue for other optional services when the customer uses the selected service to
execute a transaction (e.g., execute an ACH wire).
Card and ATM Fees
Card and ATM fees include the combined amounts of credit card, debit card, and ATM related revenue. The majority of
the fees are card interchange where Regions earns a fee for remitting cardholder funds (or extends credit) via a third party
network to merchants. Regions satisfies performance obligations for each transaction when the card is used and the funds are
remitted. The network establishes interchange fees that the merchant remits to Regions for each transaction, and Regions incurs
costs from the network for facilitating the interchange with the merchant. Due to its inability to establish prices and direct
activities of the related processing network’s service, Regions is deemed the agent in this arrangement and records interchange
revenues net of related costs. Regions also pays consideration to certain commercial card holders based on interchange fees and
contractual volume. These costs are recognized as a reduction to interchange income.
Card and ATM fees also include ATM fee income generated from allowing a Regions cardholder to withdraw funds from
a non-Regions ATM and from allowing a non-Regions cardholder to withdraw funds from a Regions ATM. Regions satisfies
performance obligations for each transaction when the withdrawal is processed. Regions does not direct activities of the related
processing network’s service and recognizes revenue on a net basis as the agent in each transaction.
Investment Management and Trust Fee Income
Investment management and trust fee income represents revenue generated from asset management services provided to
individuals, businesses, and institutions. Regions has a fiduciary responsibility to the beneficiary of the trust to perform agreed
upon services which can include investing the assets, periodic reporting to the beneficiaries, and providing tax information
regarding the trust. In exchange for these trust and custodial services, Regions collects fee income from beneficiaries as
109
Table of Contents
contractually determined via fee schedules. Regions’ performance obligations to customers are primarily satisfied over time as
the services are performed and provided to the customer.
Mortgage Income
Mortgage income is recognized when earned or as each transaction occurs through the origination and servicing of
residential mortgage loans for long-term investors and sales of residential mortgage loans in the secondary market. Mortgage
income also includes any fair value adjustments for mortgage loans Regions has elected to measure under the fair value option
and fair value adjustments related to mortgage servicing rights.
Capital Markets Income
Regions generates capital markets fee revenue through capital raising activities which include revenue streams such as
securities underwriting and placement, loan syndication and placement, as well as foreign exchange, derivatives, merger and
acquisition and other advisory services. For those revenue streams, revenue is primarily recognized at a point in time which
coincides with the satisfaction of a single performance obligation, typically the transaction closing.
Securities underwriting and placement fees involve the issuing and distribution of securities for an underwriting fee from
customers. The underwriting fee is a single performance obligation which is satisfied at the time that the transaction is closed,
and the amount of the fee is either a fixed or variable percentage based on the deal value which is determinable at the time of
deal closing.
Regions generates revenue from affordable housing investments through the syndication of investment funds to third
parties. Regions transfers the primary benefits of the investment to the customer and recognizes syndication revenue on the
closing date of the transaction.
Bank-Owned Life Insurance
Bank-owned life insurance income primarily represents income earned from the appreciation of the cash surrender value
of insurance contracts held and the proceeds of insurance benefits. Regions recognizes revenue each period in the amount of the
appreciation of the cash surrender value of the insurance policies. Revenue from the proceeds of insurance benefits is
recognized at the time a claim is confirmed.
Commercial Credit Fee Income
Commercial credit fee income includes letters of credit fees and unused commercial commitment fees. Regions recognizes
revenue for letters of credit fees and unused commercial commitment fees over time.
Investment Services Fee Income
Investment services fee income represents income earned from investment advisory services. Through the use of third
party carriers, Regions provides its customers with access to investment products that meet customers’ financial needs and
investment objectives. Upon selection of an investment product, the customer enters into a policy with the carrier. Regions’
performance obligation is satisfied by fulfilling its responsibility to place customers in investment vehicles for which Regions
earns commissions from the carrier based on agreed-upon fee percentages. In addition, Regions has a contractual relationship
with a third party broker dealer to provide full service brokerage and investment advisory activities. As the principal in the
arrangement, Regions recognizes the investment services commissions on a gross basis.
Securities Gains (Losses), Net
Net securities gains or losses result from Regions’ asset/liability management process. Gains or losses on the sale of
securities are recognized as each sales transaction occurs with the cost of securities sold based on the specific identification
method.
Market Value Adjustments on Employee Benefit Assets
Regions holds assets for certain employee benefit assets, both defined and other. Those assets are recorded at estimated
fair value and the market value variations are recognized each period.
Other Miscellaneous Income
Other miscellaneous income includes miscellaneous revenue from affordable housing, income from SBIC investments,
valuation adjustments to equity investments, commercial loan and leasing related income, fees from safe deposit boxes, check
fees, and other miscellaneous income including unusual gains. Regions recognizes the related fee or gain in a manner that
reflects the timing of when transactions occur or as services are provided.
PER SHARE AMOUNTS
Earnings per common share is calculated by dividing net income available to common shareholders by the weighted-
average number of common shares outstanding during the period. Diluted earnings per common share is calculated by dividing
110
Table of Contents
net income available to common shareholders by the weighted-average number of common shares outstanding during the
period, plus the effect of restricted and performance stock awards, if dilutive. Refer to Note 15 for additional information.
FAIR VALUE MEASUREMENTS
Fair value guidance establishes a framework for using fair value to measure assets and liabilities and defines fair value as
the price that would be received to sell an asset or paid to transfer a liability (an exit price) as opposed to the price that would be
paid to acquire the asset or received to assume the liability (an entry price). A fair value measure should reflect the assumptions
that market participants would use in pricing the asset or liability, including the assumptions about the risk inherent in a
particular valuation technique, the effect of a restriction on the sale or use of an asset and the risk of nonperformance. Required
disclosures include stratification of balance sheet amounts measured at fair value based on inputs the Company uses to derive
fair value measurements. These strata include:
•
•
•
Level 1 valuations, where the valuation is based on quoted market prices for identical assets or liabilities traded in
active markets (which include exchanges and over-the-counter markets with sufficient volume),
Level 2 valuations, where the valuation is based on quoted market prices for similar instruments traded in active
markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation
techniques for which all significant assumptions are observable in the market, and
Level 3 valuations, where the valuation is generated from model-based techniques that use significant assumptions
not observable in the market, but observable based on Company-specific data. These unobservable assumptions
reflect the Company’s own estimates for assumptions that market participants would use in pricing the asset or
liability. Valuation techniques typically include option pricing models, discounted cash flow models and similar
techniques, but may also include the use of market prices of assets or liabilities that are not directly comparable to the
subject asset or liability.
ITEMS MEASURED AT FAIR VALUE ON A RECURRING BASIS
Debt securities available for sale, certain mortgage loans held for sale, marketable equity securities, residential MSRs,
derivative assets and derivative liabilities are recorded at fair value on a recurring basis. Below is a description of valuation
methodologies for these assets and liabilities.
Debt securities available for sale consist of U.S. Treasuries, MBS (including agency securities), obligations of states and
political subdivisions, and other debt securities.
•
U.S. Treasuries are valued based on quoted market prices of identical assets on active exchanges. Pricing received for
U.S. Treasuries from third-party services is based on a market approach using dealer quotes from multiple active
market makers and real-time trading systems. These valuations are Level 1 measurements.
• MBS are valued primarily using data from third-party pricing services for similar securities as applicable. Pricing
from these third-party services is generally based on a market approach using observable inputs such as benchmark
yields, reported trades, broker/dealer quotes, benchmark securities, TBA prices, issuer spreads, bids and offers,
monthly payment information, and collateral performance, as applicable. These valuations are Level 2 measurements.
Where such comparable data is not available, the Company develops valuations based on assumptions that are not
readily observable in the market place; these valuations are Level 3 measurements.
Obligations of states and political subdivisions are generally based on data from third-party pricing services. The
valuations are based on a market approach using observable inputs such as benchmark yields, relevant trade data,
material event notices and new issue data. These valuations are Level 2 measurements.
Other debt securities are valued based on Level 1, 2 and 3 measurements, depending on pricing methodology selected
and are valued primarily using data from third-party pricing services. Pricing from these third-party services is
generally based on a market approach using observable inputs such as benchmark yields, reported trades, broker/
dealer quotes, issuer spreads, benchmark securities, bids and offers, and TRACE reported trades.
•
•
The majority of Regions' debt securities available for sale are valued using third-party pricing services. To validate pricing
related to liquid investment securities, which represent the vast majority of the available for sale portfolio (e.g., MBS), Regions
compares price changes received from the third-party pricing service to overall changes in market factors in order to validate
the pricing received. To validate pricing received on less liquid investment securities in the available for sale portfolio, Regions
receives pricing from third-party brokers-dealers on a sample of securities that are then compared to the pricing received. The
pricing service uses standard observable inputs when available, for example: benchmark yields, reported trades, broker-dealer
quotes, issuer spreads, benchmark securities, and bids and offers, among others. For certain security types, additional inputs
may be used, or some inputs may not be applicable. It is not customary for Regions to adjust the pricing received for the
available for sale portfolio. In the event that prices are adjusted, Regions classifies the measurement as a Level 3 measurement.
Mortgage loans held for sale consist of residential first mortgage loans and commercial mortgages held for sale. Regions
has elected to measure certain residential and commercial mortgage loans held for sale at fair value by applying the fair value
option (see additional discussion under the “Fair Value Option” section in Note 21). The residential first mortgage loans held
for sale are valued based on traded market prices of similar assets where available and/or discounted cash flows at market
111
Table of Contents
interest rates, adjusted for securitization activities that include servicing value and market conditions, a Level 2 measurement.
The commercial mortgage loans held for sale are valued based on traded market prices for comparable commercial mortgage-
backed securitizations, into which the loans will be placed, adjusted for movements of interest rates and credit spreads, a Level
3 measurement due to the unobservable inputs included in the credit spreads for bonds in commercial mortgage-backed
securitizations.
Marketable equity securities, which primarily consist of assets held for certain employee benefits and money market
funds, are valued based on quoted market prices of identical assets on active exchanges; these valuations are Level 1
measurements.
Residential mortgage servicing rights are valued using an option-adjusted spread valuation approach, a Level 3
measurement. The underlying assumptions and estimated values are corroborated at least quarterly by values received from
independent third parties. See Note 6 for information regarding the servicing of financial assets and additional details regarding
the assumptions relevant to this valuation.
Derivative assets and liabilities, which primarily consist of interest rate, foreign exchange, and commodity contracts that
include forwards, futures, options and swaps, are included in other assets and other liabilities (as applicable) on the consolidated
balance sheets. Interest rate swaps are predominantly traded in over-the-counter markets and, as such, values are determined
using widely accepted discounted cash flow models, which are Level 2 measurements. These discounted cash flow models use
projections of future cash payments/receipts that are discounted at an appropriate index rate. Regions utilizes forward curves as
fair value measurement inputs for the valuation of interest rate and commodity derivatives. The projected future cash flows are
sourced from an assumed yield curve, which is consistent with industry standards and conventions. These valuations are
adjusted for the unsecured credit risk at the reporting date, which considers collateral posted and the impact of master netting
agreements. For options and futures contracts traded in over-the-counter markets, values are determined using discounted cash
flow analyses and option pricing models based on market rates and volatilities, which are Level 2 measurements. Interest rate
lock commitments on loans intended for sale and risk participations categorized as credit derivatives are valued using option
pricing models that incorporate significant unobservable inputs, and therefore are Level 3 measurements.
ITEMS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS
From time to time, certain assets may be recorded at fair value on a non-recurring basis. These non-recurring fair value
adjustments typically are a result of the application of lower of cost or fair value accounting or a write-down occurring during
the period. For example, if the fair value of an asset in these categories falls below its cost basis, it is considered to be at fair
value at the end of the period of the adjustment. In periods where there is no adjustment, the asset is generally not considered to
be at fair value. The following is a description of the valuation methodologies used for assets measured at fair value on a non-
recurring basis.
Foreclosed property and other real estate is carried in other assets at the lower of the recorded investment in the loan or
fair value less estimated costs to sell the property. The fair value for foreclosed property that is based on either observable
transactions of similar instruments or formally committed sale prices is classified as a Level 2 measurement. If no formally
committed sale price is available, Regions also obtains valuations from professional valuation experts and/or third party
appraisers. Updated valuations are obtained on at least an annual basis. Foreclosed property exceeding established dollar
thresholds is valued based on appraisals. Appraisals are performed by third-parties with appropriate professional certifications
and conform to generally accepted appraisal standards as evidenced by the Uniform Standards of Professional Appraisal
Practice. Regions’ policies related to appraisals conform to regulations established by the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 and other regulatory guidance. Professional valuations are considered Level 2
measurements because they are based largely on observable inputs. Regions has a centralized appraisal review function that is
responsible for reviewing appraisals for compliance with banking regulations and guidelines as well as appraisal standards.
Based on these reviews, Regions may make adjustments to the market value conclusions determined in the appraisals of real
estate (either as other real estate or loans held for sale) when the appraisal review function determines that the valuation is based
on inappropriate assumptions or where the conclusion is not sufficiently supported by the market data presented in the
appraisal. Adjustments to the market value conclusions are discussed with the professional valuation experts and/or third-party
appraisers; the magnitude of the adjustments that are not mutually agreed upon is insignificant. Adjustments, if made, must be
based on sufficient information available to support an alternate opinion of market value. An estimated standard discount factor,
which is updated at least annually, is applied to the appraisal amount for certain commercial and investor real estate properties
when the recorded investment in the loan is transferred into foreclosed property. Internally adjusted valuations are considered
Level 3 measurements as management uses assumptions that may not be observable in the market. These non-recurring fair
value measurements are typically recorded on the date an updated offered quote, appraisal, or third-party valuation is received.
Equity investments without a readily determinable fair value are adjusted prospectively to estimated fair value when
an observable price transaction for a same or similar investment with the same issuer occurs; these valuations are Level 3
measurements.
112
Table of Contents
Loans held for sale for which the fair value option has not been elected are recorded at the lower of cost or fair value and
therefore may be reported at fair value on a non-recurring basis. The fair values for commercial loans held for sale are based on
Company-specific data not observable in the market. These valuations are Level 3 measurements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating fair values of financial instruments that
are not disclosed above:
Cash and cash equivalents: The carrying amounts reported in the consolidated balance sheets and statements of cash
flows approximate the estimated fair values. Because these amounts generally relate to either currency or highly liquid assets,
these are considered Level 1 valuations.
Debt securities held to maturity: The fair values of debt securities held to maturity are estimated in the same manner as
the corresponding debt securities available for sale, which are measured at fair value on a recurring basis.
Loans (excluding sales-type, direct financing, and leveraged leases), net of unearned income and allowance for loan
losses: A discounted cash flow method under the income approach is utilized to estimate the fair value of the loan portfolio. The
discounted cash flow method relies upon assumptions about the amount and timing of scheduled principal and interest
payments, principal prepayments, and current market rates. The loan portfolio is aggregated into categories based on loan type
and credit quality. For each loan category, weighted average statistics, such as coupon rate, age, and remaining term are
calculated. These are Level 3 valuations.
Other earning assets (excluding equity investments): The carrying amounts reported in the consolidated balance sheets
approximate the estimated fair values. When available, the fair values of these other earning assets are estimated using quoted
market prices of identical instruments traded in active markets and are considered Level 1 measurements. Other instruments
utilize valuation inputs that are actively quoted and can be validated through external sources or are reported at par as required
by regulatory guidelines, and are considered Level 2 valuations.
Deposits: The fair value of non-interest-bearing demand accounts, interest-bearing checking accounts, savings accounts,
money market accounts and certain other time deposit accounts is the amount payable on demand at the reporting date (i.e., the
carrying amount) and are considered Level 2 valuations. Fair values for certificates of deposit are estimated by using discounted
cash flow analyses, based on market spreads to benchmark rates, and are considered Level 2 valuations.
Short-term borrowings: The carrying amounts of short-term borrowings reported in the consolidated balance sheets
approximate the estimated fair values, and are considered Level 2 measurements as similar instruments are traded in active
markets.
Long-term borrowings: The fair values of certain long term borrowings are estimated using quoted market prices of
identical instruments in non-active markets and are considered Level 2 valuations. Otherwise, valuations are based on non-
binding broker quotes and are considered Level 3 valuations.
Loan commitments and letters of credit: The fair value of these instruments is reasonably estimated by the carrying
value of deferred fees plus the unfunded loan commitments reserve related to the creditworthiness of the counterparty. Because
the valuation inputs are not observable in the market and are considered Company specific, these are Level 3 valuations.
See Note 21 for additional information related to fair value measurements.
113
Table of Contents
RECENT ACCOUNTING PRONOUNCEMENTS
The following table provides a brief description of accounting standards adopted in 2023 and those that could have a
material impact to Regions’ consolidated financial statements upon adoption in the future.
Standard
Description
Standards Adopted (or partially adopted) in 2023
ASU 2022-02, Financial
Instruments—Credit Losses
(Topic 326): Troubled Debt
Restructurings and Vintage
Disclosures
This Update is intended to improve the decision usefulness of
information provided to investors about certain loan refinancing,
restructurings, and write-offs.
The amendments in the Update eliminate the accounting guidance for
TDRs by creditors that have adopted CECL while enhancing disclosure
requirements for certain loan refinancings and restructurings by creditors
made to borrowers experiencing financial difficulty.
Required
Date of
Adoption
Effect on Regions'
financial statements or
other significant matters
January 1, 2023 The adoption of this guidance
did not have a material impact.
See Note 1 Basis of Presentation
for additional information.
The Update also requires that a public business entity disclose current-
period gross write-offs by year of origination for financing receivables
and net investment in leases.
The amendments in this Update were applied prospectively, except for
the transition method related to the recognition and measurement of
TDRs for which there was an option to apply a modified retrospective
transition method, resulting in a cumulative-effect adjustment to retained
earnings in the period of adoption.
This Update clarifies how the fair value of equity securities subject to
contractual sale restrictions is determined.
ASU 2022-03 clarifies that a contractual sale restriction should not be
considered in measuring fair value. It also requires entities with
investments in equity securities subject to contractual sale restrictions to
disclose certain qualitative and quantitative information about such
securities.
This Update amends or supersedes various SEC paragraphs within the
Codification to conform to past SEC staff announcements and guidance
issued by the SEC. The Update does not provide any new guidance so
there is no transition guidance or effective date associated with it.
January 1, 2023 The adoption of this guidance
did not have a material impact.
Effective upon
issuance
The adoption of this guidance
did not have a material impact.
ASU 2022-03, Fair Value
Measurement of Equity
Securities Subject to
Contractual Sale Restrictions
ASU 2023-03, Presentation
of Financial Statements
(Topic 205), Income
Statement—Reporting
Comprehensive Income
(Topic 220), Distinguishing
Liabilities from Equity
(Topic 480), Equity (Topic
505), and Compensation—
Stock Compensation (Topic
114
Table of Contents
Standard
Description
Standards Adopted After 2023
ASU 2023-02, Investments
—Equity Method and Joint
Ventures (Topic 323)
Accounting for Investments
in Tax Credit Structures
Using the Proportional
Amortization Method
This Update allows entities to elect to account for equity investments
made primarily for the purpose of receiving income tax credits using the
proportional amortization method, regardless of the tax credit program
through which the investment earns income tax credits, if certain
conditions were met.
The Update also sets forth the conditions needed to apply the proportional
amortization method.
The Update further eliminates certain low income housing tax credit-
specific guidance to align the accounting more closely for low income
housing tax credits with the accounting for other equity investments in
tax credit structures and require that the delayed equity contribution apply
only to tax equity investments accounted for using the proportional
amortization method.
Required
Date of
Adoption
Effect on Regions'
financial statements or
other significant matters
January 1, 2024 Regions adopted this guidance
as of January 1, 2024 with
no material impact.
ASU 2023-05, Business
Combinations—
Joint Venture Formations
(Subtopic 805-60)
This Update requires certain joint ventures, upon formation, to use a new
basis of accounting by applying most aspects of the acquisition method
for business combinations. New joint ventures generally will recognize
and initially measure assets and liabilities at fair value. The Update is
effective for all joint ventures with a formation date on or after January 1,
2025. Early adoption is permitted.
January 1, 2025 The adoption of this guidance is
not likely to have a material
impact. Regions will continue to
evaluate through date of
adoption.
ASU 2023-06, Disclosure
Improvements: Codification
Amendments in Response to
the SEC’s Disclosure Update
and Simplification Initiative
This Update incorporates into the Codification 14 of the 27 disclosures
referred by the SEC in Release No. 33-10532, Disclosure Update and
Simplification. This Update clarifies and improves the disclosure and
presentation requirements of a variety of Topics in the Codification to
align with the SEC's regulations.
The adoption of this guidance is
not likely to have a material
impact. Regions will continue to
evaluate through date of
adoption.
The date on
which the SEC’s
removal of that
related
disclosure from
Regulation S-X
or Regulation S-
K becomes
effective.
ASU 2023-07, Segment
Reporting (Topic 280):
Improvements to Reportable
Segment Disclosures
The Board is issuing this Update to improve the disclosures about a
public entity's reportable segments on an annual and interim basis and
address requests from investors for additional, more detailed information
about a reportable segment's expenses.
January 1, 2024 Regions adopted this guidance
as of January 1, 2024 with
no material impact.
ASU 2023-09, Income Taxes
(Topic 740) Improvements to
Income Tax Disclosures
The ASU improves the transparency of income tax disclosures by
requiring (1) consistent categories and greater disaggregation of
information in the rate reconciliation and (2) income taxes paid
disaggregated by jurisdiction. It also includes certain other amendments
to improve the effectiveness of income tax disclosures.
January 1, 2025 The adoption of this guidance is
not likely to have a material
impact. Regions will continue to
evaluate through date of
adoption.
115
Table of Contents
NOTE 2. VARIABLE INTEREST ENTITIES
Regions is involved in various entities that are considered to be VIEs, as defined by authoritative accounting literature.
Generally, a VIE is a corporation, partnership, trust or other legal structure that either does not have equity investors with
substantive voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its
activities. The following discusses the VIEs in which Regions has a significant interest.
AFFORDABLE HOUSING TAX CREDIT INVESTMENTS
Regions periodically invests in various limited partnerships that sponsor affordable housing projects, which are funded
through a combination of debt and equity. These partnerships meet the definition of a VIE. Regions uses the proportional
amortization method to account for these investments. Due to the nature of the management activities of the general partner,
Regions is not the primary beneficiary of these partnerships. See Note 1 for additional details. Additionally, Regions has loans
or letters of credit commitments with certain limited partnerships. The funded portion of the loans and letters of credit are
classified as commercial and industrial loans or investor real estate loans as applicable in Note 4 .
A summary of Regions’ affordable housing tax credit investments and related loans and letters of credit, representing
Regions’ maximum exposure to loss as of December 31 is as follows:
Affordable housing tax credit investments included in other assets
Unfunded affordable housing tax credit commitments included in other liabilities
Loans and letters of credit commitments
Funded portion of loans and letters of credit commitments
Tax credits and other tax benefits recognized
Tax credit amortization expense included in income tax expense
2023
2022
(In millions)
$
1,415 $
592
730
395
1,238
511
598
282
2023
2022
2021
(In millions)
$
207
$
180
$
166
149
165
139
In addition to the investments discussed above, Regions also syndicates affordable housing investments. In these
syndication transactions, Regions creates affordable housing funds in which a subsidiary is the general partner or managing
member and sells limited partnership interests to third parties. Regions' general partner or managing member interest represents
an insignificant interest in the affordable housing fund. The affordable housing funds meet the definition of a VIE. As Regions
is not the primary beneficiary and does not have a significant interest, these investments are not consolidated. At December 31,
2023 and 2022, the value of Regions’ general partnership interest in affordable housing investments was immaterial.
116
Table of Contents
NOTE 3. DEBT SECURITIES
The amortized cost, gross unrealized gains and losses, and estimated fair value of debt securities held to maturity and debt
securities available for sale are as follows:
Recognized in OCI (1)
Not recognized in OCI
December 31, 2023
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Carrying
Value
(In millions)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency
Commercial agency
$
$
247 $
— $
(8) $
239 $
— $
(16) $
516
—
(1)
515
—
(22)
763 $
— $
(9) $
754 $
— $
(38) $
Debt securities available for sale:
U.S. Treasury securities
Federal agency securities
Obligations of states and political subdivisions
Mortgage-backed securities:
Residential agency
Commercial agency
Commercial non-agency
Corporate and other debt securities
$
1,322 $
— $
(99) $
1,085
2
19,450
7,807
93
1,105
4
—
52
2
—
4
(46)
—
(2,130)
(502)
(10)
(35)
1,223
1,043
2
17,372
7,307
83
1,074
$
223
493
716
1,223
1,043
2
17,372
7,307
83
1,074
$
30,864 $
62 $
(2,822) $
28,104
$
28,104
Recognized in OCI (1)
Not recognized in OCI
December 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Carrying
Value
(In millions)
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair
Value
$
$
289 $
— $
(10) $
279 $
— $
(21) $
523
—
(1)
522
—
(29)
812 $
— $
(11) $
801 $
— $
(50) $
258
493
751
$
1,310 $
— $
(123) $
1,187
$
1,187
898
2
19,477
1
8,262
198
1,219
—
—
—
—
—
—
1
(62)
—
836
2
(2,523)
16,954
—
(649)
(12)
(66)
1
7,613
186
1,154
836
2
16,954
1
7,613
186
1,154
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency
Commercial agency
Debt 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 agency
Commercial non-agency
Corporate and other debt securities
$
31,367 $
1 $
(3,435) $
27,933
$
27,933
_________
(1) The gross unrealized losses recognized in OCI on securities held to maturity resulted from a transfer of securities available for sale to held to maturity in
the second quarter of 2013.
Debt securities with carrying values of $24.0 billion and $8.8 billion at December 31, 2023 and December 31, 2022,
respectively, were pledged to secure public funds, trust deposits and other borrowing arrangements.
117
Table of Contents
The amortized cost and estimated fair value of debt securities held to maturity and debt securities available for sale at
December 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency
Commercial agency
Debt securities available for sale:
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities:
Residential agency
Commercial agency
Commercial non-agency
Amortized
Cost
Estimated
Fair Value
(In millions)
$
$
$
$
247 $
516
763 $
369 $
2,600
390
155
19,450
7,807
93
30,864 $
223
493
716
363
2,455
384
140
17,372
7,307
83
28,104
The following tables present gross unrealized losses and the related estimated fair value of debt securities held to maturity
and debt securities available for sale at December 31, 2023 and December 31, 2022. For debt securities transferred to held to
maturity from available for sale, the analysis in the tables below compares the securities' original amortized cost to its current
estimated fair value. All securities in an unrealized position are segregated between investments that have been in a continuous
unrealized loss position for less than twelve months and for twelve months or more.
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency
Commercial agency
Debt securities available for sale:
U.S Treasury securities
Federal agency securities
Mortgage-backed securities:
Residential agency
Commercial agency
Commercial non-agency
Corporate and other debt securities
Less Than Twelve Months
Estimated
Fair
Value
Gross
Unrealized
Losses
December 31, 2023
Twelve Months or More
Estimated
Fair
Value
Gross
Unrealized
Losses
(In millions)
Total
Estimated
Fair
Value
Gross
Unrealized
Losses
$
$
$
— $
—
— $
— $
—
— $
223 $
493
716 $
(23) $
(23)
(46) $
223 $
493
716 $
6 $
— $
1,201 $
(99) $
1,207 $
237
241
612
—
23
(5)
(3)
(7)
—
—
666
(41)
903
15,144
6,583
82
879
(2,127)
(495)
(10)
(35)
15,385
7,195
82
902
(23)
(23)
(46)
(99)
(46)
(2,130)
(502)
(10)
(35)
$
1,119 $
(15) $
24,555 $
(2,807) $
25,674 $
(2,822)
118
Table of Contents
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency
Commercial agency
Debt securities available for sale:
U.S. Treasury securities
Federal agency securities
Mortgage-backed securities:
Residential agency
Commercial agency
Commercial non-agency
Corporate and other debt securities
Less Than Twelve Months
Estimated
Fair
Value
Gross
Unrealized
Losses
December 31, 2022
Twelve Months or More
Estimated
Fair
Value
Gross
Unrealized
Losses
(In millions)
Total
Estimated
Fair
Value
Gross
Unrealized
Losses
$
$
$
251 $
469
720 $
276 $
766
(29) $
(26)
(55) $
7 $
24
31 $
(1) $
(4)
(5) $
258 $
493
751 $
(30)
(30)
(60)
(8) $
903 $
(115) $
1,179 $
(50)
53
(12)
819
9,350
6,110
141
736
(1,005)
(400)
(8)
(36)
7,578
1,503
45
354
(1,518)
(249)
(4)
(30)
16,928
7,613
186
1,090
(123)
(62)
(2,523)
(649)
(12)
(66)
$
17,379 $
(1,507) $
10,436 $
(1,928) $
27,815 $
(3,435)
The number of individual debt positions in an unrealized loss position in the tables above decreased to 1,703 at December
31, 2023 from 1,806 at December 31, 2022. The decrease in the number of securities and the total amount of unrealized losses
from year-end 2022 was due to maturities in the portfolio along with no reinvestment for a portion of 2023. The decrease in the
total amount of unrealized losses was also impacted by changes in market interest rates. In instances where an unrealized loss
existed, there was no indication of an adverse change in credit on the underlying positions in the tables above. As it relates to
these positions, management believes no individual unrealized loss represented credit impairment as of those dates. At
December 31, 2023, the Company does not intend to sell, and it is not more likely than not that the Company will be required to
sell, the positions before the recovery of their amortized cost bases, which may be at maturity.
Gross realized gains and gross realized losses on sales of debt securities available for sale were immaterial for 2023, 2022
and 2021. The cost of securities sold is based on the specific identification method. As part of the Company's normal process
for evaluating impairment, credit-related impairment identified by management was immaterial for 2023. No credit-related
impairment was identified by management for 2022 and 2021.
NOTE 4. LOANS
The following table presents the distribution of Regions' loan portfolio by segment and class, net of unearned income as of
December 31:
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolio
Other consumer
Total consumer
Total loans, net of unearned income (1)
2023
2022
(In millions)
50,865 $
4,887
281
56,033
6,605
2,245
8,850
20,207
3,221
2,439
1,341
43
6,245
33,496
98,379 $
50,905
5,103
298
56,306
6,393
1,986
8,379
18,810
3,510
2,489
1,248
570
5,697
32,324
97,009
$
$
_________
(1) Loans are presented net of unearned income, unamortized discounts and premiums and deferred loan fees and costs of $965 million and $894 million at
December 31, 2023 and December 31, 2022.
119
Table of Contents
See Note 13 for details regarding Regions’ investment in sales-type, direct financing, and leveraged leases included within
the commercial and industrial loan portfolio.
NOTE 5. ALLOWANCE FOR CREDIT LOSSES
ALLOWANCE FOR CREDIT LOSSES
Regions determines the appropriate level of the allowance on a quarterly basis. Refer to Note 1 in the Annual Report on
Form 10-K for the year ended December 31, 2022, for a description of the methodology prior to the adoption of modifications
to troubled borrowers accounting on January 1, 2023.
Reflected in the 2023 allowance is the impact of the sale of $284 million of consumer loans in a portfolio of third party
relationship loans in the fourth quarter of 2023. In conjunction with the sale, the Company recognized a $35 million fair value
mark recorded through charge-offs resulting in a net provision benefit of $27 million and a loss on sale of $8 million.
Reflected in the 2022 allowance is the impact of the sale of $1.2 billion of unsecured consumer loans at the end of the
third quarter of 2022 with an associated allowance of $94 million. In conjunction with the sale, the Company recognized a
$63 million fair value mark recorded through charge-offs resulting in a net provision benefit of $31 million.
ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES
The following tables present analyses of the allowance for credit losses by portfolio segment for December 31, 2023,
2022 and 2021.
Commercial
Investor Real
Estate
Consumer
Total
2023
Allowance for loan losses, December 31, 2022
Cumulative effect of accounting guidance (1)
Allowance for loan losses, January 1, 2023 (adjusted for change in
accounting guidance)
Provision for loan losses
$
Loan losses:
Charge-offs
Recoveries
Net loan (losses) recoveries
Allowance for loan losses, December 31, 2023
Reserve for unfunded credit commitments, January 1, 2023
Provision for (benefit from) unfunded credit losses
Reserve for unfunded credit commitments, December 31, 2023
665 $
(3)
(In millions)
121 $
(3)
662
205
(197)
52
(145)
722
72
20
92
118
74
—
—
—
192
21
(8)
13
678 $
(32)
646 $
268
(293)
41
(252)
662
25
(6)
19
Allowance for credit losses, December 31, 2023
$
814 $
205 $
681 $
Commercial
Investor Real
Estate
Consumer
Total
2022
Allowance for loan losses, January 1, 2022
$
Provision for loan losses
Loan losses:
Charge-offs
Recoveries
Net loan (losses) recoveries
Allowance for loan losses, December 31, 2022
Reserve for unfunded credit commitments, January 1, 2022
Provision for (benefit from) unfunded credit losses
Reserve for unfunded credit commitments, December 31, 2022
682 $
40
(107)
50
(57)
665
58
14
72
(In millions)
79 $
45
(5)
2
(3)
121
8
13
21
718 $
163
(263)
60
(203)
678
29
(4)
25
Allowance for credit losses, December 31, 2022
$
737 $
142 $
703 $
1,464
(38)
1,426
547
(490)
93
(397)
1,576
118
6
124
1,700
1,479
248
(375)
112
(263)
1,464
95
23
118
1,582
120
Table of Contents
Allowance for loan losses, January 1, 2021
Provision for (benefit from) loan losses
Initial allowance on acquired PCD loans
Loan losses:
Charge-offs
Recoveries
Net loan (losses) recoveries
Allowance for loan losses, December 31, 2021
Reserve for unfunded credit commitments, January 1, 2021
Provision for (benefit from) unfunded credit losses
Reserve for unfunded credit commitments, December 31, 2021
Commercial
Investor Real
Estate
Consumer
Total
2021
$
1,196 $
(In millions)
183 $
(445)
—
(128)
59
(69)
682
97
(39)
58
(87)
—
(20)
3
(17)
79
14
(6)
8
788 $
39
9
(180)
62
(118)
718
15
14
29
Allowance for credit losses, December 31, 2021
$
740 $
87 $
747 $
_____
(1) See Note 1 for additional information.
PORTFOLIO SEGMENT RISK FACTORS
2,167
(493)
9
(328)
124
(204)
1,479
126
(31)
95
1,574
The following describe the risk characteristics relevant to each of the portfolio segments.
Commercial—The commercial portfolio segment includes commercial and industrial 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 mortgage loans to operating businesses, which are loans for
long-term financing on land and buildings, and are repaid by cash flow generated by business operations. Owner-occupied
commercial real estate construction loans are made to commercial businesses for the development of land or construction of a
building where the repayment is derived from revenues generated from the business of the borrower. Collection risk in this
portfolio is driven by the creditworthiness of underlying borrowers, particularly cash flow from customers’ business operations,
and is impacted by sensitivity to several other factors, such as market fluctuations in commodity prices.
Investor Real Estate—Loans for real estate development are repaid through cash flow related to the operation, sale or
refinance of the property. This portfolio segment includes extensions of credit to real estate developers or investors where
repayment is dependent on the sale of real estate or income generated from the real estate collateral. A portion of Regions’
investor real estate portfolio segment consists of loans secured by residential product types (land, single-family and
condominium loans) within Regions’ markets. Additionally, this category includes loans made to finance income-producing
properties such as apartment buildings, office and industrial buildings, and retail shopping centers. Loans in this portfolio
segment are particularly sensitive to the valuation of real estate.
Consumer—The consumer portfolio segment includes residential first mortgage, home equity lines, home equity loans,
consumer credit card, other consumer—exit portfolios and other consumer loans. Residential first mortgage loans represent
loans to consumers to finance a residence. These loans are typically financed over a 15 to 30 year term and, in most cases, are
extended to borrowers to finance their primary residence. Home equity lending includes both home equity loans and lines of
credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows 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. Consumer credit card
lending includes Regions branded consumer credit card accounts. Other consumer—exit portfolios includes lending initiatives
through third parties consisting of loans made through automotive dealerships. Regions ceased originating new loans related to
these businesses prior to 2020. Other consumer loans include other revolving consumer accounts, indirect and direct consumer
loans, and overdrafts. Loans in this portfolio segment are sensitive to unemployment, inflation, and other key consumer
economic measures.
121
Table of Contents
CREDIT QUALITY INDICATORS
The following tables present credit quality indicators for the loan portfolio segments and classes, excluding loans held for
sale, as of December 31, 2023 and 2022.
The commercial and investor real estate portfolio segments' primary credit quality indicator is internal risk ratings which
are detailed by categories related to underlying credit quality and probability of default. Regions assigns these risk ratings at
loan origination and reviews the relationship utilizing a risk-based approach on, at minimum, an annual basis or at any time
management becomes aware of information affecting the borrowers' ability to fulfill their obligations. Both quantitative and
qualitative factors are considered in this review process. These categories are utilized to develop the associated allowance for
credit losses.
•
•
•
•
Pass—includes obligations where the probability of default is considered low;
Special Mention—includes obligations that have potential weakness that may, if not reversed or corrected, weaken
the credit or inadequately protect the Company’s position at some future date. Obligations in this category may also
be subject to economic or market conditions that may, in the future, have an adverse effect on debt service ability;
Substandard Accrual—includes obligations that exhibit a well-defined weakness that presently jeopardizes debt
repayment, even though they are currently performing. These obligations are characterized by the distinct possibility
that the Company may incur a loss in the future if these weaknesses are not corrected;
Non-accrual—includes obligations where management has determined that full payment of principal and interest is
in doubt.
Substandard accrual and non-accrual loans are often collectively referred to as “classified.” Special mention, substandard
accrual, and non-accrual loans are often collectively referred to as “criticized and classified.”
Regions considers factors such as periodic updates of FICO scores, accrual status, days past due status, unemployment
rates, home prices, and geography as credit quality indicators for the consumer loan portfolio. FICO scores are obtained at
origination as part of Regions' formal underwriting process. Refreshed FICO scores are obtained by the Company quarterly for
all consumer loans, including residential first mortgage loans. Current FICO data is not available for certain loans in the
portfolio for various reasons; for example, if customers do not use sufficient credit, an updated score may not be available.
These categories are utilized to develop the associated allowance for credit losses. The higher the FICO score the less
probability of default and vice versa.
The disclosure of credit quality indicators for loan portfolio segments and classes, excluding loans held for sale, is
presented by credit quality indicator by vintage year. Gross charge-offs are also presented by vintage year for the twelve months
ended December 31, 2023 as a result of the prospective adoption of new accounting guidance. Regions defines the vintage date
for the purposes of disclosure as the date of the most recent credit decision. In general, renewals are categorized as new credit
decisions and reflect the renewal date as the vintage date. Prior to the adoption of new accounting guidance, 2022 disclosures
reflect loans that are modified as a TDR are considered to be a continuation of the original loan, therefore the origination date of
the original loan is reflected as the vintage date. The following tables present applicable credit quality indicators for the loan
portfolio segments and classes, excluding loans held for sale, as of December 31, 2023 and 2022. Classes in the commercial and
investor real estate portfolio segments are disclosed by risk rating. Classes in the consumer portfolio segment are disclosed by
current FICO scores.
Term Loans
Origination Year
2023
2022
2021
2020
2019
Prior
Revolving
Loans
Revolving
Loans
Converted to
Amortizing
Unallocated (1)
Total
December 31, 2023
(In millions)
$ 8,272 $ 9,123 $ 5,267 $ 2,326 $ 1,376 $ 3,210 $
18,561 $
— $
53 $ 48,188
87
141
128
186
212
102
71
74
37
109
38
6
26
7
20
90
3
10
484
678
168
$ 8,628 $ 9,623 $ 5,449 $ 2,479 $ 1,429 $ 3,313 $
19,891 $
—
—
—
— $
— $
—
—
—
1,053
1,153
471
53 $ 50,865
— $
195
Commercial and industrial:
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial and
industrial
Gross charge-offs
$
12 $
57 $
55 $
28 $
15 $
16 $
12 $
122
Table of Contents
Term Loans
Origination Year
2023
2022
2021
2020
2019
Prior
Revolving
Loans
Revolving
Loans
Converted to
Amortizing
Unallocated (1)
Total
December 31, 2023
(In millions)
Commercial real estate mortgage—owner-occupied:
$
799 $
954 $
988 $
658 $
343 $
801 $
76 $
— $
(5) $ 4,614
21
3
4
13
34
3
33
32
10
20
14
8
7
8
3
13
24
8
14
1
—
—
—
—
—
—
—
121
116
36
827 $ 1,004 $ 1,063 $
700 $
361 $
846 $
1 $ — $ — $ — $ — $
1 $
91 $
— $
— $
— $
(5) $ 4,887
— $
2
Commercial real estate construction—owner-occupied:
$
89 $
53 $
44 $
24 $
11 $
38 $
3 $
— $
— $
262
—
—
2
7
1
—
—
—
—
—
1
2
—
—
—
1
1
4
—
—
—
91 $
61 $
44 $
27 $
11 $
44 $
— $ — $ — $ — $ — $ — $
3 $
— $
—
—
—
— $
— $
— $
—
—
—
8
3
8
— $
281
— $ —
48 $ 56,033
Total commercial
$ 9,546 $ 10,688 $ 6,556 $ 3,206 $ 1,801 $ 4,203 $
19,985 $
Gross commercial charge-
offs
$
13 $
57 $
55 $
28 $
15 $
17 $
12 $
— $
— $
197
Commercial investor real estate mortgage:
$ 1,130 $ 1,587 $ 1,135 $
488 $
296 $
110 $
383 $
— $
(4) $ 5,125
269
134
99
247
197
57
52
—
37
59
67
—
30
67
12
—
3
28
90
32
—
—
—
—
—
—
—
747
500
233
$ 1,632 $ 2,088 $ 1,224 $
614 $
405 $
141 $
Gross charge-offs
$
— $ — $ — $ — $ — $ — $
Commercial investor real estate construction:
505 $
— $
— $
— $
(4) $ 6,605
— $ —
$
256 $
836 $
280 $
26 $
2 $
1 $
649 $
— $
(15) $ 2,035
—
—
—
122
25
—
—
—
—
—
—
—
—
—
—
—
—
—
59
4
—
Total commercial investor
real estate construction
Gross charge-offs
$
$
256 $
983 $
280 $
26 $
2 $
1 $
— $ — $ — $ — $ — $ — $
712 $
— $
Total investor real estate
$ 1,888 $ 3,071 $ 1,504 $
640 $
407 $
142 $
1,217 $
—
—
—
— $
— $
— $
—
—
—
181
29
—
(15) $ 2,245
— $ —
(19) $ 8,850
$
— $ — $ — $ — $ — $ — $
— $
— $
— $ —
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial real estate
mortgage—owner-
occupied:
Gross charge-offs
$
$
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial real estate
construction—owner-
occupied:
Gross charge-offs
$
$
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial investor
real estate mortgage
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Gross investor real estate
charge-offs
Residential first mortgage:
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total residential first
mortgage
$ 1,939 $ 2,863 $ 4,358 $ 4,390 $
226
86
21
33
298
153
90
16
355
153
122
49
255
112
87
46
43
53
11
270
389
92
816 $ 2,353 $
52
294
— $
—
— $
—
—
—
—
— $
— $
— $ 16,719
1,480
—
—
—
181
817
762
429
181 $ 20,207
— $
1
—
—
1
1 $
— $
$ 2,305 $ 3,420 $ 5,037 $ 4,890 $
975 $ 3,398 $
Gross charge-offs
$
— $ — $ — $ — $ — $
1 $
123
Table of Contents
Home equity lines:
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total home equity lines
Gross charge-offs
Home equity loans:
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Term Loans
Origination Year
2023
2022
2021
2020
2019
Prior
Revolving
Loans
Revolving
Loans
Converted to
Amortizing
Unallocated (1)
Total
December 31, 2023
(In millions)
$
— $ — $ — $ — $ — $ — $
2,399 $
45 $
— $ 2,444
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
346
184
97
85
$
$
— $ — $ — $ — $ — $ — $
3,111 $
— $ — $ — $ — $ — $ — $
3 $
11
9
7
5
77 $
— $
—
—
—
33
357
193
104
123
33 $ 3,221
— $
3
$
322 $
370 $
397 $
205 $
93 $
529 $
— $
— $
— $ 1,916
53
19
2
1
62
27
8
4
49
23
12
5
22
8
5
3
14
8
7
3
60
52
35
25
—
—
—
—
—
—
—
—
—
—
—
16
260
137
69
57
Total home equity loans
Gross charge-offs
$
$
397 $
471 $
486 $
243 $
125 $
701 $
— $ — $ — $ — $ — $
1 $
— $
— $
— $
— $
16 $ 2,439
— $
1
Consumer credit card:
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total consumer credit card
Gross charge-offs
$
$
Other consumer—exit portfolios:
$
— $ — $ — $ — $ — $ — $
780 $
— $
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
254
210
95
20
— $ — $ — $ — $ — $ — $
1,359 $
— $ — $ — $ — $ — $ — $
52 $
—
—
—
—
— $
— $
—
—
—
(18)
780
254
210
95
2
(18) $ 1,341
— $
52
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total other consumer—exit
portfolios
Gross charge-offs
$
— $ — $ — $ — $
2 $
22 $
— $
— $
— $
24
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
—
1
—
4
5
7
1
—
—
—
—
—
—
—
—
—
—
—
—
$
$
— $ — $ — $ — $
4 $
— $ — $ — $ — $
19 $
39 $
31 $
— $
— $
— $
— $
— $
— $
5
5
8
1
43
50
124
Table of Contents
Other consumer(2):
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Term Loans
Origination Year
2023
2022
2021
2020
2019
Prior
Revolving
Loans
Revolving
Loans
Converted to
Amortizing
Unallocated (1)
Total
December 31, 2023
(In millions)
$ 1,312 $ 1,519 $
501 $
284 $
155 $
118 $
119 $
— $
— $ 4,008
270
178
52
94
409
294
147
10
136
103
65
7
74
50
31
5
34
21
14
114
29
20
13
65
Total other consumer
$ 1,906 $ 2,379 $
812 $
444 $
338 $
245 $
Gross charge-offs
$
59 $
57 $
32 $
17 $
9 $
12 $
Total consumer loans
$ 4,608 $ 6,270 $ 6,335 $ 5,577 $ 1,442 $ 4,383 $
4,741 $
Gross consumer charge-offs $
59 $
57 $
32 $
17 $
28 $
45 $
55 $
Total Loans
$ 16,042 $ 20,029 $ 14,395 $ 9,423 $ 3,650 $ 8,728 $
25,943 $
Total Gross charge-offs
$
72 $
114 $
87 $
45 $
43 $
62 $
67 $
December 31, 2022
67
53
30
1
270 $
— $
—
—
—
—
— $
— $
77 $
— $
77 $
— $
—
—
—
(149)
1,019
719
352
147
(149) $ 6,245
— $
186
63 $ 33,496
— $
293
92 $ 98,379
— $
490
Term Loans
Origination Year
2022
2021
2020
2019
2018
Prior
Revolving
Loans
Converted to
Amortizing
Revolving
Loans
Unallocated (1)
Total
(In millions)
Commercial and industrial:
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial and
industrial
$ 11,948 $ 7,167 $ 3,277 $ 2,297 $ 1,026 $ 3,283 $
19,599 $
— $
313 $ 48,910
85
248
95
120
114
55
70
39
11
30
57
9
32
53
36
1
17
6
282
500
135
—
—
—
—
—
—
620
1,028
347
$ 12,376 $ 7,456 $ 3,397 $ 2,393 $ 1,147 $ 3,307 $
20,516 $
— $
313 $ 50,905
Commercial real estate mortgage—owner-occupied:
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial real
estate mortgage—owner-
occupied:
$ 1,058 $ 1,175 $
929 $
479 $
519 $
626 $
89 $
— $
(5) $ 4,870
7
10
1
32
16
2
17
36
9
10
35
1
15
5
5
12
6
11
2
1
—
—
—
—
—
—
—
95
109
29
$ 1,076 $ 1,225 $
991 $
525 $
544 $
655 $
92 $
— $
(5) $ 5,103
Commercial real estate construction—owner-occupied:
$
115 $
79 $
22 $
15 $
15 $
38 $
1 $
— $
— $
285
—
2
—
—
—
—
—
2
1
—
—
1
2
—
—
—
1
4
—
—
—
—
—
—
—
—
—
2
5
6
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial real
estate construction—
owner-occupied:
— $
— $
— $
298
308 $ 56,306
$
117 $
79 $
25 $
16 $
17 $
43 $
1 $
Total commercial
$ 13,569 $ 8,760 $ 4,413 $ 2,934 $ 1,708 $ 4,005 $
20,609 $
125
Table of Contents
December 31, 2022
Term Loans
Origination Year
2022
2021
2020
2019
2018
Prior
Revolving
Loans
Converted to
Amortizing
Revolving
Loans
Unallocated (1)
Total
Commercial investor real estate mortgage:
(In millions)
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
Total commercial investor
real estate mortgage
$ 2,332 $ 1,321 $
634 $
466 $
257 $
94 $
490 $
— $
(7) $ 5,587
229
107
52
75
—
—
—
74
—
18
138
—
—
68
—
3
3
1
38
—
—
—
—
—
—
—
—
363
390
53
$ 2,720 $ 1,396 $
708 $
622 $
325 $
101 $
528 $
— $
(7) $ 6,393
Commercial investor real estate construction:
Risk rating:
Pass
Special Mention
Substandard Accrual
Non-accrual
$
458 $
402 $
205 $
112 $
— $
1 $
722 $
— $
(16) $ 1,884
25
3
—
52
—
—
—
17
—
—
—
—
—
—
—
—
—
—
5
—
—
—
—
—
—
—
—
82
20
—
Total commercial investor
real estate construction
$
486 $
454 $
Total investor real estate
$ 3,206 $ 1,850 $
Residential first mortgage:
222 $
930 $
112 $
734 $
— $
1 $
727 $
325 $
102 $
1,255 $
— $
— $
(16) $ 1,986
(23) $ 8,379
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total residential first
mortgage
Home equity lines:
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
$ 2,485 $ 4,455 $ 4,765 $
899 $
327 $ 2,445 $
— $
— $
— $ 15,376
337
168
42
27
412
183
92
45
313
129
77
47
83
53
52
13
42
34
40
4
300
295
379
98
—
—
—
2
—
—
—
—
—
—
—
167
1,487
862
682
403
$ 3,059 $ 5,187 $ 5,331 $ 1,100 $
447 $ 3,517 $
2 $
— $
167 $ 18,810
$
— $
— $
— $
— $
— $
— $
2,620 $
47 $
— $ 2,667
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
369
212
99
97
12
11
8
4
—
—
—
31
381
223
107
132
Total home equity lines
$
— $
— $
— $
— $
— $
— $
3,397 $
82 $
31 $ 3,510
Home equity loans
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
$
436 $
466 $
250 $
117 $
106 $
582 $
— $
— $
— $ 1,957
75
29
4
4
62
28
8
3
26
11
4
3
17
12
5
3
14
9
7
4
67
58
38
24
—
—
—
—
—
—
—
—
—
—
—
17
261
147
66
58
Total home equity loans
$
548 $
567 $
294 $
154 $
140 $
769 $
— $
— $
17 $ 2,489
Consumer credit card:
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total consumer credit
card
$
— $
— $
— $
— $
— $
— $
719 $
— $
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
246
204
86
9
—
—
—
—
—
—
—
(16)
719
246
204
86
(7)
$
— $
— $
— $
— $
— $
— $
1,264 $
— $
(16) $ 1,248
126
Table of Contents
December 31, 2022
Term Loans
Origination Year
2022
2021
2020
2019
2018
Prior
Revolving
Loans
Converted to
Amortizing
Revolving
Loans
Unallocated (1)
Total
Other consumer- exit portfolios:
(In millions)
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
Total other consumer- exit
portfolios
$
$
— $
— $
— $
102 $
172 $
96 $
— $
— $
— $
370
—
—
—
—
—
—
—
—
—
—
—
—
30
17
7
1
40
30
17
3
23
17
10
3
—
—
—
—
—
—
—
—
—
—
—
2
93
64
34
9
— $
— $
— $
157 $
262 $
149 $
— $
— $
2 $
570
Other consumer(2):
FICO scores:
Above 720
681-720
620-680
Below 620
Data not available
$ 2,072 $
674 $
382 $
215 $
99 $
80 $
119 $
— $
— $ 3,641
493
348
102
61
200
153
69
6
106
73
38
5
50
34
20
130
23
19
12
73
20
15
8
5
66
55
23
2
Total other consumer
$ 3,076 $ 1,102 $
604 $
449 $
226 $
128 $
265 $
Total consumer loans
$ 6,683 $ 6,856 $ 6,229 $ 1,860 $ 1,075 $ 4,563 $
4,928 $
Total Loans
$ 23,458 $ 17,466 $ 11,572 $ 5,528 $ 3,108 $ 8,670 $
26,792 $
—
—
—
—
— $
82 $
82 $
—
—
—
(153)
958
697
272
129
(153) $ 5,697
48 $ 32,324
333 $ 97,009
________
(1)
(2)
These amounts consist of fees that are not allocated at the loan level and loans serviced by third parties wherein Regions does not receive FICO or
vintage information.
Other consumer class includes overdrafts and related gross charge-offs. Overdrafts are included in the current vintage year and the majority of overdraft
gross charge-offs for the twelve months ended December 31, 2023 are also included in the current vintage year.
127
Table of Contents
AGING AND NON-ACCRUAL ANALYSIS
The following tables include an aging analysis of DPD and loans on non-accrual status for each portfolio segment and
class as of December 31, 2023 and December 31, 2022. Loans on non-accrual status with no related allowance totaled $280
million comprised of commercial and investor real estate loans at December 31, 2023. Loans on non-accrual status with no
related allowance totaled $151 million comprised of commercial loans at December 31, 2022. Non–accrual loans with no
related allowance typically include loans where the underlying collateral is deemed sufficient to recover all remaining principal.
Loans that have been fully charged-off do not appear in the tables below.
Accrual Loans
2023
30-59 DPD
60-89 DPD
90+ DPD
Total
30+ DPD
(In millions)
Total
Accrual
Non-accrual
Total
Commercial and industrial
$
43 $
21 $
11 $
75 $
50,394 $
471 $
50,865
Commercial real estate mortgage—
owner-occupied
Commercial real estate construction—
owner-occupied
Total commercial
Commercial investor real estate
mortgage
Commercial investor real estate
construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
3
—
46
—
—
—
104
17
10
11
2
60
204
2
1
24
—
—
—
48
10
4
8
1
31
102
—
—
11
23
—
23
95
20
7
20
—
29
171
5
1
81
23
—
23
247
47
21
39
3
120
477
4,851
273
55,518
6,372
2,245
8,617
20,185
3,192
2,433
1,341
43
6,245
33,439
36
8
515
233
—
233
22
29
6
—
—
—
57
$
250 $
126 $
205 $
581 $
97,574 $
805 $
4,887
281
56,033
6,605
2,245
8,850
20,207
3,221
2,439
1,341
43
6,245
33,496
98,379
Accrual Loans
2022
30-59 DPD
60-89 DPD
90+ DPD
Total
30+ DPD
(In millions)
Total
Accrual
Non-accrual
Total
Commercial and industrial
$
36 $
20 $
30 $
86 $
50,558 $
347 $
50,905
Commercial real estate mortgage—
owner-occupied
Commercial real estate construction—
owner-occupied
Total commercial
Commercial investor real estate
mortgage
Commercial investor real estate
construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
7
—
43
—
—
—
87
18
8
9
7
46
175
2
—
22
—
—
—
45
12
3
7
3
21
91
1
—
31
40
—
40
81
15
8
15
1
17
10
—
96
40
—
40
213
45
19
31
11
84
5,074
292
55,924
6,340
1,986
8,326
18,779
3,482
2,483
1,248
570
5,697
137
403
32,259
29
6
382
53
—
53
31
28
6
—
—
—
65
$
218 $
113 $
208 $
539 $
96,509 $
500 $
5,103
298
56,306
6,393
1,986
8,379
18,810
3,510
2,489
1,248
570
5,697
32,324
97,009
128
Table of Contents
At December 31, 2023 and December 31, 2022, the Company had collateral-dependent commercial loans of $220 million
and $162 million, respectively. At December 31, 2023, the Company had collateral-dependent investor real estate loans of
$92 million. The collateral for commercial and investor real estate loans generally consists of business assets including real
estate, receivables and equipment. At December 31, 2023 and December 31, 2022, the Company had collateral-dependent
residential mortgage and home equity loans and lines totaling $93 million and $105 million, respectively. The collateral for
these loans are secured by residential real estate.
MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY
The majority of Regions' commercial and investor real estate modifications to troubled borrowers are the result of
renewals of classified loans wherein there has been an interest rate reduction and/or maturity extension (that is considered other
than insignificant). Similarly, Regions works to meet the individual needs of troubled consumer borrowers through its CAP.
Regions designed the program to allow for customer-tailored modifications with the goal of keeping customers in their homes
and avoiding foreclosure where possible. Modifications may be offered to any borrower experiencing financial hardship
regardless of the borrower's payment status. Consumer modifications to troubled borrowers primarily involve an interest rate
reduction and/or a payment deferral or maturity extension that is considered other than insignificant. All CAP modifications
that involve an interest rate reduction, principal forgiveness, other than insignificant payment deferral or term extension and/or
a combination of these are disclosed as modifications to troubled borrowers because the customer documents a financial
hardship in order to participate. Refer to Note 1 for additional information regarding the Company's modifications to troubled
borrowers.
For each portfolio segment and class, the following table presents the end of period balance of new modifications to
troubled borrowers and the related percentage of the loan portfolio period-end balance by the type of modification in the twelve
months ended December 31, 2023. During 2023, the Company did not make any modifications of principal forgiveness.
Term
Extension
$
%(1)
Payment
Deferral
$
%(1)
2023
Term
Extension and
Interest Rate
Modification
%(1)
$
(Dollars in millions)
Term
Extension and
Payment
Deferral
Total
$
%(1)
$
%(1)
Commercial and industrial
$ 379
0.75 % $ 139
0.27 % $ —
— % $
37
0.07 % $ 555
1.09 %
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Total consumer
____
(1) Amounts calculated based upon whole dollar values.
3
2
384
213
213
0.05 % —
— % —
— % —
0.67 %
1
0.15 % —
— % —
— %
— %
0.68 %
140
0.25 % —
— %
37
0.07 %
3.23 % —
— % —
— % —
2.41 % —
— % —
— % —
94
0.46 %
2
0.01 %
1
4
0.02 % —
0.17 % —
— %
— %
99
0.29 %
2
0.01 %
$ 696
0.71 % $ 142
0.14 % $
3
4
5
12
12
0.02 % —
0.11 % —
0.18 % —
0.03 % —
— %
113
0.34 %
0.01 % $
37
0.04 % $ 887
0.90 %
3
3
561
213
213
0.06 %
0.81 %
1.00 %
3.23 %
2.41 %
99
0.49 %
5
9
0.13 %
0.35 %
— %
— %
— %
— %
— %
The end of period balance of unfunded commitments related to modifications to troubled borrowers in the twelve months
ended December 31, 2023, was $106 million for commercial borrowers. Unfunded commitment balances for modifications to
troubled borrowers for investor real estate and consumer loans were immaterial.
129
Table of Contents
The following table presents the financial impact of modifications to troubled borrowers during 2023 by portfolio
segment, class of financing receivable, and the type of modification. The table includes new modifications to troubled
borrowers, as well as renewals of existing modifications to troubled borrowers.
Term
Extension
Weighted-
Average Term
Extension
Payment
Deferral
Weighted-
Average
Payment
Deferral
2023
Term Extension and Interest Rate
Modification
Weighted-
Average Term
Extension
Weighted-
Average
Reduction in
Interest Rate
(In years, except for percentage data)
Term Extension and Payment
Deferral
Weighted-
Average Term
Extension
Weighted-
Average
Payment
Deferral
Commercial and industrial
Commercial real estate mortgage—owner-
occupied
Commercial real estate construction—
owner-occupied
Commercial investor real estate mortgage
Residential first mortgage
Home equity lines
Home equity loans
1
1.50
0.25
0.83
6
18
14
0.5
—
—
—
0.83
—
—
—
—
—
—
7
21
17
—
—
—
—
1 %
1 %
2 %
3
—
—
—
—
—
—
3
—
—
—
—
—
—
In addition to the financial impacts in the table above, during the twelve months ended December 31, 2023, there were
instances of commercial and industrial payment deferrals in which the amortization period was doubled to maturity.
The following table includes the end of period balances of aging and non-accrual performance for modifications to
troubled borrowers modified in the twelve-month period since the adoption of related accounting guidance by portfolio segment
and class.
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Total consumer
2023
Current
30-89 DPD
90+ DPD
(In millions)
Non-
Performing
Loans
Total
$
355 $
— $
5 $
195 $
555
1
—
356
151
151
75
5
6
86
—
—
—
—
—
16
—
1
17
—
—
5
—
—
5
—
—
5
2
3
200
62
62
3
—
2
5
$
593 $
17 $
10 $
267 $
3
3
561
213
213
99
5
9
113
887
For modifications to troubled borrowers, a subsequent payment default is defined in terms of delinquency, when a
principal or interest payment is 90 days past due or classified as non-accrual status during the reporting period. As of December
31, 2023, subsequent defaults of the loans restructured as a modification to a troubled borrower during the twelve-month period
ended December 31, 2023 totaled $116 million.
Prior to the Company’s adoption of new guidance related to modifications to borrowers experiencing financial difficulty,
Regions accounted for loans in which the borrower was experiencing financial difficulty at the modification date and wherein
Regions had granted a concession to the borrower as a TDR. Like modifications to troubled borrowers, TDRs were undertaken
in order to improve the likelihood of repayment of a loan. However, TDR modifications were different because they may have
had a stated interest rate lower than the current market rate for new debt with similar risk, other modifications to the structure of
the loan that fell outside of normal underwriting policies and procedures, or in limited circumstances forgiveness of principal
and/or interest. Refer to Note 1 and Note 5 in the Annual Report on Form 10-K for the year ended December 31, 2022 for
additional information.
130
Table of Contents
The following table presents the end of period balance for loans modified in a TDR during the period presented by
portfolio segment and class, and the financial impact of those modifications. The table includes modifications made to new
TDRs, as well as renewals of existing TDRs.
Commercial and industrial
Commercial real estate mortgage—owner-occupied
Commercial real estate construction—owner-occupied
Total commercial
Commercial investor real estate mortgage
Commercial investor real estate construction
Total investor real estate
Residential first mortgage
Home equity lines
Home equity loans
Consumer credit card
Other consumer—exit portfolios
Other consumer
Total consumer
Twelve Months Ended December 31, 2022
Number of
Obligors
Recorded
Investment
(Dollars in millions)
Financial Impact
of Modifications
Considered TDRs
Increase in
Allowance at
Modification
50 $
174 $
11
—
61
5
—
5
983
94
208
4
—
5
5
3
182
48
—
48
135
6
14
—
—
—
1,294
1,360 $
155
385 $
—
—
—
—
—
—
—
6
4
—
—
—
—
10
10
NOTE 6. SERVICING OF FINANCIAL ASSETS
RESIDENTIAL MORTGAGE BANKING ACTIVITIES
The fair value of residential MSRs 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 of mortgages in the
servicing portfolio could result in significant changes in the valuation adjustments, thus creating potential volatility in the
carrying amount of residential MSRs. The Company compares fair value estimates and assumptions to observable market data
where available, and also considers recent market activity and actual portfolio experience.
The table below presents an analysis of residential MSRs under the fair value measurement method for the years ended
December 31:
Carrying value, beginning of year
Additions
Purchases (1)
Increase (decrease) in fair value(2):
Due to change in valuation inputs or assumptions
Economic amortization associated with borrower repayments (3)
2023
2022
2021
(In millions)
$
812 $
418 $
27
158
17
(108)
44
301
127
(78)
Carrying value, end of year
$
906 $
812 $
_________
(1) Purchases of residential MSRs can be structured with cash hold back provisions, therefore the timing of payment may be made in future periods.
(2)
(3)
Included in mortgage income. Amounts presented exclude offsetting impact from related derivatives.
Includes both total loan payoffs as well as partial paydowns. Regions' MSR decay methodology is a discounted net cash flow approach.
296
77
72
43
(70)
418
131
Table of Contents
Data and assumptions used in the fair value calculation, as well as the valuation’s sensitivity to rate fluctuations, related to
residential MSRs (excluding related derivative instruments) as of December 31 are as follows:
Unpaid principal balance
Weighted-average CPR (%)
Estimated impact on fair value of a 10% increase
Estimated impact on fair value of a 20% increase
Option-adjusted spread (basis points)
Estimated impact on fair value of a 10% increase
Estimated impact on fair value of a 20% increase
Weighted-average coupon interest rate
Weighted-average remaining maturity (months)
Weighted-average servicing fee (basis points)
$
$
$
$
$
2023
2022
(Dollars in millions)
$
$
$
$
$
62,059
8.2 %
(43)
(79)
482
(19)
(39)
3.8 %
302
27.4
54,603
7.4 %
(50)
(89)
507
(19)
(37)
3.6 %
308
27.1
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance.
Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the
change in assumption to the change in fair value may not be linear. Also, the effect of an adverse variation in a particular
assumption on the fair value of the residential MSRs is calculated without changing any other assumption, while in reality
changes in one factor may result in changes in another, which may either magnify or counteract the effect of the change. The
derivative instruments utilized by Regions would serve to reduce the estimated impacts to fair value included in the table above.
Servicing related fees, which include contractually specified servicing fees, late fees and other ancillary income resulting
from the servicing of residential mortgage loans totaled $165 million, $137 million, and $102 million for the years ended
December 31, 2023, 2022, and 2021, respectively.
Residential mortgage loans are sold in the secondary market with standard representations and warranties regarding
certain characteristics such as the quality of the loan, the absence of fraud, the eligibility of the loan for sale and the future
servicing associated with the loan. Regions may be required to repurchase these loans at par, or make-whole or indemnify the
purchasers for losses incurred when representations and warranties are breached.
Regions maintains an immaterial repurchase liability related to residential mortgage loans sold with representations and
warranty provisions. This repurchase liability is reported in other liabilities on the consolidated balance sheets and reflects
management’s estimate of losses based on historical repurchase and loss trends, as well as other factors that may result in
anticipated losses different from historical loss trends. Adjustments to this reserve are recorded in other non-interest expense on
the consolidated statements of income.
COMMERCIAL MORTGAGE BANKING ACTIVITIES
Regions is an approved DUS lender. The DUS program provides liquidity to the multi-family housing market. In
connection with the DUS program, Regions services commercial mortgage loans, retains commercial MSRs and intangible
assets associated with the DUS license, and assumes a loss share guarantee associated with the loans. See Note 1 for additional
information. Also see Note 23 for additional information related to the guarantee.
Regions' DUS portfolio totaled $87 million, $81 million and $86 million at December 31, 2023, 2022, and 2021,
respectively. Regions periodically evaluates DUS MSRs for impairment based on fair value. The estimated fair value of the
DUS MSRs was approximately $109 million at December 31, 2023 and $96 million at both December 31, 2022 and 2021.
Servicing related fees in connection with the DUS program, which include contractually specified servicing fees, late fees
and other ancillary income resulting from the servicing of DUS commercial mortgage loans totaled $23 million, $24 million,
and $25 million for the years ended December 31, 2023, 2022, and 2021 .
NOTE 7. OTHER EARNING ASSETS
Other earning assets consist of investments in Federal Reserve Bank stock, FHLB stock, marketable equity securities and
other miscellaneous earning assets.
FEDERAL RESERVE BANK AND FHLB STOCK
The following table presents the amount of Regions' investments in Federal Reserve Bank and FHLB stock as of
December 31:
Federal Reserve Bank stock
FHLB stock
2023
2022
(In millions)
$
434 $
18
438
15
132
Table of Contents
MARKETABLE EQUITY SECURITIES
Marketable equity securities carried at fair value, which primarily consist of assets held for certain employee benefits and
money market funds, are reported in other earning assets. Total marketable equity securities were $813 million and $529
million at December 31, 2023 and 2022, respectively. Unrealized gains recognized in earnings for marketable equity securities
still being held by the Company were $15 million during 2023. Unrealized losses recognized in earnings for marketable equity
securities still being held by the Company were $45 million during 2022. Unrealized gains recognized in earnings for
marketable equity securities still being held by the Company were $20 million during 2021.
OTHER MISCELLANEOUS EARNING ASSETS
Other miscellaneous earning assets consist of long-term certificates of deposit at other institutions and other receivables,
and, in periods prior to 2022, included operating lease assets. Other miscellaneous earning assets were $152 million and
$326 million at December 31, 2023 and 2022, respectively.
NOTE 8. PREMISES, EQUIPMENT AND SOFTWARE, NET
A summary of premises, equipment and software, net at December 31 is as follows:
Land
Premises and improvements
Furniture and equipment
Software
Leasehold improvements
Construction in progress
Accumulated depreciation and amortization
NOTE 9. INTANGIBLE ASSETS
GOODWILL
2023
2022
(In millions)
$
409 $
1,555
1,103
1,034
449
150
4,700
(3,058)
$
1,642 $
420
1,680
1,056
969
455
101
4,681
(2,963)
1,718
Goodwill allocated to each reportable segment (each a reporting unit) at December 31 is presented as follows:
Corporate Bank
Consumer Bank
Wealth Management
2023
2022
(In millions)
3,006 $
2,334
393
5,733 $
3,006
2,334
393
5,733
$
$
Regions assessed the indicators of goodwill impairment for all three reporting units as part of its annual impairment test,
as of October 1, 2023 by performing a quantitative assessment of goodwill at the reporting unit level. See Note 1 for additional
information on the quantitative assessment. The results of the annual test indicated that the estimated fair value of each
reporting unit exceeded its carrying amount as of the test date; therefore, the goodwill of each reporting unit is considered not
impaired as of the testing date.
The Company continued to assess indicators of goodwill impairment through the date of the filing of this Annual Report,
by performing a qualitative assessment of goodwill at the reporting unit level. In performing the qualitative assessment, the
Company evaluated events and circumstances since the annual impairment analysis, recent operating performance including
reporting unit performance, changes in market capitalization, regulatory actions and assessments, changes in the business
climate, company-specific factors and trends in the banking industry. The results of the qualitative assessment indicated that it
was more likely than not that the estimated fair value of each reporting unit exceeded its carrying amount through the date of
the filing of this Annual Report; therefore, quantitative goodwill impairment tests were deemed unnecessary.
133
Table of Contents
OTHER IDENTIFIABLE INTANGIBLE ASSETS
The following table presents other identifiable intangible assets and related accumulated amortization as of December 31:
2023
2022
2023
2022
2023
2022
Gross Carrying Amount
Accumulated Amortization
Net Carrying Amount
(In millions)
Core deposit intangibles
$
1,011 $
1,011 $
1,010
$
1,006
$
1 $
Purchased credit card relationship assets
Relationship assets (1)
Other—amortizing (2)
Agency commercial real estate licenses (3)
Other—non-amortizing (4)
175
267
26
16
3
175
267
26
16
3
$
1,498 $
1,498 $
169
90
24
—
—
1,293
$
164
58
21
—
—
1,249
6
177
2
16
3
$
205 $
5
11
209
5
16
3
249
_________
(1)
(2)
(3)
Includes intangible assets related to broker and contractor origination networks, vendor networks, and customer relationships.
Includes intangible assets primarily related to acquired trust services, trade names, intellectual property, and employee agreements.
Includes a DUS license acquired in 2014 and commercial real estate licenses acquired in 2021 that are non-amortizing intangible assets. In 2022, an
immaterial purchase accounting adjustment resulted in an update to commercial real estate licenses. Refer to Note 6 for additional information related to
the DUS license.
Includes non-amortizing intangible assets related to other acquired trust services.
(4)
Core deposit intangibles, purchased credit card relationships and relationship assets are amortized in other non-interest
expense on an accelerated basis over their expected useful lives. Other amortizing intangibles are amortized in other non-
interest expense on a straight line basis over their expected useful lives.
The aggregate amount of amortization expense for amortizing intangible assets is estimated as follows:
2024
2025
2026
2027
2028
Year Ended December 31
(In millions)
$
36
30
25
21
18
Identifiable intangible assets other than goodwill are reviewed at least annually, usually in the fourth quarter, for events or
circumstances that could impact the recoverability of the intangible asset. Regions concluded that no impairment for any
identifiable intangible assets occurred during 2023, 2022 or 2021.
134
Table of Contents
NOTE 10. DEPOSITS
The following schedule presents a detail of interest-bearing deposits at December 31:
Interest-bearing checking
Savings
Money market—domestic
Time deposits
Total interest-bearing deposits
2023
2022
(In millions)
$
24,480
$
12,604
33,364
14,972
$
85,420
$
25,676
15,662
33,285
5,772
80,395
At December 31, 2023, the aggregate amounts of maturities of all time deposits (deposits with stated maturities,
consisting primarily of certificates of deposit and IRAs) were as follows:
2024
2025
2026
2027
2028
Thereafter
NOTE 11. BORROWED FUNDS
LONG-TERM BORROWINGS
Long-term borrowings at December 31 consist of the following:
Regions Financial Corporation (Parent):
2.25% senior notes due May 2025
1.80% senior notes due August 2028
7.75% subordinated notes due September 2024
6.75% subordinated debentures due November 2025
7.375% subordinated notes due December 2037
Valuation adjustments on hedged long-term debt
Regions Bank:
6.45% subordinated notes due June 2037
Other long-term debt
December 31, 2023
(In millions)
$
12,900
1,551
269
194
40
18
$
14,972
2023
2022
(In millions)
$
747 $
646
100
153
298
(112)
1,832
496
2
498
$
2,330 $
747
646
100
153
298
(158)
1,786
496
2
498
2,284
As disclosed above, Regions and Regions Bank had subordinated notes outstanding at December 31, 2023, which are by
definition, subordinated and subject in right of payment of both principal and interest to the prior payment in full of all senior
indebtedness of the Company, which is generally defined as all indebtedness and other obligations of the Company to its
creditors, except subordinated indebtedness. Payment of the principal of the notes may be accelerated only in the case of certain
events involving bankruptcy, insolvency proceedings or reorganization of the Company. The subordinated notes described
above qualify as Tier 2 capital under Federal Reserve guidelines, subject to diminishing credit as the respective maturity dates
135
Table of Contents
approach and subject to certain transition provisions. None of the subordinated notes are redeemable prior to maturity, unless
there is an occurrence of a qualifying capital event.
Regions Bank utilized long-term FHLB advances during 2023, but redeemed the advances prior to December 31, 2023
and recorded a $4 million pre-tax gain on the extinguishment. In 2022, neither Regions nor Regions Bank issued or redeemed
any debt.
Regions uses derivative instruments, primarily interest rate swaps, to manage interest rate risk by converting a portion of
its fixed-rate debt to a variable-rate. The effective rate adjustments related to these hedges are included in interest expense on
long-term borrowings. The weighted-average interest rate on total long-term debt, including the effect of derivative instruments,
was 6.5 percent, 5.1 percent, and 3.6 percent for the years ended December 31, 2023, 2022 and 2021, respectively. Further
discussion of derivative instruments is included in Note 20.
The aggregate amount of contractual maturities of all long-term debt in each of the next five years and thereafter is as
follows:
2024
2025
2026
2027
2028
Thereafter
Year Ended December 31
Regions
Financial
Corporation
(Parent)
Regions
Bank
$
$
(In millions)
100 $
859
—
—
575
298
1,832 $
—
—
—
—
—
498
498
On February 24, 2022, Regions filed a shelf registration statement with the SEC. This shelf registration does not have a
capacity limit and can be utilized by Regions to issue various debt and/or equity securities. The registration statement will
expire in February 2025.
Regions Bank may issue bank notes from time to time, either as part of a bank note program or as stand-alone issuances.
Notes issued by Regions Bank may be senior or subordinated notes. Notes issued by Regions Bank are not deposits and are not
insured or guaranteed by the FDIC.
Regions may, from time to time, consider opportunistically retiring outstanding issued securities, including subordinated
debt in privately negotiated or open market transactions. Regulatory approval would be required for retirement of some
securities.
136
Table of Contents
NOTE 12. REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS
Regions and Regions Bank are required to comply with regulatory capital requirements established by Federal and State
banking agencies. These regulatory capital requirements involve quantitative measures of the Company’s assets, liabilities and
selected off-balance sheet items, and also qualitative judgments by the regulators. Failure to meet minimum capital
requirements can subject the Company to a series of increasingly restrictive regulatory actions. Under the Basel III Rules,
Regions is designated as a standardized approach bank. Regions is a "Category IV" institution under the Federal Reserve's rules
for tailoring enhanced prudential standards.
Banking regulations identify five capital categories: well-capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized and critically undercapitalized. At December 31, 2023 and 2022, Regions and Regions Bank
exceeded all current regulatory requirements, and were classified as "well-capitalized." Management believes that no events or
changes have occurred subsequent to December 31, 2023 that would change this designation.
Quantitative measures established by regulation to ensure capital adequacy require institutions to maintain minimum
ratios of common equity Tier 1, Tier 1, and Total capital (as defined in the regulations) to risk-weighted assets (as defined), and
of Tier 1 capital to average tangible assets (the "Leverage" ratio).
Federal banking agencies allowed a phase-in of the impact of CECL on regulatory capital. At December 31, 2021, the
add-back to regulatory capital was calculated as the impact of initial adoption, adjusted for 25 percent of subsequent changes in
the allowance. The amount is phased-in over a three-year period beginning in 2022. At December 31, 2023, the net impact of
the add-back on CET1 was approximately $204 million or approximately 16 basis points. The add-back amounts will decrease
by approximately $100 million each year, or approximately 8 basis points, in the first quarters of 2024 and 2025.
Regions participates in supervisory stress testing conducted by the Federal Reserve and its SCB is currently floored at 2.5
percent. See Note 14 to the consolidated financial statements for further details regarding CCAR results.
The following tables summarize the applicable holding company and bank regulatory capital requirements:
Common equity Tier 1 capital:
Regions Financial Corporation
Regions Bank
Tier 1 capital:
Regions Financial Corporation
Regions Bank
Total capital:
Regions Financial Corporation
Regions Bank
Leverage capital:
Regions Financial Corporation
Regions Bank
Common equity Tier 1 capital:
Regions Financial Corporation
Regions Bank
Tier 1 capital:
Regions Financial Corporation
Regions Bank
Total capital:
Regions Financial Corporation
Regions Bank
Leverage capital:
Regions Financial Corporation
Regions Bank
December 31, 2023(1)
Amount
Ratio
Minimum
Requirement
(Dollars in millions)
Minimum
Requirement
plus SCB (2)
To Be Well
Capitalized
12,976
14,136
14,635
14,136
16,885
16,057
14,635
14,136
10.26 %
11.22
11.57 %
11.22
13.35 %
12.74
9.72 %
9.44
4.50 %
4.50
6.00 %
6.00
8.00 %
8.00
4.00 %
4.00
7.00 %
7.00
8.50 %
8.50
10.50 %
10.50
4.00 %
4.00
N/A
6.50 %
6.00 %
8.00
10.00 %
10.00
N/A
5.00 %
December 31, 2022
Amount
Ratio
Minimum
Requirement
Minimum
Requirement
plus SCB (2)
To Be Well
Capitalized
(Dollars in millions)
12,066
13,509
13,725
13,509
15,767
15,172
13,725
13,509
9.60 %
10.77
10.91 %
10.77
12.54 %
12.10
8.90 %
8.80
4.50 %
4.50
6.00 %
6.00
8.00 %
8.00
4.00 %
4.00
7.00 %
7.00
8.50 %
8.50
10.50 %
10.50
4.00 %
4.00
N/A
6.50 %
6.00 %
8.00
10.00 %
10.00
N/A
5.00 %
$
$
$
$
$
$
$
$
_________
(1) The 2023 Basel III CET1 capital, Tier 1 capital, Total capital, and Leverage capital ratios are estimated
(2) Reflects Regions' SCB of 2.50%. SCB does not apply to leverage capital ratios.
137
Table of Contents
Substantially all net assets are owned by subsidiaries. The primary source of operating cash available to Regions is
provided by dividends from subsidiaries. Statutory limits are placed on the amount of dividends the subsidiary bank can pay
without prior regulatory approval. In addition, regulatory authorities require the maintenance of minimum capital-to-asset ratios
at banking subsidiaries. Under the Federal Reserve’s Regulation H, Regions Bank may not, without approval of the Federal
Reserve, declare or pay a dividend to Regions if the total of all dividends declared in a calendar year exceeds the total of
(a) Regions Bank’s net income for that year and (b) its retained net income for the preceding two calendar years, less any
required transfers to additional paid-in capital or to a fund for the retirement of preferred stock. Under Alabama law, Regions
Bank may not pay a dividend to Regions in excess of 90 percent of its net earnings until the bank’s surplus is equal to at least
20 percent of capital. Regions Bank is also required by Alabama law to seek the approval of the Alabama Superintendent of
Banking prior to paying a dividend to Regions if the total of all dividends declared by Regions Bank in any calendar year will
exceed the total of (a) Regions Bank’s net earnings for that year, plus (b) its retained net earnings for the preceding two years,
less any required transfers to surplus. The statute defines net earnings as “the remainder of all earnings from current operations
plus actual recoveries on loans and investments and other assets, after deducting from the total thereof all current operating
expenses, actual losses, accrued dividends on preferred stock, if any, and all federal, state and local taxes.” In addition to
dividend restrictions, Federal statutes also prohibit unsecured loans from banking subsidiaries to the parent company.
In addition, Regions must adhere to various HUD regulatory guidelines including required minimum capital to maintain
their HUD approved status. Failure to comply with the HUD guidelines could result in withdrawal of this certification. As of
December 31, 2023, Regions was in compliance with HUD guidelines. Regions is also subject to various capital requirements
by secondary market investors.
NOTE 13. LEASES
LESSEE
As of December 31, 2023, assets and liabilities recorded under operating leases for properties were $462 million and $535
million, respectively, and $474 million and $553 million, respectively, as of December 31, 2022. The difference between the
asset and liability balance is largely driven by increases in rent over the lease term and any strategic decisions to exit a lease
location early, resulting in derecognition of the asset. The asset is recorded within other assets, and the lease liability is recorded
within other liabilities on the consolidated balance sheets. Lease expense, which is operating lease costs recorded within net
occupancy expense, was $85 million, $86 million, and $87 million for the years ended December 31, 2023, 2022, and 2021
respectively.
Other information related to operating leases at December 31 is as follows:
Weighted-average remaining lease term (years)
Weighted-average discount rate (%)
Future, undiscounted minimum lease payments on operating leases are as follows:
2024
2025
2026
2027
2028
Thereafter
Total lease payments
Less: Imputed interest
Total present value of lease liabilities
2023
2022
9.6 years
10.0 years
2.9 %
2.6 %
December 31, 2023
(In millions)
$
$
92
88
75
63
51
262
631
96
535
138
Table of Contents
LESSOR
The following tables present a summary of Regions' sales-type, direct financing and leveraged leases for the years ended
December 31.
Sales-Type and Direct Financing
Leveraged(1)
Net Interest Income
2023
2022
2021
(In millions)
$
$
65 $
2
67 $
52 $
12
64 $
59
14
73
_________
(1) Leveraged lease income is shown pre-tax and related tax expense is immaterial for all periods presented. Leveraged lease termination gains excluded from
amounts presented above were immaterial for all periods presented.
Lease receivable
Unearned income
Guaranteed residual
Unguaranteed residual
Total net investment
Lease receivable
Unearned income
Guaranteed residual
Unguaranteed residual
Total net investment
As of December 31, 2023
Sales-Type and
Direct Financing
$
$
1,397 $
(211)
96
188
1,470 $
Leveraged
(In millions)
Total
123 $
(47)
—
118
194 $
As of December 31, 2022
Sales-Type and
Direct Financing
Leveraged
(In millions)
Total
$
$
1,236 $
140 $
(189)
71
173
(62)
—
134
1,291 $
212 $
1,520
(258)
96
306
1,664
1,376
(251)
71
307
1,503
The following table presents the minimum future payments due from customers for sales-type and direct financing leases:
2024
2025
2026
2027
2028
Thereafter
December 31, 2023
Sales-Type and
Direct Financing
(In millions)
$
332
268
228
159
103
307
$
1,397
139
Table of Contents
NOTE 14. SHAREHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
PREFERRED STOCK
The following table presents a summary of the non-cumulative perpetual preferred stock:
Issuance
Date
Earliest
Redemption
Date
Dividend
Rate (1)
Liquidation
Amount
Liquidation
preference
per Share
2023
2022
Liquidation
preference
per
Depositary
Share
Ownership
Interest
per
Depositary
Share
Shares
Issued and
Outstanding
Carrying
Amount
Carrying
Amount
(Dollars in millions, except for share and per share amounts)
Series B 4/29/2014
9/15/2024
Series C 4/30/2019
5/15/2029
Series D 6/5/2020
9/15/2025
Series E
5/4/2021
6/15/2026
6.375 % (2)
5.700 % (3)
5.750 % (4)
4.450 %
$
500 $
1,000 $
500
350
400
1,000
100,000
1,000
25
25
1,000
25
1/40th
1/40th
1/100th
1/40th
500,000
$
433 $
500,000
3,500
400,000
490
346
390
433
490
346
390
$
1,750
1,403,500 $
1,659 $
1,659
_________
(1) Dividends on all series of preferred stock, if declared, accrue and are payable quarterly in arrears.
(2) Dividends, if declared, will be paid quarterly at an annual rate equal to (i) for each period beginning prior to September 15, 2024, 6.375%, and (ii) for
each period beginning on or after September 15, 2024, three-month CME Term SOFR plus 3.536%.
(3) Dividends, if declared, will be paid quarterly at an annual rate equal to (i) for each period beginning prior to August 15, 2029, 5.700%, and (ii) for each
period beginning on or after August 15, 2029, three-month CME Term SOFR plus 3.148%.
(4) Dividends, if declared, will be paid quarterly at an annual rate equal to (i) for each period beginning prior to September 15, 2025, 5.750%, and (ii) for
each period beginning on or after September 15, 2025, the five-year treasury rate as of the most recent reset dividend determination date plus 5.426%.
All series of preferred stock have no stated maturity and redemption is solely at Regions' option, subject to regulatory
approval, in whole, or in part, after the earliest redemption date or in whole, but not in part, at any time following a regulatory
capital treatment event for the Series B, Series C, Series D, and Series E preferred stock.
The Board of Directors declared a total of $98 million and $99 million in cash dividends on all series of preferred stock
during years 2023 and 2022, respectively.
In the event Series B, Series C, Series D or Series E preferred shares are redeemed at the liquidation amounts, $67 million,
$10 million, $4 million, or $10 million in excess of the redemption amount over the carrying amount will be recognized,
respectively. Approximately $52 million of Series B preferred dividends that were recorded as a reduction of preferred stock,
including related surplus, will be recorded as a reduction to common shareholders' equity. The remaining amounts listed
represent issuance costs that were recorded as reductions to preferred stock, including related surplus, and will be recorded as
reductions to net income available to common shareholders.
COMMON STOCK
As a Category IV bank, Regions was not required to participate in this year's supervisory capital stress test; however, the
Company did receive its SCB reflecting planned capital changes including plans to increase its common stock dividend. From
the fourth quarter of 2023 through the third quarter of 2024, the Company's SCB will remain at 2.5 percent.
On April 20, 2022, the Board authorized the repurchase of up to $2.5 billion of the Company's common stock, permitting
purchases from the second quarter of 2022 through the fourth quarter of 2024. As of December 31, 2023, Regions had
repurchased approximately 17 million shares of common stock at a total cost of $267 million under this plan. All of these shares
were immediately retired upon repurchase and therefore were not included in treasury stock.
Regions declared $0.88 per share in cash dividends for 2023, $0.74 for 2022, and $0.65 for 2021.
140
Table of Contents
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables present the balances and activity in AOCI on a pre-tax and net of tax basis for the years ended
December 31 :
Total accumulated other comprehensive income (loss), beginning of period
Unrealized losses on securities transferred to held to maturity:
Beginning balance
Reclassification adjustments for amortization on unrealized losses (2)
Ending balance
Unrealized gains (losses) on securities available for sale:
Beginning balance
Unrealized gains (losses) arising during the period
Reclassification adjustments for securities (gains) losses realized in net income (3)
Change in AOCI from securities available for sale activity in the period
Ending balance
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance
Unrealized gains (losses) on derivatives arising during the period
Reclassification adjustments for (gains) losses realized in net income (2)
Change in AOCI from derivative activity in the period
Ending balance
Defined benefit pension plans and other post employment benefit plans:
Beginning balance
Net actuarial gains (losses) arising during the period
Reclassification adjustments for amortization of actuarial (gains) losses and
settlements realized in net income (4)
Change in AOCI from defined benefit pension plans and other post employment
benefits activity in the period
Ending balance
Total other comprehensive income (loss)
Total accumulated other comprehensive income (loss), end of period
$
$
$
$
$
$
$
$
$
$
Pre-tax AOCI
Activity
2023
Tax Effect (1)
(In millions)
Net AOCI Activity
(4,481) $
1,138 $
(3,343)
(11) $
2
(9) $
(3,433) $
669
5
674
(2,759) $
2 $
(1)
1 $
872 $
(168)
(1)
(169)
703 $
(468) $
119 $
(167)
236
69
43
(60)
(17)
(399) $
102 $
(569) $
145 $
(82)
45
(37)
21
(11)
10
(606) $
155 $
(9)
1
(8)
(2,561)
501
4
505
(2,056)
(349)
(124)
176
52
(297)
(424)
(61)
34
(27)
(451)
708
(3,773) $
(177)
961 $
531
(2,812)
141
Table of Contents
Total accumulated other comprehensive income (loss), beginning of period
Unrealized losses on securities transferred to held to maturity:
Beginning balance
Reclassification adjustments for amortization on unrealized (gains) losses (2)
Ending balance
Unrealized gains (losses) on securities available for sale:
Beginning balance
Unrealized gains (losses) arising during the period
Reclassification adjustments for securities losses realized in net income (3)
Change in AOCI from securities available for sale activity in the period
Ending balance
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance
Unrealized gains (losses) on derivatives arising during the period
Reclassification adjustments for (gains) losses realized in net income (2)
Change in AOCI from derivative activity in the period
Ending balance
Defined benefit pension plans and other post employment benefit plans:
Beginning balance
Net actuarial gains (losses) arising during the period
Reclassification adjustments for amortization of actuarial (gains) losses and
settlements realized in net income (4)
Change in AOCI from defined benefit pension plans and other post employment
benefits activity in the period
Ending balance
Total other comprehensive income (loss)
Total accumulated other comprehensive income (loss), end of period
$
$
$
$
$
$
$
$
$
$
Pre-tax AOCI
Activity
2022
Tax Effect (1)
(In millions)
Net AOCI Activity
387 $
(98) $
289
(14) $
3
(11) $
218 $
(3,652)
1
(3,651)
(3,433) $
830 $
(1,158)
(140)
(1,298)
(468) $
3 $
(1)
2 $
(55) $
927
—
927
872 $
(209) $
292
36
328
119 $
(647) $
163 $
40
38
78
(7)
(11)
(18)
(11)
2
(9)
163
(2,725)
1
(2,724)
(2,561)
621
(866)
(104)
(970)
(349)
(484)
33
27
60
(569) $
145 $
(424)
(4,868)
(4,481) $
1,236
1,138 $
(3,632)
(3,343)
142
Table of Contents
Total accumulated other comprehensive income (loss), beginning of period
Unrealized losses on securities transferred to held to maturity:
Beginning balance
Reclassification adjustments for amortization on unrealized (gains) losses (2)
Ending balance
Unrealized gains (losses) on securities available for sale:
Beginning balance
Unrealized gains (losses) arising during the period
Reclassification adjustments for securities (gains) losses realized in net income (3)
Change in AOCI from securities available for sale activity in the period
Ending balance
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance
Unrealized gains (losses) on derivatives arising during the period
Reclassification adjustments for (gains) losses realized in net income (2)
Change in AOCI from derivative activity in the period
Ending balance
Defined benefit pension plans and other post employment benefit plans:
Beginning balance
Net actuarial gains (losses) arising during the period
Reclassification adjustments for amortization of actuarial (gains) losses and
settlements realized in net income (4)
Change in AOCI from defined benefit pension plans and other post employment
benefits activity in the period
Ending balance
Total other comprehensive income (loss)
Total accumulated other comprehensive income (loss), end of period
$
$
$
$
$
$
$
$
$
$
Pre-tax AOCI
Activity
2021
Tax Effect (1)
(In millions)
Net AOCI Activity
1,759 $
(444) $
1,315
(21) $
7
(14) $
5 $
(2)
3 $
1,062 $
(268) $
(841)
(3)
(844)
212
1
213
218 $
(55) $
1,610 $
(406) $
(354)
(426)
(780)
89
108
197
830 $
(209) $
(892) $
225 $
180
65
245
(46)
(16)
(62)
(647) $
163 $
(16)
5
(11)
794
(629)
(2)
(631)
163
1,204
(265)
(318)
(583)
621
(667)
134
49
183
(484)
(1,372)
387 $
346
(98) $
(1,026)
289
____
(1) The impact of all AOCI activity is shown net of the related tax impact, calculated using an effective tax rate of approximately 25 percent.
(2) Reclassification amount is recognized in net interest income in the consolidated statements of income.
(3) Reclassification amount is recognized in securities gains (losses), net in the consolidated statements of income.
(4) Reclassification amount is recognized in other non-interest expense in the consolidated statements of income. Additionally, these accumulated other
comprehensive income (loss) components are included in the computation of net periodic pension cost (see Note 17 for additional details).
NOTE 15. EARNINGS PER COMMON SHARE
The following table sets forth the computation of basic earnings per common share and diluted earnings per common
share for the years ended December 31:
Numerator:
Net income
Preferred stock dividends and other (1)
Net income available to common shareholders
Denominator:
Weighted-average common shares outstanding—basic
Potential common shares
Weighted-average common shares outstanding—diluted
Earnings per common share:
Basic
Diluted
2023
2022
2021
(In millions, except per share data)
m
e
2,074 $
2,245 $
(98)
(99)
1,976 $
2,146 $
2,521
(121)
2,400
936 $
935 $
2
938 $
2.11 $
2.11 $
7
942
2.29 $
2.28 $
956
7
963
2.51
2.49
$
$
$
$
$
$
________
(1) Preferred stock dividends and other for the year ended December 31, 2021 includes $13 million of issuance costs associated with the redemption of Series
A preferred shares in 2021.
143
Table of Contents
The effects from the assumed exercise of restricted stock units and awards and performance stock units totaling 6 million
for year ended December 31, 2023 and 4 million for both years ended December 31, 2022 and December 31, 2021 were not
included in the above computations of diluted earnings per common share because such amounts would have had an antidilutive
effect on earnings per common share.
NOTE 16. SHARE-BASED PAYMENTS
Regions administers long-term incentive compensation plans that permit the granting of incentive awards in the form of
restricted stock awards, performance awards, stock options and stock appreciation rights. While Regions has the ability to issue
stock appreciation rights, none has been issued to date. The terms of all awards issued under these plans are determined by the
CHR Committee of the Board; however, no awards may be granted after the tenth anniversary from the date the plans were
initially approved by shareholders. Incentive awards usually vest based on employee service, generally within three years from
the date of the grant. The contractual lives of options, issued in periods prior to 2021, granted under these plans were typically
ten years from the date of the grant.
On April 23, 2015, the shareholders of the Company approved the Regions Financial Corporation 2015 LTIP, which
permits the Company to grant to employees and directors various forms of incentive compensation. These forms of incentive
compensation are similar to the types of compensation approved in prior plans. The 2015 LTIP authorizes 60 million common
share equivalents available for grant, where grants of options and grants of full value awards (e.g., shares of restricted stock,
restricted stock units and performance stock units) count as one share equivalent. Unless otherwise determined by the CHR
Committee of the Board, grants of restricted stock, restricted stock units, and performance stock units accrue dividends, or their
notional equivalent, as they are declared by the Board, and are paid upon vesting of the award. Upon adoption of the 2015
LTIP, Regions closed the prior long-term incentive plan to new grants, and, accordingly, prospective grants must be made
under the 2015 LTIP or a successor plan. All existing grants under prior long-term incentive plans are unaffected by adoption of
the 2015 LTIP. The number of remaining share equivalents available for future issuance under the 2015 LTIP was
approximately 24 million at December 31, 2023.
Grants of performance-based restricted stock typically have a three-year performance period, and shares vest within three
years after the grant date. Restricted stock units typically vest over three years. Grantees of restricted stock awards or units must
either remain employed with the Company for certain periods from the date of grant in order for shares to be released or issued
or retire after meeting the standards of a retiree, at which time shares would be issued and released. The terms of these plans
generally stipulate that the exercise price of options may not be less than the fair market value of Regions' common stock at the
date the options are granted. Regions issues new shares from authorized reserves upon exercise.
The following table summarizes the elements of compensation cost recognized in the consolidated statements of income
for the years ended December 31:
Compensation cost of share-based compensation awards:
Restricted and performance stock awards
Tax benefits related to share-based compensation cost
Compensation cost of share-based compensation awards, net of tax
2023
2022
2021
(In millions)
$
$
61 $
(16)
45 $
60 $
(15)
45 $
57
(14)
43
RESTRICTED STOCK AWARDS AND PERFORMANCE STOCK AWARDS
During 2023, 2022 and 2021, Regions made restricted stock grants that vest upon satisfaction of service conditions and
restricted stock award and performance stock award grants that vest based upon service conditions and performance conditions.
Incremental shares earned above the performance target associated with previous performance stock awards are included when
and if performance targets are achieved. Dividend payments during the vesting period are deferred to the end of the vesting
term. The fair value of these restricted shares, restricted stock units and performance stock units was estimated based upon the
fair value of the underlying shares on the date of the grant. The valuation was not adjusted for the deferral of dividends.
144
Table of Contents
Activity related to restricted stock awards and performance stock awards for 2023, 2022 and 2021 is summarized as
follows:
Non-vested at December 31, 2020
Granted
Vested
Forfeited
Non-vested at December 31, 2021
Granted
Vested
Forfeited
Non-vested at December 31, 2022
Granted
Vested
Forfeited
Non-vested at December 31, 2023
Number of
Shares/Units
Weighted-Average
Grant Date
Fair Value
11,682,160 $
2,984,065
(3,227,513)
(231,818)
11,206,894 $
2,831,304
(3,543,152)
(331,283)
10,163,763 $
3,943,474
(5,844,477)
(262,719)
8,000,041 $
12.14
21.18
15.91
13.24
13.39
21.39
14.24
14.73
15.23
17.54
10.25
18.08
19.90
As of December 31, 2023, the pre-tax amount of non-vested restricted stock, restricted stock units and performance stock
units not yet recognized was $60 million, which will be recognized over a weighted-average period of 1.68 years. The total fair
value of shares vested during the years ended December 31, 2023, 2022, and 2021, was $109 million, $76 million, and $75
million, respectively. No share-based compensation costs were capitalized during the years ended December 31, 2023, 2022, or
2021.
NOTE 17. EMPLOYEE BENEFIT PLANS
PENSION AND OTHER POSTRETIREMENT BENEFITS
Regions' defined benefit pension plans cover only certain employees as the pension plans are closed to new entrants.
Benefits under the pension plans are based on years of service and the employee’s highest five consecutive years of
compensation during the last ten years of employment. Regions’ funding policy is to contribute annually at least the amount
required by IRS minimum funding standards. Contributions are intended to provide not only for benefits attributed to service to
date, but also for those expected to be earned in the future.
The Company also sponsors a SERP, which is a non-qualified pension plan that provides certain senior executive officers
defined benefits in relation to their compensation. Actuarially determined pension expense is charged to current operations
using the projected unit credit method. All defined benefit plans are referred to as “the plans” throughout the remainder of this
footnote.
The following table sets forth the plans’ change in benefit obligation, plan assets and funded status, using a December 31
measurement date, and amounts recognized in the consolidated balance sheets at December 31:
145
Table of Contents
Change in benefit obligation
Projected benefit obligation, beginning of year
$
1,623 $
2,281 $
127 $
156 $
1,750 $
2,437
Qualified Plans
Non-qualified Plans
Total
2023
2022
2023
2022
2023
2022
(In millions)
Service cost
Interest cost
Actuarial (gains) losses
Benefit payments
Administrative expenses
Plan settlements
Projected benefit obligation, end of year
Change in plan assets
Fair value of plan assets, beginning of year
Actual return on plan assets
Company contributions
Benefit payments
Administrative expenses
Plan settlements
Fair value of plan assets, end of year
Funded status and accrued benefit (cost) at measurement date
Amount recognized in the Consolidated Balance Sheets:
Other assets
Other liabilities
Pre-tax amounts recognized in Accumulated Other
Comprehensive (Income) Loss:
Net actuarial loss
21
86
49
(132)
(3)
—
34
56
(568)
(108)
(3)
(69)
1
6
14
(8)
—
(58)
2
3
(17)
(8)
—
(9)
22
92
63
(140)
(3)
(58)
36
59
(585)
(116)
(3)
(78)
1,644 $
1,623 $
82 $
127 $
1,726 $
1,750
1,970 $
2,554 $
— $
— $
1,970 $
2,554
101
—
(132)
(3)
(404)
—
(108)
(3)
—
66
(8)
—
—
17
(8)
—
101
66
(140)
(3)
—
1,936 $
(69)
1,970 $
292 $
347 $
(58)
— $
(82) $
(9)
— $
(58)
1,936 $
(127) $
210 $
292 $
347 $
— $
— $
292 $
—
—
(82)
(127)
(82)
292 $
347 $
(82) $
(127) $
210 $
(404)
17
(116)
(3)
(78)
1,970
220
347
(127)
220
580 $
537 $
29 $
36 $
609 $
573
$
$
$
$
$
$
$
The accumulated benefit obligation for the qualified plans was $1.6 billion and $1.5 billion as of December 31, 2023 and
2022, respectively. Total plan assets exceeded the corresponding accumulated benefit obligation for the qualified plans as of
December 31, 2023 and 2022. The accumulated benefit obligation for the non-qualified plans was $82 million and $127 million
as of December 31, 2023 and 2022, respectively, which exceeded all corresponding plan assets for each period. As of
December 31, 2023 and 2022, the actuarial (gains) losses related to the change in the benefit obligation were primarily driven
by changes in the discount rate.
Net periodic pension cost (benefit) included the following components for the years ended December 31:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Settlement charge
Qualified Plans
Non-qualified Plans
2021
2023
Total
2022
2021
2023
2022
2021
$
21 $
86
34 $
56
38 $
49
2023
2022
(In millions)
1 $
6
(120)
(139)
(142)
24
—
25
4
46
—
—
4
17
—
7
2
—
8
11
2 $
3
3 $
2
22 $
92
36 $
59
41
51
(120)
(139)
(142)
28
17
32
6
54
11
15
Net periodic pension (benefit) cost
$
11 $
(20) $
(9) $
28 $
14 $
24 $
39 $
(6) $
The service cost component of net periodic pension (benefit) cost is recorded in salaries and employee benefits on the
consolidated statements of income. Components other than service cost are recorded in other non-interest expense on the
consolidated statements of income.
The assumptions used to determine benefit obligations at December 31 are as follows:
Discount rate
Rate of annual compensation increase
Qualified Plans
Non-qualified Plans
2023
2022
2023
2022
5.15 %
4.00 %
5.42 %
4.00 %
5.08 %
3.00 %
5.38 %
3.00 %
146
Table of Contents
The weighted-average assumptions used to determine net periodic pension (benefit) cost for the years ended December 31
are as follows:
Discount rate
Expected long-term rate of return on plan assets
Rate of annual compensation increase
Qualified Plans
Non-qualified Plans
2023
2022
2021
2023
2022
2021
5.42 %
6.37 %
4.00 %
2.85 %
5.62 %
4.00 %
2.48 %
5.87 %
4.00 %
5.42 %
N/A
3.00 %
2.72 %
N/A
3.00 %
2.20 %
N/A
3.00 %
Regions utilizes a disaggregated approach in the estimation of the service and interest components of net periodic pension
costs by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant
projected cash flows. This provides a more precise measurement of service and interest costs by improving the correlation
between projected benefit cash flows and the corresponding spot yield curve rates.
The expected long-term rate of return on the qualified plans' assets is based on an estimated reasonable range of probable
returns. The assumption is established by considering historical and anticipated returns of the asset classes invested in by the
qualified plans and the allocation strategy currently in place among those classes. Management chose a point within the range
based on the probability of achievement combined with incremental returns attributable to active management. For 2024, the
weighted-average expected long-term rate of return on plan assets is 6.37 percent, using the weighted fair value of plan assets as
of December 31, 2023.
The qualified plans' investment strategy is continuing to shift from focusing on maximizing asset returns to minimizing
funding ratio volatility, with a planned increase in the allocation to fixed income securities. The combined target asset
allocation is 33 percent equities, 62 percent fixed income securities and 5 percent in all other types of investments. Equity
securities include investments in large and small/mid cap companies primarily located in the U.S., international equities, and
private equities. Fixed income securities include investments in corporate and government bonds, asset-backed securities and
any other fixed income investments as allowed by respective prospectuses and other offering documents. Other types of
investments may include hedge funds and real estate funds that follow several different strategies. The plans' assets are highly
diversified with respect to asset class, security and manager. Investment risk is controlled with the plans' assets rebalancing to
target allocations on a periodic basis and continual monitoring of investment managers’ performance relative to the investment
guidelines established with each investment manager.
Regions’ qualified plans have a portion of their investments in Regions' common stock. At December 31, 2023, the plans
held 2,855,618 shares, which represents a total market value of approximately $55 million, or approximately 3 percent of the
plans' assets.
147
Table of Contents
The following table presents the fair value of Regions’ qualified pension plans’ financial assets as of December 31:
2023
2022
Level 1
Level 2
Level 3
Fair Value
Level 1
Level 2
Level 3
Fair Value
$
$
$
$
$
$
$
Cash and cash equivalents
Fixed income securities:
U.S. Treasury securities
Federal agency securities
Corporate bonds and other debt
Total fixed income securities
Equity securities:
Domestic
International
Total equity securities
International mutual funds
Total assets in the fair value hierarchy
Collective trust funds:
Fixed income fund (1)
Common stock fund (1)
International fund (1)
Total collective trust funds
Real estate funds measured at NAV (1)
Private equity funds measured at NAV (1)
74 $
— $
— $
74 $
34 $
— $
— $
34
(In millions)
359 $
— $
— $
359 $
280 $
— $
— $
—
—
7
603
—
—
7
603
—
—
15
354
—
—
359 $
610 $
— $
969 $
280 $
369 $
— $
132 $
— $
— $
132 $
135 $
— $
— $
—
132 $
103 $
668 $
—
— $
— $
610 $
—
— $
— $
— $
—
132 $
103 $
1,278 $
130
265 $
125 $
704 $
—
— $
— $
369 $
—
— $
— $
— $
$
$
$
$
$
111
119
117
347
144
167
1,936
$
$
$
$
$
280
15
354
649
135
130
265
125
1,073
340
168
40
548
177
172
1,970
__________
(1)
In accordance with accounting guidance, investments that are measured at fair value using the net asset value per share (or its equivalent) practical
expedient are not required to be classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation
of amounts reported in the fair value hierarchy to amounts reported on the balance sheet.
For all investments, the plans attempt to use quoted market prices of identical assets on active exchanges, or Level 1
measurements. Where such quoted market prices are not available, the plans typically employ quoted market prices of similar
instruments (including matrix pricing) and/or discounted cash flows to estimate a value of these securities, or Level 2
measurements. Level 2 discounted cash flow analyses are typically based on market interest rates, prepayment speeds and/or
option adjusted spreads.
Investments held in the plans consist of cash and cash equivalents, fixed income securities, equity securities, collective
trust funds, hedge funds, real estate funds, private equity and other assets and are recorded at fair value on a recurring basis. See
Note 1 for a description of valuation methodologies related to U.S. Treasuries, federal agency securities, and equity securities.
The methodology described in Note 1 for other debt securities is applicable to corporate bonds and other debt.
Mutual funds are valued based on quoted market prices of identical assets on active exchanges; these valuations are Level
1 measurements. Collective trust funds, hedge funds, real estate funds, private equity funds and other assets are valued based on
net asset value or the valuation of the limited partner’s portion of the equity of the fund. Third party fund managers provide
these valuations based primarily on estimated valuations of underlying investments.
148
Table of Contents
Information about the expected cash flows for the qualified and non-qualified plans is as follows:
Expected Employer Contributions:
2024
Expected Benefit Payments:
2024
2025
2026
2027
2028
Next five years
OTHER PLANS
Qualified Plans
Non-qualified Plans
(In millions)
$
$
— $
122 $
124
125
127
126
602
9
9
9
10
9
9
35
Regions has a defined-contribution 401(k) plan that includes a Company match of eligible employee contributions.
Eligible employees include those who have been employed for one year and have worked a minimum of 1,000 hours. The
Company match is invested based on the employees' allocation elections. Regions provides an automatic 2 percent cash 401(k)
contribution to eligible employees regardless of whether or not they are contributing to the 401(k) plan. To receive this
contribution, employees must be employed at the end of the year and not actively accruing a benefit in the Regions’ pension
plans. Regions’ cash contribution was approximately $24 million for 2023 and $22 million for 2022 and 2021. For 2023, 2022
and 2021, eligible employees who were already contributing to the 401(k) plan received up to a 5 percent Company match plus
the automatic 2 percent cash contribution. Regions’ match to the 401(k) plan on behalf of employees totaled $72 million in
2023, $67 million in 2022, and $63 million in 2021. Regions’ 401(k) plan held 16 million shares of Regions' common stock at
both December 31, 2023 and 2022. The 401(k) plan received approximately $13 million, $12 million and $11 million in
dividends on Regions' common stock for the years ended December 31, 2023, 2022 and 2021, respectively.
Regions also sponsors defined benefit postretirement health care plans that cover certain retired employees. For these
certain employees retiring before normal retirement age, the Company currently pays a portion of the costs of certain health
care benefits until the retired employee becomes eligible for Medicare. Certain retirees, participating in plans of acquired
entities, are offered a Medicare supplemental benefit. The plan is contributory and contains other cost-sharing features such as
deductibles and co-payments. Retiree health care benefits, as well as similar benefits for active employees, are provided through
a self-insured program in which Company and retiree costs are based on the amount of benefits paid. 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.
Postretirement life insurance is also provided to a grandfathered group of employees and retirees.
NOTE 18. OTHER NON-INTEREST INCOME AND EXPENSE
The following is a detail of other non-interest income for the years ended December 31:
Investment services fee income
Commercial credit fee income
Bank-owned life insurance
Market value adjustments on employee benefit assets
Insurance proceeds (1)
Gain on equity investment (2)
Other miscellaneous income
2023
2022
2021
(In millions)
$
138 $
122 $
104
105
78
15
—
—
185
96
62
(45)
50
—
199
$
521 $
484 $
91
82
20
—
3
223
523
______
(1)
(2) This amount represents a gain on the sale of an equity investment that was sold in the first quarter of 2021.
In 2022, the Company settled a previously disclosed matter with the CFPB and received an insurance reimbursement related to the settlement.
149
Table of Contents
The following is a detail of other non-interest expense for the years ended December 31:
Outside services
Marketing
Professional, legal and regulatory expenses
Credit/checkcard expenses
FDIC insurance assessments
Operational losses
Branch consolidation, property and equipment charges
Visa class B shares expense
Early extinguishment of debt
Other miscellaneous expenses
NOTE 19. INCOME TAXES
2023
2022
2021
(In millions)
$
163 $
157 $
110
85
60
228
212
7
28
(4)
410
102
263
66
61
56
3
24
—
326
$
1,299 $
1,058 $
The components of income tax expense for the years ended December 31 were as follows:
Current income tax expense:
Federal
State
Total current expense
Deferred income tax expense (benefit):
Federal
State
Total deferred expense
Total income tax expense
2023
2022
(In millions)
2021
$
$
$
$
$
417 $
84
501 $
25 $
7
32 $
533 $
493 $
116
609 $
26 $
(4)
22 $
631 $
156
106
98
62
45
46
5
22
20
314
874
456
73
529
132
33
165
694
Income tax expense does not reflect the tax effects of unrealized losses on securities transferred to held to maturity,
unrealized gains and losses on securities available for sale, unrealized gains and losses on derivative instruments and the net
change from defined benefit pension plans and other postretirement benefits. Refer to Note 14 for additional information on
shareholders' equity and accumulated other comprehensive income (loss).
The Company accounts for investment tax credits using the deferral method. Investment tax credits generated totaled $94
million, $67 million and $64 million for 2023, 2022, and 2021, respectively.
Income taxes for financial reporting purposes differs from the amount computed by applying the statutory federal income
tax rate of 21 percent as shown in the following table:
Tax on income computed at statutory federal income tax rate
Increase (decrease) in taxes resulting from:
State income tax, net of federal tax effect
Non-deductible expenses
Tax-exempt interest
Affordable housing credits, net of amortization
Bank-owned life insurance
Other, net
Income tax expense(1)
Effective tax rate
2023
2022
2021
(Dollars in millions)
$
547
$
604
$
675
72
33
(38)
(42)
(19)
(20)
88
34
(33)
(32)
(16)
(14)
83
18
(30)
(25)
(20)
(7)
$
533
$
631
$
694
20.5 %
22.0 %
21.6 %
__________
(1) Income tax expense includes gross amortization of affordable housing investments of $166 million, $149 million, and $139 million for 2023, 2022 and
2021, respectively.
150
Table of Contents
Significant components of the Company’s net deferred tax asset at December 31 are listed below:
Deferred tax assets:
Unrealized losses included in shareholders' equity
$
961 $
1,138
2023
2022
(In millions)
Allowance for credit losses
Right of use liability
Accrued expenses
Other
Federal and state net operating losses, net of federal tax effect
Total deferred tax assets
Less: valuation allowance
Total deferred tax assets less valuation allowance
Deferred tax liabilities:
Lease financing
Right of use asset
Mortgage servicing rights
Goodwill and intangibles
Fixed assets
Employee benefits and deferred compensation
Other
Total deferred tax liabilities
Net deferred tax asset
430
129
87
20
31
1,658
(21)
1,637
439
121
95
112
30
37
62
896
$
741 $
401
136
61
47
40
1,823
(21)
1,802
403
128
122
103
52
29
22
859
943
The following table provides details of the Company’s net operating loss carryforwards at December 31, 2023, including
the expiration dates and related valuation allowance:
Net operating losses-federal
Net operating losses-states
Net operating losses-states
Net operating losses-states
Net operating losses-states
Expiration
Dates
Deferred Tax Asset
Balance
Valuation
Allowance
Net Deferred Tax
Asset Balance
None
2024-2028
2029-2035
2036-2043
None
(In millions)
9
13
3
3
3
—
13
2
2
2
$
31 $
19 $
9
—
1
1
1
12
The Company believes that a portion of the state net operating loss carryforwards will not be realized due to certain state
statutory limitations. Accordingly, a valuation allowance has been established in the amount of $19 million against such
benefits at December 31, 2023 compared to $21 million at December 31, 2022.
A reconciliation of the beginning and ending amount of UTB is as follows:
Balance at beginning of year
Additions based on tax positions taken in a prior period
Settlements
Expiration of statute of limitations
Balance at end of year
2023
2022
(In millions)
2021
8 $
9 $
3
—
—
—
—
(1)
11 $
8 $
12
—
(2)
(1)
9
$
$
The Company files U.S. federal, state, and local income tax returns. The Company is in the IRS’s Compliance Assurance
Process program and examinations of the U.S federal consolidated income tax return for tax years through 2021 have been
completed. With limited exceptions, the Company is no longer subject to state and local tax examinations for tax years prior to
2019. Currently, there are no material disputed tax positions with federal or state taxing authorities. Accordingly, the Company
does not anticipate that any adjustments relating to federal or state tax examinations will result in material changes to its
business, financial position, results of operations or cash flows.
There are no expected decreases to the potential liability for UTBs during the next twelve months.
As of December 31, 2023, 2022 and 2021, the balances of the Company’s UTBs that would reduce the effective tax rates,
if recognized, were $11 million, $8 million and $7 million, respectively.
151
Table of Contents
Interest and penalties related to UTBs are recorded in the provision for income taxes. During the years ended December
31, 2023, 2022 and 2021, the Company recognized an immaterial expense (benefit) for gross interest and penalties. As of
December 31, 2023 and 2022, the Company had an immaterial gross liability for interest and penalties related to UTBs.
NOTE 20. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The following tables present the notional amount and estimated fair value of derivative instruments.
2023
2022
Notional
Amount(1)
Estimated Fair Value
Gain(1)(2)
Loss(1)(2)
Notional
Amount
Estimated Fair Value
Gain(2)
Loss(2)
(In millions)
Derivatives in fair value hedging relationships:
Interest rate swaps
$
2,975 $
1 $
121 $
1,423 $
1 $
158
Derivatives in cash flow hedging relationships:
Interest rate swaps
Interest rate options
Total derivatives in cash flow hedging relationships
29,550
2,000
31,550
43
21
64
580
13
593
30,600
—
30,600
19
—
19
Total derivatives designated as hedging instruments
$
34,525 $
65 $
714 $
32,023 $
20 $
668
—
668
826
85
5
127
2,552
3,378
3,378
1,925
1,453
Derivatives not designated as hedging instruments:
Interest rate swaps
Interest rate options
Interest rate futures and forward commitments
Other contracts
$
99,892 $
1,769 $
1,718 $
94,220 $
2,315 $
2,335
13,497
655
12,007
66
7
198
57
12
190
12,506
985
12,173
94
8
172
Total derivatives not designated as hedging instruments
$ 126,051 $
2,040 $
1,977 $ 119,884 $
2,589 $
Total derivatives
$ 160,576 $
2,105 $
2,691 $ 151,907 $
2,609 $
Total gross derivative instruments, before netting
Less: Netting adjustments (3)
Total gross derivative instruments, after netting
$
$
2,105 $
2,029
76 $
2,691
1,560
1,131
$
$
2,609 $
2,504
105 $
_________
(1)
In the second quarter of 2023, the Company entered into additional trades to transition remaining derivative exposure from LIBOR to SOFR. As a part of
this transition, the Company applied certain optional expedients and exceptions in previously adopted accounting relief for hedges.
(2) Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities on the consolidated balance
sheets. Includes accrued interest as applicable.
(3) Netting adjustments represent amounts recorded to convert derivative assets and derivative liabilities from a gross basis to a net basis in accordance with
applicable accounting guidance. The net basis takes into account the impact of cash collateral received or posted, legally enforceable master netting
agreements, and variation margin that allow Regions to settle derivative contracts with the counterparty on a net basis and to offset the net position with
the related cash collateral. Cash collateral, all of which is included as a netting adjustment, totaled $243 million and $185 million for derivative assets at
December 31, 2023 and 2022, respectively. Cash collateral totaled $43 million and $90 million for derivative liabilities at December 31, 2023 and 2022,
respectively.
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 hedges or cash flow hedges. See Note 1 for additional information regarding accounting
policies for derivatives.
FAIR VALUE HEDGES
Fair value hedge relationships mitigate exposure to the change in fair value of an asset, liability or firm commitment.
Regions enters into interest rate swap agreements to manage interest rate exposure on the Company’s fixed-rate
borrowings and time deposits. These agreements involve the receipt of fixed-rate amounts in exchange for floating-rate interest
payments over the life of the agreements. Regions also enters into interest rate swap agreements to manage interest rate
exposure on certain of the Company's fixed-rate prepayable and non-prepayable debt securities available for sale. These
agreements involve the payment of fixed-rate amounts in exchange for floating-rate interest receipts.
CASH FLOW HEDGES
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions.
Regions enters into interest rate swaps, options (e.g., floors, caps and collars), and agreements with a combination of these
instruments to manage overall cash flow changes related to interest rate risk exposure on variable rate loans. The agreements
152
Table of Contents
effectively modify the Company’s exposure to interest rate risk by utilizing receive fixed/pay SOFR interest rate swaps and
interest rate options. As of December 31, 2023, Regions is hedging its exposure to the variability in future cash flows into 2031.
As of December 31, 2023, cash flow hedges were held at a pre-tax net loss of $399 million, which includes pre-tax net
gains of $90 million related to terminated cash flow floors and swaps. Regions expects to reclassify into earnings approximately
$309 million in pre-tax expenses due to the net receipt/ payment of interest and amortization on all cash flow hedges within the
next twelve months. Included in this amount is $61 million in pre-tax net gains related to the amortization of terminated cash
flow floors and swaps.
The following tables present the effect of hedging derivative instruments on the consolidated statements of income and the
total amounts for the respective line items affected:
Total income (expense) presented in the consolidated statements of income
Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives
Recognized on derivatives
Recognized on hedged items
Income (expense) recognized on fair value hedges
Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)
Income (expense) recognized on cash flow hedges
Total income (expense) presented in the consolidated statements of income
Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives
Recognized on derivatives
Recognized on hedged items
Income (expense) recognized on fair value hedges
Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)
Income (expense) recognized on cash flow hedges
2023
Interest Income
Interest Income
Interest Expense
Debt securities
Loans, including
fees
Long-term
borrowings
(In millions)
749 $
5,733 $
(226)
(1) $
(6)
6
(1) $
— $
—
—
— $
— $
— $
(236) $
(236) $
(64)
46
(46)
(64)
—
—
2022
Interest Income
Interest Income
Interest Expense
Debt securities
Loans, including
fees
Long-term
borrowings
(In millions)
688 $
4,088 $
(119)
41 $
— $
—
—
—
—
41 $
— $
— $
— $
140 $
140 $
(16)
(124)
124
(16)
—
—
$
$
$
$
$
$
$
$
$
$
153
Table of Contents
Total income (expense) presented in the consolidated statements of income
Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives
Recognized on derivatives
Recognized on hedged items
Income (expense) recognized on fair value hedges
Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)
Income (expense) recognized on cash flow hedges
____
(1) See Note 14 for gain or (loss) recognized for cash flow hedges in AOCI.
(2) Pre-tax
2021
Interest Income
Interest Expense
Loans, including
fees
Long-term
borrowings
$
$
$
$
$
(In millions)
3,452 $
(103)
— $
—
—
— $
426 $
426 $
19
(51)
51
19
—
—
The following tables present the carrying amount and associated cumulative basis adjustment related to the application of
hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.
Debt securities available for sale(1)(2)
Long-term borrowings
Time deposits
2023
2022
Hedged Items Currently Designated
Hedged Items Currently Designated
Carrying Amount of
Assets/(Liabilities)
Hedge Accounting
Basis Adjustment
Carrying Amount of
Assets/(Liabilities)
Hedge Accounting
Basis Adjustment
$
(In millions)
1,653 $
(1,286)
(252)
5 $
112
—
(In millions)
23 $
(1,239)
—
—
158
—
_____
(1) As of December 31, 2023, the Company designated interest rate swaps as fair value hedges of debt securities available for sale under the portfolio layer
method under which the Company designated $1.0 billion as the hedged amount from a closed portfolio of prepayable financial assets with a carrying
amount of $1.3 billion.
(2) Carrying amount represents amortized cost.
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company holds a portfolio of interest rate swaps, option contracts, and futures and forward commitments that result
from transactions with its commercial customers in which they manage their risks by entering into a derivative with Regions.
The Company monitors and manages the net risk in this customer portfolio and enters into separate derivative contracts in order
to reduce the overall exposure to pre-defined limits. For both derivatives with its end customers and derivatives Regions enters
into to mitigate the risk in this portfolio, the Company is subject to market risk and the risk that the counterparty will default.
The contracts in this portfolio are not designated as accounting hedges and are marked-to market through earnings (in capital
markets income) and included in other assets and other liabilities, as appropriate.
Regions enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the
interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. At December 31,
2023 and December 31, 2022, Regions had $124 million and $118 million, respectively, in total notional amount of interest rate
lock commitments. Regions manages market risk on interest rate lock commitments and mortgage loans held for sale with
corresponding forward sale commitments. Residential mortgage loans held for sale are recorded at fair value with changes in
fair value recorded in mortgage income. Commercial mortgage loans held for sale are recorded at either the lower of cost or
market or at fair value based on management's election. At December 31, 2023 and December 31, 2022, Regions had $267
million and $233 million, respectively, in total notional amounts related to these forward sale commitments. Changes in mark-
to-market from both interest rate lock commitments and corresponding forward sale commitments related to residential
mortgage loans are included in mortgage income. Changes in mark-to-market from both interest rate lock commitments and
corresponding forward sale commitments related to commercial mortgage loans are included in capital markets income.
Regions elected to account for residential MSRs at fair value with any changes to fair value recorded in mortgage income.
Concurrent with the election to use the fair value measurement method, Regions uses various derivative instruments in the form
of forward rate commitments, futures contracts, swaps and swaptions to mitigate the effect of changes in the fair value of its
154
Table of Contents
residential MSRs in its consolidated statements of income. As of December 31, 2023 and December 31, 2022, the total notional
amount related to these contracts was $3.3 billion and $3.4 billion, respectively.
The following table presents the location and amount of gain or (loss) recognized in income on derivatives not designated
as hedging instruments in the consolidated statements of income for the periods presented below:
Derivatives Not Designated as Hedging Instruments
Capital markets income:
Interest rate swaps
Interest rate options
Interest rate futures and forward commitments
Other contracts
Total capital markets income
Mortgage income:
Interest rate swaps
Interest rate options
Interest rate futures and forward commitments
Total mortgage income
CREDIT DERIVATIVES
2023
2022
(In millions)
2021
$
(17) $
108 $
42
13
11
49
(14)
1
(10)
(23)
23
10
11
152
(118)
(14)
(4)
(136)
$
26 $
16 $
46
28
15
4
93
(45)
(32)
13
64
29
Regions has both bought and sold credit protection in the form of participations on interest rate swaps (swap
participations). These swap participations, which meet the definition of credit derivatives, were entered into in the ordinary
course of business to serve the credit needs of customers. Swap participations, whereby Regions has purchased credit
protection, entitle Regions to receive a payment from the counterparty if the customer fails to make payment on any amounts
due to Regions upon early termination of the swap transaction and have maturities between 2024 and 2029. Swap
participations, whereby Regions has sold credit protection have maturities between 2024 and 2035. For contracts where
Regions sold credit protection, Regions would be required to make payment to the counterparty if the customer fails to make
payment on any amounts due to the counterparty upon early termination of the swap transaction. Regions bases the current
status of the prepayment/performance risk on bought and sold credit derivatives on recently issued internal risk ratings
consistent with the risk management practices of unfunded commitments.
Regions’ maximum potential amount of future payments under these contracts as of December 31, 2023 was
approximately $418 million. This scenario occurs if variable interest rates were at zero percent and all counterparties defaulted
with zero recovery. The fair value of sold protection at December 31, 2023 and 2022 was immaterial. In transactions where
Regions has sold credit protection, recourse to collateral associated with the original swap transaction is available to offset some
or all of Regions’ obligation.
Regions has bought credit protection in the form of credit default indices. These indices, which meet the definition of
credit derivatives, were entered into in the ordinary course of business to economically hedge credit spread risk in commercial
mortgage loans held for sale whereby the fair value option has been elected. Credit derivatives, whereby Regions has purchased
credit protection, entitle Regions to receive a payment from the counterparty if losses on the underlying index exceed a certain
threshold, dependent upon the tranche rating of the capital structure.
CONTINGENT FEATURES
Certain of Regions’ derivative instrument contracts with broker-dealers contain credit-related termination provisions and/
or credit-related provisions regarding the posting of collateral, allowing those broker-dealers to terminate the contracts in the
event that Regions’ and/or Regions Bank’s credit ratings falls below specified ratings from certain major credit rating agencies.
The aggregate fair values of all derivative instruments with any credit-risk-related contingent features that were in a liability
position on December 31, 2023 and December 31, 2022, were $29 million and $17 million, respectively, for which Regions had
posted collateral of $32 million and $20 million, respectively, in the normal course of business.
155
Table of Contents
NOTE 21. FAIR VALUE MEASUREMENTS
See Note 1 for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and
non-recurring basis. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements.
Marketable equity securities and debt securities available for sale may be periodically transferred to or from Level 3 valuation
based on management’s conclusion regarding the observability of inputs used in valuing the securities. Such transfers are
accounted for as if they occur at the beginning of a reporting period.
The following table presents assets and liabilities measured at estimated fair value on a recurring basis as of December 31:
2023
2022
Level 1
Level 2
Level 3 (1)
Total
Estimated
Fair Value
Level 1
Level 2
Level 3 (1)
Total
Estimated
Fair Value
(In millions)
Recurring fair value measurements
Debt securities available for sale:
U.S. Treasury securities
$
1,223 $
— $
— $
1,223
$
1,187 $
— $
— $
1,187
Federal agency securities
Obligations of states and political
subdivisions
Mortgage-backed securities:
Residential agency
Residential non-agency
Commercial agency
Commercial non-agency
Corporate and other debt
securities
Total debt securities available for sale
Loans held for sale
Marketable equity securities in other
earning assets
Residential mortgage servicing rights
Derivative assets (2):
Interest rate swaps
Interest rate options
Interest rate futures and forward
commitments
Other contracts
Total derivative assets
Derivative liabilities (2):
Interest rate swaps
$
$
$
$
$
$
$
—
—
—
—
—
—
—
1,043
2
17,372
—
7,307
83
1,073
—
—
—
—
—
—
1
1,043
2
17,372
—
7,307
83
1,074
—
—
—
—
—
—
—
836
2
16,954
—
7,613
186
1,153
—
—
—
1
—
—
1
836
2
16,954
1
7,613
186
1,154
1,223 $ 26,880 $
1 $
28,104
— $
201 $
— $
201
813 $
— $
— $
— $
— $
906 $
813
906
$
$
$
$
1,187 $ 26,744 $
2 $
27,933
— $
177 $
19 $
196
529 $
— $
— $
— $
— $
812 $
529
812
— $
1,813 $
— $
1,813
$
— $
2,335 $
— $
2,335
—
—
—
83
7
198
4
—
—
87
7
198
—
—
3
91
8
169
3
—
—
94
8
172
— $
2,101 $
4 $
2,105
$
3 $
2,603 $
3 $
2,609
— $
2,419 $
— $
2,419
$
— $
3,161 $
— $
3,161
Interest rate options
Interest rate futures and forward
commitments
Other contracts
—
—
—
70
12
189
—
—
1
70
12
190
—
—
2
85
5
124
—
—
1
85
5
127
Total derivative liabilities
$
— $
2,690 $
1 $
2,691
$
2 $
3,375 $
1 $
3,378
_________
(1) All following disclosures related to Level 3 recurring assets do not include those deemed to be immaterial at December 31, 2023 and 2022.
(2) As permitted under U.S. GAAP, variation margin collateral payments made or received for derivatives that are centrally cleared are legally characterized
as settled. As such, these derivative assets and derivative liabilities and the related variation margin collateral are presented on a net basis on the balance
sheet.
156
Table of Contents
Assets and liabilities in all levels could result in volatile and material price fluctuations. Realized and unrealized gains and
losses on Level 3 assets represent only a portion of the risk to market fluctuations in Regions’ consolidated balance sheets. See
Note 6 for a reconciliation of beginning and ending balances of residential MSRs for the years ended December 31, 2023 and
2022.
RECURRING FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS
Residential mortgage servicing rights
The significant unobservable inputs used in the fair value measurement of residential MSRs are OAS and CPR. This
valuation requires generating cash flow projections over multiple interest rate scenarios and discounting those cash flows at a
risk-adjusted rate. Additionally, the impact of prepayments and changes in the OAS are based on a variety of underlying inputs
including servicing costs. Increases or decreases to the underlying cash flow inputs will have a corresponding impact on the
value of the MSR asset. The net change in unrealized gains (losses) included in earnings related to MSRs held at period end are
disclosed as the changes in valuation inputs or assumptions included in the MSR rollforward table in Note 6 .
The following tables present detailed information regarding material assets and liabilities measured at fair value using
significant unobservable inputs (Level 3) as of December 31, 2023 and 2022. The tables include the valuation techniques and
the significant unobservable inputs utilized. The range of each significant unobservable input as well as the weighted-average
within the range utilized at December 31, 2023 and 2022 2021. are included. Following the tables are descriptions of the
valuation techniques and the sensitivity of the techniques to changes in the significant unobservable inputs.
Recurring fair value measurements:
Residential mortgage servicing rights (1)
Recurring fair value measurements:
Residential mortgage servicing rights (1)
Level 3
Estimated Fair
Value
December 31, 2023
Valuation
Technique
Unobservable
Input(s)
(Dollars in millions)
Quantitative Range of
Unobservable Inputs and
(Weighted-Average)
$906
Discounted cash flow
Weighted-average CPR (%)
5.6% - 21.5% (8.2%)
OAS (%)
4.5% - 8.2% (4.8%)
Level 3
Estimated Fair
Value
December 31, 2022
Valuation
Technique
Unobservable
Input(s)
(Dollars in millions)
Quantitative Range of
Unobservable Inputs and
(Weighted-Average)
$812
Discounted cash flow Weighted-average CPR (%)
6.1% - 15.1% (7.4%)
OAS (%)
4.8% -8.2% (5.1%)
_______
(1) See Note 6 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.
FAIR VALUE OPTION
The Company has elected the option to measure certain commercial mortgage loans held for sale at fair value.
Commercial mortgage loans held for sale are valued based on traded market prices for comparable commercial mortgage-
backed securitizations, into which the loans will be placed, adjusted for movements of interest rates and credit spreads. At
December 31, 2023 and December 31, 2022, the balance of these loans was immaterial.
The Company has elected the option to measure certain commercial and industrial loans held for sale at fair value, as
these loans are actively traded in the secondary market. The Company is able to obtain fair value estimates for substantially all
of these loans through a third party valuation service that is broadly used by market participants. While most of the loans are
traded in the market, the volume and level of trading activity is subject to variability and the loans are not exchange-traded. The
balance of these loans held for sale was immaterial at December 31, 2023 and December 31, 2022.
Regions has elected the fair value option for all eligible agency residential first mortgage loans originated with the intent
to sell. This election allows for a more effective offset of the changes in fair values of the loans and the derivative instruments
used to economically hedge them without the burden of complying with the requirements for hedge accounting. Fair values of
residential first mortgage loans held for sale are based on traded market prices of similar assets where available and/or
discounted cash flows at market interest rates, adjusted for securitization activities that include servicing values and market
conditions, and are recorded in loans held for sale. At December 31, 2023, the aggregate fair value of these loans totaled $184
million compared to aggregate unpaid principal of $177 million. At December 31, 2022, the aggregate fair value of these loans
totaled $160 million compared to aggregate unpaid principal of $157 million.
157
Table of Contents
Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest
income on loans held for sale. The following details net gains and losses resulting from changes in fair value of residential
mortgage loans held for sale, which were recorded in mortgage income in the consolidated statements of income during the
years ended December 31, 2023 and 2022. A net gain resulting from changes in fair value of residential mortgage loans held for
sale totaled $3 million during the year ended December 31, 2023. A net loss resulting from changes in fair value of residential
mortgage loans held for sale totaled $17 million during the year ended December 31, 2022. These changes in fair value are
mostly offset by economic hedging activities. An immaterial portion of these amounts was attributable to changes in
instrument-specific credit risk.
NON-RECURRING FAIR VALUE MEASUREMENTS
Items measured at fair value on a non-recurring basis include loans held for sale for which the fair value option has not
been elected, foreclosed property and other real estate and equity investments without a readily determinable fair value; all of
which may be considered either Level 2 or Level 3 valuation measurements. Non-recurring fair value adjustments related to
loans held for sale, foreclosed property and other real estate are typically a result of the application of lower of cost or fair value
accounting during the period. Non-recurring fair value adjustments related to equity investments without readily determinable
fair values are the result of impairments or price changes from observable transactions. The balances of each of these assets, as
well as the related fair value adjustments during the periods, were immaterial at both December 31, 2023 and December 31,
2022.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s
financial instruments as of December 31, 2023 are as follows:
Financial assets:
Cash and cash equivalents
Debt securities held to maturity
Debt securities available for sale
Loans held for sale
Loans (excluding leases), net of unearned income and allowance for
loan losses(2)(3)
Other earning assets
Derivative assets
Financial liabilities:
Derivative liabilities
Deposits with no stated maturity(4)
Time deposits(4)
Long-term borrowings
Loan commitments and letters of credit
Carrying
Amount
Estimated
Fair
Value(1)
2023
Level 1
Level 2
Level 3
(In millions)
$
6,801 $
6,801 $
6,801 $
— $
754
28,104
400
95,141
1,417
2,105
2,691
112,816
14,972
2,330
156
716
28,104
400
91,352
1,417
2,105
2,691
112,816
14,905
2,319
156
—
1,223
—
—
813
—
—
—
—
—
—
716
26,880
397
—
604
2,101
2,690
112,816
14,905
2,318
—
—
—
1
3
91,352
—
4
1
—
—
1
156
_________
(1) Estimated fair values are consistent with an exit price concept. The assumptions used to estimate the fair values are intended to approximate those that a
market participant would use in a hypothetical orderly transaction. In estimating fair value, the Company makes adjustments for estimated changes in
interest rates, market liquidity and credit spreads in the periods they are deemed to have occurred.
(2) The estimated fair value of portfolio loans assumes sale of the loans to a third-party financial investor. Accordingly, the value to the Company if the loans
were held to maturity is not reflected in the fair value estimate. The fair value discount on the loan portfolio's net carrying amount at December 31, 2023
was $3.8 billion or 4.0 percent.
(3) Excluded from this table is the sales-type, direct financing, and leveraged lease carrying amount of $1.7 billion at December 31, 2023.
(4) The fair value of non-interest-bearing demand accounts, interest-bearing checking accounts, savings accounts, and money market accounts is the amount
payable on demand at the reporting date (i.e., the carrying amount) as these instruments have an indeterminate maturity date. Fair values for time deposits
are estimated by using discounted cash flow analyses, based on market spreads to benchmark rates.
158
Table of Contents
The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company's
financial instruments as of December 31, 2022 are as follows:
Financial assets:
Cash and cash equivalents
Debt securities held to maturity
Debt securities available for sale
Loans held for sale
Loans (excluding leases), net of unearned income and allowance for
loan losses(2)(3)
Other earning assets
Derivative assets
Financial liabilities:
Derivative liabilities
Deposits with no stated maturity(4)
Time deposits(4)
Long-term borrowings
Loan commitments and letters of credit
Carrying
Amount
Estimated
Fair
Value(1)
2022
Level 1
Level 2
Level 3
(In millions)
$
11,227 $
11,227 $
11,227 $
— $
801
27,933
354
94,044
1,308
2,609
3,378
125,971
5,772
2,284
153
751
27,933
354
89,540
1,308
2,609
3,378
125,971
5,697
2,376
153
—
1,187
—
—
529
3
2
—
—
—
—
751
26,744
335
—
779
2,603
3,375
125,971
5,697
2,375
—
—
—
2
19
89,540
—
3
1
—
—
1
153
_________
(1) Estimated fair values are consistent with an exit price concept. The assumptions used to estimate the fair values are intended to approximate those that a
market participant would use in a hypothetical orderly transaction. In estimating fair value, the Company makes adjustments for estimated changes in
interest rates, market liquidity and credit spreads in the periods they are deemed to have occurred.
(2) The estimated fair value of portfolio loans assumes sale of the loans to a third-party financial investor. Accordingly, the value to the Company if the loans
were held to maturity is not reflected in the fair value estimate. The fair value discount on the loan portfolio's net carrying amount at December 31, 2022
was $4.5 billion or 4.8 percent.
(3) Excluded from this table is the sales-type, direct financing, and leveraged lease carrying amount of $1.5 billion at December 31, 2022.
(4) The fair value of non-interest-bearing demand accounts, interest-bearing checking accounts, savings accounts, and money market accounts is the amount
payable on demand at the reporting date (i.e., the carrying amount) as these instruments have an indeterminate maturity date. Fair values for time deposits
are estimated by using discounted cash flow analyses, based on market spreads to benchmark rates.
NOTE 22. BUSINESS SEGMENT INFORMATION
Each of Regions’ reportable segments is a strategic business unit that serves specific needs of Regions’ customers based
on the products and services provided. The segments are based on the manner in which management views the financial
performance of the business. The Company has three reportable segments: Corporate Bank, Consumer Bank, and Wealth
Management, with the remainder in Other.
The application and development of management reporting methodologies is a dynamic process and is subject to periodic
enhancements. As these enhancements are made, financial results presented by each reportable segment may be periodically
revised. Accordingly, the prior periods were updated to reflect these enhancements.
The Corporate Bank segment represents the Company’s commercial banking functions including commercial and
industrial, commercial real estate and investor real estate lending. This segment also includes equipment lease financing, as well
as capital markets activities, which include securities underwriting and placement, loan syndication and placement, foreign
exchange, derivatives, merger and acquisition and other advisory services. Corporate Bank customers include corporate, middle
market, and commercial real estate developers and investors. Corresponding deposit products related to these types of
customers are also included in this segment.
The Consumer Bank segment represents the Company’s branch network, including consumer banking products and
services related to residential first mortgages, home equity lines and loans, consumer credit cards and other consumer loans, as
well as the corresponding deposit relationships. These services are also provided through the Company's digital channels and
contact center.
The Wealth Management segment offers individuals, businesses, governmental institutions and non-profit entities a wide
range of solutions to help protect, grow and transfer wealth. Offerings include credit related products, trust and investment
management, asset management, retirement and savings solutions and estate planning.
Other includes the Company’s Treasury function, the securities portfolio, wholesale funding activities, interest rate risk
management activities and other corporate functions that are not related to a strategic business unit. Also within Other are
certain reconciling items in order to translate the segment results that are based on management accounting practices into
consolidated results. Management accounting practices utilized by Regions as the basis of presentation for segment results
include the following:
159
Table of Contents
•
•
•
Net interest income is presented based upon an FTP approach, for which market-based funding charges/credits are
assigned within the segments. By allocating a cost or a credit to each product based on the FTP framework,
management is able to more effectively measure the net interest margin contribution of its assets/liabilities by
segment. The summation of the interest income/expense and FTP charges/credits for each segment is its designated
net interest income.
Provision for (benefit from) credit losses is allocated to each segment based on an estimated loss methodology. The
difference between the consolidated provision for (benefit from) credit losses and the segments’ estimated loss is
reflected in Other.
Income tax expense (benefit) is calculated for the Corporate Bank, Consumer Bank and Wealth Management based
on a consistent federal and state statutory rate. Any difference between the Company’s consolidated income tax
expense (benefit) and the segments’ calculated amounts is reflected in Other.
• Management reporting allocations of certain expenses are made in order to analyze the financial performance of the
segments. These allocations consist of operational and overhead cost pools and are intended to represent the total
costs to support a segment.
The following tables present financial information for each reportable segment for the year ended December 31:
Corporate
Bank
Consumer
Bank
Wealth
Management
Other
Consolidated
2023
Net interest income
Provision for (benefit from) credit losses
Non-interest income
Non-interest expense
Income (loss) before income taxes
Income tax expense (benefit)
Net income
Average assets
Net interest income
Provision for (benefit from) credit losses
Non-interest income
Non-interest expense
Income before income taxes
Income tax expense (benefit)
Net income
Average assets
Net interest income
Provision for (benefit from) credit losses
Non-interest income
Non-interest expense
Income before income taxes
Income tax expense
Net income
Average assets
$
2,003 $
3,132 $
185 $
— $
(In millions)
343
712
1,223
1,149
287
279
1,044
2,574
1,323
330
8
457
427
207
52
(77)
43
192
(72)
(136)
862 $
993 $
155 $
64 $
69,520 $
37,762 $
2,044 $
43,691 $
153,017
Corporate
Bank
Consumer
Bank
Wealth
Management
Other
Consolidated
2022
$
1,961 $
2,641 $
184 $
— $
(In millions)
287
803
1,184
1,293
323
280
1,165
2,296
1,230
308
9
426
404
197
50
(305)
35
184
156
(50)
970 $
922 $
147 $
206 $
64,532 $
36,623 $
2,116 $
56,121 $
159,392
Corporate
Bank
Consumer
Bank
2021
Wealth
Management
(In millions)
Other
Consolidated
$
1,759 $
2,016 $
139 $
— $
295
752
1,090
1,126
282
254
1,266
2,174
854
213
10
390
387
132
33
(1,083)
116
96
1,103
166
844 $
641 $
99 $
937 $
59,132 $
34,309 $
2,046 $
58,782 $
154,269
160
5,320
553
2,256
4,416
2,607
533
2,074
4,786
271
2,429
4,068
2,876
631
2,245
3,914
(524)
2,524
3,747
3,215
694
2,521
$
$
$
$
$
$
Table of Contents
NOTE 23. COMMITMENTS, CONTINGENCIES 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’ normal
credit approval policies and procedures. Regions measures inherent risk associated with these instruments by recording a
reserve for unfunded commitments based on an assessment of the likelihood that the guarantee will be funded and the
creditworthiness of the customer or counterparty. Collateral is obtained based on management’s assessment of the
creditworthiness of the customer. Credit risk is represented in unused commitments to extend credit, standby letters of credit
and commercial letters of credit.
Credit risk associated with these instruments as of December 31 is represented by the contractual amounts indicated in the
following table:
Unused commitments to extend credit
Standby letters of credit
Commercial letters of credit
Liabilities associated with standby letters of credit
Assets associated with standby letters of credit
Reserve for unfunded credit commitments
$
2023
2022
(In millions)
63,631 $
1,997
78
32
34
124
65,460
1,962
75
35
37
118
Unused commitments to extend credit—To accommodate the financial needs of its customers, Regions makes
commitments under various terms to lend funds to consumers, businesses and other entities. These commitments include
(among others) credit card and other revolving credit agreements, term loan commitments and short-term borrowing
agreements. Many of these loan commitments have fixed expiration dates or other termination clauses and may require payment
of a fee. Since many of these commitments are expected to expire without being funded, the total commitment amounts do not
necessarily represent future liquidity requirements.
Standby letters of credit—Standby letters of credit are also issued to customers which commit Regions to make payments
on behalf of customers if certain specified future events occur. Regions has recourse against the customer for any amount
required to be paid to a third party under a standby letter of credit. The credit risk involved in the issuance of these guarantees is
essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when
necessary. Historically, a large percentage of standby letters of credit expire without being funded. The contractual amount of
standby letters of credit represents the maximum potential amount of future payments Regions could be required to make and
represents Regions’ maximum credit risk.
Commercial letters of credit—Commercial letters of credit are issued to facilitate foreign or domestic trade transactions
for customers. As a general rule, drafts will be drawn when the goods underlying the transaction are in transit.
LEGAL CONTINGENCIES
Regions and its subsidiaries are routinely subject to actual or threatened legal proceedings, including litigation and
regulatory matters, arising in the ordinary course of business. Litigation matters range from individual actions involving a
single plaintiff to class action lawsuits and can involve claims for substantial or indeterminate alleged damages or for injunctive
or other relief. Regulatory investigations and enforcement matters may involve formal or informal proceedings and other
inquiries initiated by various governmental agencies, law enforcement authorities, and self-regulatory organizations, and can
result in fines, penalties, restitution, changes to Regions’ business practices, and other related costs, including reputational
damage. At any given time, these legal proceedings are at varying stages of adjudication, arbitration, or investigation, and may
relate to a variety of topics, including common law tort and contract claims, as well as statutory consumer protection-related
claims, among others.
Assessment of exposure that could result from legal proceedings is complex because these proceedings often involve
inherently unpredictable factors, including, but not limited to, the following: whether the proceeding is in early stages; whether
damages or the amount of potential fines, penalties, and restitution are unspecified, unsupported, or uncertain; whether there is a
potential for punitive or other pecuniary damages; whether the matter involves legal uncertainties, including novel issues of
law; whether the matter involves multiple parties and/or jurisdictions; whether discovery or other investigation has begun or is
not complete; whether material facts may be disputed or unsubstantiated; whether meaningful settlement discussions have
commenced; and whether the matter involves class allegations. As a result of these complexities, Regions may be unable to
develop an estimate or range of loss.
Regions evaluates legal proceedings based on information currently available, including advice of counsel. Regions
establishes accruals for those matters when a loss is considered probable and the related amount is reasonably estimable.
161
Table of Contents
Additionally, when it is practicable and reasonably possible that it may experience losses in excess of established accruals,
Regions estimates possible loss contingencies. Regions currently estimates that the aggregate amount of reasonably possible
losses that it may experience, in excess of what has been accrued, is immaterial. While the final outcomes of legal proceedings
are inherently unpredictable, management is currently of the opinion that the outcomes of pending and threatened matters will
not have a material effect on Regions’ business, consolidated financial position, results of operations or cash flows as a whole.
As available information changes, the matters for which Regions is able to estimate, as well as the estimates themselves,
will be adjusted accordingly. Regions’ estimates are subject to significant judgment and uncertainties, and the matters
underlying the estimates will change from time to time. In the event of unexpected future developments, it is possible that an
adverse outcome in any such matter could be material to Regions’ business, consolidated financial position, results of
operations, or cash flows as a whole for any particular reporting period of occurrence.
Some of Regions’ exposure with respect to loss contingencies may be offset by applicable insurance coverage. However,
in determining the amounts of any accruals or estimates of possible loss contingencies, Regions does not take into account the
availability of insurance coverage. To the extent that Regions has an insurance recovery, the proceeds are recorded in the period
the recovery is received.
GUARANTEES
FANNIE MAE LOSS SHARE GUARANTEE
Regions sells commercial loans to Fannie Mae through the DUS lending program and through other platforms. The DUS
program provides liquidity to the multi-family housing market. Regions services loans sold to Fannie Mae and is required to
provide a loss share guarantee equal to one-third of the principal balance for the majority of the commercial servicing portfolio.
At December 31, 2023 and December 31, 2022, the Company's DUS servicing portfolio totaled approximately $6.2 billion and
$4.9 billion, respectively. Regions has additional loans sold to Fannie Mae outside of the DUS program that are also subject to a
loss share guarantee and at December 31, 2023 and December 31, 2022, these serviced loans totaled approximately $653
million and $655 million, respectively. Regions' maximum quantifiable contingent liability related to all loans subject to a loss
share guarantee was approximately $2.3 billion at December 31, 2023 and $1.8 billion at December 31, 2022. The Company
would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of
loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of
settlement. Therefore, the maximum quantifiable contingent liability is not representative of the actual loss the Company would
be expected to incur. The estimated fair value of the associated loss share guarantee recorded as a liability on the Company's
consolidated balance sheets was immaterial at both December 31, 2023 and December 31, 2022. Refer to Note 1 for additional
information.
VISA INDEMNIFICATION
As a member of the Visa USA network, Regions, along with other members, indemnified Visa USA against litigation. On
October 3, 2007, Visa USA was restructured and acquired several Visa affiliates. In conjunction with this restructuring,
Regions' indemnification of Visa USA was modified to cover specific litigation (“covered litigation”).
A portion of Visa's proceeds from its IPO was put into escrow to fund the covered litigation. To the extent that the amount
available under the escrow arrangement, or subsequent fundings of the escrow account resulting from reductions in the class B
share conversion ratio, is insufficient to fully resolve the covered litigation, Visa will enforce the indemnification obligations of
Visa USA's members for any excess amount. At this time, Regions has concluded that it is not probable that covered litigation
exposure will exceed the class B share value.
162
Table of Contents
NOTE 24. REVENUE RECOGNITION
The following tables present total non-interest income disaggregated by major product category for each reportable
segment for the period indicated (refer to Note 1 for descriptions of the accounting and reporting policies related to revenue
recognition):
Year Ended December 31, 2023
Corporate
Bank
Consumer
Bank
Wealth
Management
Other
Segment
Revenue
Other(1)
Total
(In millions)
Service charges on deposit accounts
$
193 $
396 $
3 $
— $
— $
Card and ATM fees
Capital markets income
Investment management and trust fee income
Mortgage income
Investment services fee income
Commercial credit fee income
Bank-owned life insurance
Securities gains (losses), net
Market value adjustments on employee benefit assets - other
Other miscellaneous income
45
92
—
—
—
—
—
—
—
40
446
—
—
—
—
—
—
—
—
51
1
—
313
—
138
—
—
—
—
2
1
1
—
—
—
—
—
—
—
—
11
129
—
109
—
105
78
(5)
15
92
$
370 $
893 $
457 $
2 $
534 $
592
504
222
313
109
138
105
78
(5)
15
185
2,256
Year Ended December 31, 2022
Corporate
Bank
Consumer
Bank
Wealth
Management
Other
Segment
Revenue
Other(1)
Total
(In millions)
Service charges on deposit accounts
$
177 $
458 $
3 $
2 $
1 $
Card and ATM fees
Capital markets income
Investment management and trust fee income
Mortgage income
Investment services fee income
Commercial credit fee income
Bank-owned life insurance
Insurance proceeds (2)
Securities gains (losses), net
Market value adjustments on employee benefit assets - other
Other miscellaneous income
45
108
—
—
—
—
—
—
—
—
43
457
—
—
—
—
—
—
—
—
—
51
—
—
297
—
122
—
—
—
—
—
3
—
—
—
—
—
—
—
—
—
—
—
11
231
—
156
—
96
62
50
(1)
(45)
102
641
513
339
297
156
122
96
62
50
(1)
(45)
199
$
373 $
966 $
425 $
2 $
663 $
2,429
163
Table of Contents
Year Ended December 31, 2021
Corporate
Bank
Consumer
Bank
Wealth
Management
Other
Segment
Revenue
Other(1)
Total
(In millions)
Service charges on deposit accounts
$
160 $
480 $
3 $
— $
5 $
Card and ATM fees
Capital markets income
Investment management and trust fee income
Mortgage income
Investment services fee income
Commercial credit fee income
Bank-owned life insurance
Securities gains (losses), net
Market value adjustments on employee benefit assets - other
Gain on equity investment
Other miscellaneous income
41
149
—
—
—
—
—
—
—
—
39
448
—
—
—
—
—
—
—
—
—
55
—
—
278
—
104
—
—
—
—
—
4
(1)
—
—
—
—
—
—
—
—
—
3
11
182
—
242
—
91
82
3
20
3
122
$
389 $
983 $
389 $
2 $
761 $
648
499
331
278
242
104
91
82
3
20
3
223
2,524
_________
(1) This revenue is not impacted by the accounting guidance adopted in 2018 and continues to be recognized when earned in accordance with the Company's
(2)
prior revenue recognition policy.
In the third quarter of 2022, the Company settled a previously disclosed matter with the CFPB. The Company received an insurance reimbursement
related to the settlement in the fourth quarter of 2022.
NOTE 25. PARENT COMPANY ONLY FINANCIAL STATEMENTS
Presented below are condensed financial statements of Regions Financial Corporation:
Balance Sheets
Assets
December 31
2023
2022
(In millions)
$
1,869
$
1,594
Interest-bearing deposits in other banks
Debt securities available for sale
Premises and equipment, net
Investments in subsidiaries:
Banks
Non-banks
Other assets
Total assets
Long-term borrowings
Other liabilities
Total liabilities
Shareholders’ equity:
Preferred stock
Common stock
Additional paid-in capital
Retained earnings
Treasury stock, at cost
Accumulated other comprehensive income, net
Total shareholders’ equity
Liabilities and Shareholders’ Equity
$
$
20
47
16,882
425
17,307
291
21
28
15,676
385
16,061
275
19,534
$
17,979
1,832
$
273
2,105
1,659
10
11,757
8,186
(1,371)
(2,812)
17,429
1,786
246
2,032
1,659
10
11,988
7,004
(1,371)
(3,343)
15,947
17,979
Total liabilities and shareholders’ equity
$
19,534
$
Statements of Income
164
Table of Contents
Income:
Dividends received from subsidiaries
Interest from subsidiaries
Other
Expenses:
Salaries and employee benefits
Interest expense
Equipment and software expense
Other
Income before income taxes and equity in undistributed earnings of subsidiaries
Income tax benefit
Income before equity in undistributed earnings of subsidiaries and preferred stock dividends
Equity in undistributed earnings of subsidiaries:
Banks
Non-banks
Net income
Preferred stock dividends
Year Ended December 31
2023
2022
2021
(In millions)
$
1,609 $
1,351 $
2,250
1
7
4
(3)
1,617
1,352
65
134
(2)
70
267
1,350
(43)
1,393
644
37
681
2,074
(98)
64
86
4
62
216
1,136
(36)
1,172
1,066
7
1,073
2,245
(99)
8
22
2,280
61
68
4
96
229
2,051
(43)
2,094
372
55
427
2,521
(121)
2,400
Net income available to common shareholders
$
1,976 $
2,146 $
165
Table of Contents
Statements of Cash Flows
Operating activities:
Net income
Adjustments to reconcile net cash from operating activities:
Equity in undistributed earnings of subsidiaries
Provision for (benefit from) deferred income taxes
Depreciation, amortization and accretion, net
Loss on sale of assets
Loss (gain) on early extinguishment of debt
Net change in operating assets and liabilities:
Other assets
Other liabilities
Other
Year Ended December 31
2023
2022
2021
(In millions)
$
2,074 $
2,245 $
2,521
(681)
(1,073)
(4)
2
(6)
—
(11)
(9)
74
(3)
2
—
—
12
(27)
(89)
(427)
(21)
3
—
20
61
1
(51)
2,107
(21)
5
(3)
—
(19)
646
(1,424)
(608)
(108)
390
(500)
(467)
(2,071)
17
1,526
1,543
Net cash from operating activities
1,439
1,067
Investing activities:
(Investment in) / repayment of investment in subsidiaries
Proceeds from sales and maturities of debt securities available for sale
Purchases of debt securities available for sale
Other, net
Net cash from investing activities
Financing activities:
Proceeds from long-term borrowings
Payments on long-term borrowings
Cash dividends on common stock
Cash dividends on preferred stock
Net proceeds from issuance of preferred stock
Payment for redemption of preferred stock
Repurchases of common stock
Net cash from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(8)
13
(11)
(21)
(27)
—
—
(787)
(98)
—
—
(252)
(1,137)
275
1,594
(23)
8
(9)
—
(24)
—
—
(663)
(99)
—
—
(230)
(992)
51
1,543
$
1,869 $
1,594 $
166
Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not Applicable.
Item 9A. Controls and Procedures
Based on an evaluation, as of the end of the period covered by this Form 10-K, under the supervision and with the
participation of Regions’ management, including its Chief Executive Officer and Chief Financial Officer, the Chief Executive
Officer and the Chief Financial Officer have concluded 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, 2023, there have been no changes in Regions’ internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, Regions’ control over financial reporting.
The Report of Management on Internal Control Over Financial Reporting and the attestation report of registered public
accounting firm on registrant's internal control over financial reporting are included in Item 8. of this Annual Report on Form
10-K.
Item 9B. Other Information
Not applicable.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
167
Table of Contents
Item 10. Directors, Executive Officers and Corporate Governance
PART III
Information about the Directors and Director nominees of Regions included in Regions’ Proxy Statement for the 2024
Annual Meeting of Shareholders (the “Proxy Statement”) under the captions “PROPOSAL 1—ELECTION OF DIRECTORS”
and the information incorporated by reference pursuant to Item 13. below are incorporated herein by reference. Information
regarding Regions’ executive officers is at the end of Item I of this Annual Report on Form 10-K.
Information regarding Regions’ Audit Committee included in the Proxy Statement under the caption “CORPORATE
GOVERNANCE—Committees of the Board of Directors” is incorporated herein by reference.
Information regarding timeliness of filings under Section 16(a) of the Securities Exchange Act of 1934 included in the
Proxy Statement under the caption “OWNERSHIP OF REGIONS COMMON STOCK—Delinquent Section 16(a) Reports” is
incorporated herein by reference.
Information regarding Regions’ Code of Ethics for Senior Financial Officers included in the Proxy Statement under the
caption “CORPORATE GOVERNANCE—Codes of Conduct” is incorporated herein by reference.
Item 11. Executive Compensation
All
information presented under
“COMPENSATION DISCUSSION AND ANALYSIS,”
“COMPENSATION OF EXECUTIVE OFFICERS,” “COMPENSATION AND HUMAN RESOURCES COMMITTEE
REPORT,” “DIRECTOR COMPENSATION,” and “CORPORATE GOVERNANCE—Compensation Committee Interlocks
and Insider Participation” and “—Relationship of Compensation Policies and Practices to Risk Management” of the Proxy
Statement are incorporated herein by reference.
captions
the
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
All information presented under the caption “OWNERSHIP OF REGIONS COMMON STOCK” of the Proxy Statement
is incorporated herein by reference.
Equity Compensation Plan Information
The following table gives information about the common stock that may be issued upon the exercise of options, warrants
and rights under all of Regions’ existing equity compensation plans as of December 31, 2023.
Plan Category
Equity Compensation Plans Approved by Stockholders
Equity Compensation Plans Not Approved by
Stockholders
Total
Number of Securities to
be Issued Upon
Exercise of Outstanding
Options, Warrants and
Rights (a)
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
$
—
Number of Securities
Remaining Available
Under Equity
Compensation Plans
(Excluding Securities in
First Column)
24,086,496 (b)
$
$
—
—
—
24,086,496
—
—
—
_____
(a) Does not include outstanding restricted stock units of 8,000,041.
(b) Consists of shares available for future issuance under the Regions Financial Corporation 2015 Long Term Incentive Plan. In 2015, all prior long-term
incentive plans were closed to new grants.
Item 13. Certain Relationships and Related Transactions, and Director Independence
All information presented under the captions “CORPORATE GOVERNANCE—Related Person Transactions,” and “—
Director Independence” of the Proxy Statement is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
All
information presented under
the caption “ PROPOSAL 2—RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM” of the Proxy Statement is incorporated herein by reference.
168
Table of Contents
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a) 1. Consolidated Financial Statements. The following reports of independent registered public accounting firm
(PCAOB ID: 42) and consolidated financial statements of Regions and its subsidiaries are included in Item 8. of this Form 10-
K:
Reports of Independent Registered Public Accounting Firm;
Consolidated Balance Sheets—December 31, 2023 and 2022;
Consolidated Statements of Income—Years ended December 31, 2023, 2022 and 2021;
Consolidated Statements of Comprehensive Income—Years ended December 31, 2023, 2022 and 2021;
Consolidated Statements of Changes in Shareholders’ Equity—Years ended December 31, 2023, 2022 and 2021; and
Consolidated Statements of Cash Flows—Years ended December 31, 2023, 2022 and 2021.
Notes to Consolidated Financial Statements
2. Consolidated Financial Statement Schedules. The following consolidated financial statement schedules are included in
Item 8. of this Form 10-K:
None. The Schedules to consolidated financial statements are not required under the related instructions or are
inapplicable.
(b) Exhibits. The exhibits indicated below are either included or incorporated by reference as indicated.
SEC Assigned
Exhibit Number
Description of Exhibits
3.1
3.2
3.3
3.4
3.5
3.6
4.1
4.2
Amended and Restated Certificate of Incorporation incorporated by reference to Exhibit 3.1 to
Form 10-Q Quarterly Report filed by registrant on August 6, 2012.
Certificate of Designations, incorporated by reference to Exhibit 3.3 to Form 8-A filed by
registrant on April 28, 2014.
Certificate of Designations, incorporated by reference to Exhibit 3.4 to Form 8-A filed by
registrant on April 29, 2019.
Certificate of Designations, incorporated by reference to Exhibit 3.1 to the Form 8-K Current
Report filed by registrant on June 5, 2020.
Certificate of Designations, incorporated by reference to Exhibit 3.6 to the Form 8-A filed by
the registrant on May 3, 2021.
Bylaws as amended and restated, incorporated by reference to Exhibit 3.2 to Form 8-K filed
by registrant on October 18, 2023.
Instruments defining the rights of security holders, including indentures. The registrant hereby
agrees to furnish to the Commission upon request copies of instruments defining the rights of
holders of long-term debt of the registrant and its consolidated subsidiaries; no issuance of
debt exceeds 10 percent of the assets of the registrant and its subsidiaries on a consolidated
basis.
Deposit Agreement, dated as of April 29, 2014, by and among Regions Financial Corporation,
Computershare Trust Company, N.A., as depositary, Computershare, Inc. and the holders
from time to time of the depositary receipts described therein, incorporated by reference to
Exhibit 4.1 to the Form 8-K Current Report filed by registrant on April 29, 2014.
169
Table of Contents
SEC Assigned
Exhibit Number
4.2A
4.3
4.4
4.5
4.5A
4.6
4.7
4.7A
4.8
4.9
4.9A
4.10
4.11
Description of Exhibits
Amendment to Deposit Agreement, dated as of April 29, 2014, effective as of October 21,
2022, by and among Regions Financial Corporation, Computershare, Inc., Computershare
Trust Company, N.A., and Broadridge Corporate Issuer Solutions, Inc. incorporated by
reference to Exhibit 4.2A to Form 10-K Annual Report filed by the registrant on February 24,
2023.
Form of depositary receipt representing the Series B Depositary Shares, incorporated by
reference to Exhibit A to Exhibit 4.1 to the Form 8-K Current Report filed by registrant on
April 29, 2014.
Form of certificate representing the Series B Preferred Stock, incorporated by reference to
Exhibit 4.3 to the Form 8-A filed by registrant on April 28, 2014.
Deposit Agreement, dated as of April 30, 2019, by and among Regions Financial Corporation,
Computershare, Inc., and Computershare Trust Company, N.A., jointly as depositary, and the
holders from time to time of the depositary receipts described therein, incorporated by
reference to Exhibit 4.1 to the Form 8-A filed by registrant on April 29, 2019.
Amendment to Deposit Agreement, dated as of April 30, 2019, effective as of October 21,
2022, by and among Regions Financial Corporation, Computershare, Inc., Computershare
Trust Company, N.A.,and Broadridge Corporate Issuer Solutions, Inc. incorporated by
reference to Exhibit 4.5A to Form 10-K Annual Report filed by the registrant on February 24,
2023.
Form of depositary receipt representing the Series C Depositary Shares, incorporated by
reference to Exhibit A to Exhibit 4.1 to the Form 8-A filed by registrant on April 29, 2019.
Deposit Agreement, dated as of June 5, 2020, by and among Regions Financial Corporation,
Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, and the
holders from time to time of the depositary receipts described therein, incorporated by
reference to Exhibit 4.1 to the Form 8-K Current Report filed by registrant on June 5, 2020.
Amendment to Deposit Agreement, dated as of June 5, 2020, effective as of October 21, 2022,
by and among Regions Financial Corporation, Computershare, Inc., Computershare Trust
Company, N.A., and Broadridge Corporate Issuer Solutions, Inc. incorporated by reference to
Exhibit 4.7A to Form 10-K Annual Report filed by the registrant on February 24, 2023.
Form of depositary receipt representing the Series D Depositary Shares, incorporated by
reference to Exhibit A to Exhibit 4.1 to the Form 8-K Current Report filed by registrant on
June 5, 2020.
Deposit Agreement, dated as of May 4, 2021, by and among Regions Financial Corporation,
Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, and the
holders from time to time of the depositary receipts described therein, incorporated by
reference to Exhibit 4.1 to the Form 8-A filed by registrant on May 3, 2021.
Amendment to Deposit Agreement, dated as of May 4, 2021, effective as of October 21, 2022,
by and among Regions Financial Corporation, Computershare, Inc., Computershare Trust
Company, N.A., and Broadridge Corporate Issuer Solutions, Inc. incorporated by reference to
Exhibit 4.9A to Form 10-K Annual Report filed by the registrant on February 24, 2023.
Form of depositary receipt representing the Series E Depositary Shares, incorporated by
reference to Exhibit A to Exhibit 4.1 to the Form 8-A filed by registrant on May 3, 2021.
Description of Registered Securities.
170
Table of Contents
SEC Assigned
Exhibit Number
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
Description of Exhibits
Regions Financial Corporation Director Compensation Program, effective April 20, 2022,
incorporated by reference to Exhibit 10.1 to Form 10-Q Quarterly Report filed by registrant
on May 6, 2022.
Regions Financial Corporation Directors’ Deferred Restricted Stock Unit Plan, incorporated
by reference to Exhibit 10.26 to Form 10-K Annual Report filed by registrant on February 22,
2019.
Regions Financial Corporation Directors’ Deferred Investment Plan (As Amended and
Restated as of January 1, 2021), incorporated by reference to Exhibit 4.7 to Form S-8
Registration Statement filed by registrant on December 30, 2020.
Regions Financial Corporation Deferred Compensation Plan for Former Directors of
AmSouth Bancorporation (formerly named Deferred Compensation Plan for Directors of
AmSouth Bancorporation), incorporated by reference to Exhibit 10.30 to Form 10-K Annual
Report filed by registrant on February 25, 2009.
Form of Indemnification Agreement for Directors of AmSouth Bancorporation, incorporated
by reference to Exhibit 10.2 to Form 8-K Current Report filed by AmSouth Bancorporation
on April 20, 2006.
Form of Change-in-Control Agreement with executive officer John M. Turner, Jr.,
incorporated by reference to Exhibit 99.3 to Form 8-K Current Report filed by registrant on
June 19, 2018.
Form of Change-in-Control Agreement with executive officer Kate R. Danella, incorporated
by reference to Exhibit 10.37 to Form 10-K Annual Report filed by registrant on February 22,
2019.
Form of Change-in-Control Agreement with executive officer C. Matthew Lusco,
incorporated by reference to Exhibit 10.11 of Form 10-Q Quarterly Report filed by registrant
on August 4, 2011.
Form of Change-in-Control Agreement with executive officers David R. Keenan, Scott M.
Peters, Ronald G. Smith and David J. Turner, Jr., incorporated by reference to Exhibit 10.48
to Form 10-K Annual Report filed by registrant on February 24, 2011.
Form of Change-in-Control Agreement with executive officer William D. Ritter, incorporated
by reference to Exhibit 10.49 to Form 10-K Annual Report filed by registrant on February 24,
2011.
Form of Amendment to Change-in-Control Agreement with executive officers David J.
Turner, Jr., David R. Keenan, Scott M. Peters, Ronald G. Smith, and William D. Ritter,
incorporated by reference to Exhibit 10.52 to Form 10-K Annual Report filed by registrant on
February 21, 2013.
Offer Letter with executive officer C. Dandridge Massey dated May 2, 2022, incorporated by
reference to Exhibit 10.12 to Form 10-K Annual Report filed by the registrant on February 24,
2023.
Repayment Agreement with executive officer C. Dandridge Massey dated May 2, 2022,
incorporated by reference to Exhibit 10.13 to Form 10-K Annual Report filed by the registrant
on February 24, 2023.
Regions Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to
Appendix B to Regions Financial Corporation’s Proxy Statement dated March 10, 2015, for
the Regions Annual Meeting of Stockholders held April 23, 2015.
171
Table of Contents
SEC Assigned
Exhibit Number
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
Description of Exhibits
Amendment Number One to the Regions Financial Corporation 2015 Long Term Incentive
Plan, incorporated by reference to Exhibit 10.1 to Form 10-Q Quarterly Report filed by
registrant on May 5, 2017.
Form of Director Restricted Stock Unit Notice and Award Agreement under the Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.1 to Form 10-Q Quarterly Report filed by registrant on August 6, 2021.
2020 Form of Notice and Form of Restricted Stock Unit Award Agreement under Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.2 to Form 10-Q Quarterly Report filed by registrant on August 5, 2020.
Form of Associate Restricted Stock Unit Notice and Award Agreement under the Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.2 to Form 10-Q Quarterly Report filed by registrant on August 6, 2021.
2020 Form of Notice and Form of Performance Stock Unit Award Agreement under Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.3 to Form 10-Q Quarterly Report filed by registrant on August 5, 2020.
Form of Associate Performance Stock Unit Notice and Award Agreement under the Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.3 to Form 10-Q Quarterly Report filed by registrant on August 6, 2021.
2020 Form of Notice and Form of Performance Unit Award Agreement under Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.4 to Form 10-Q Quarterly Report filed by registrant on August 5, 2020.
Form of Associate Performance Unit Notice and Award Agreement under the Regions
Financial Corporation 2015 Long Term Incentive Plan, incorporated by reference to Exhibit
10.4 to Form 10-Q Quarterly Report filed by registrant on August 6, 2021.
Restricted Stock Unit Notice and Award Agreement under the Regions Financial Corporation
2015 Long Term Incentive Plan with executive officer C. Dandridge Massey dated July 1,
2022, incorporated by reference to Exhibit 10.26 to Form 10-K Annual Report filed by
registrant on February 24, 2023.
Regions Financial Corporation Executive Incentive Plan (Effective January 1, 2021),
incorporated by reference to Exhibit 10.50 to Form 10-K Annual Report filed by registrant on
February 24, 2021.
Regions Financial Corporation Executive Incentive Plan (Amended and Restated Effective
January 1, 2023).
Regions Financial Corporation Non-Qualified Excess 401(k) Plan (Amended and Restated as
of June 1, 2020), incorporated by reference to Exhibit 10.5 to Form 10-Q Quarterly Report
filed by registrant on August 5, 2020.
Amendment One to the Regions Financial Corporation Non-Qualified Excess 401(k) Plan
(Amended and Restated as of June 1, 2020), incorporated by reference to Exhibit 10.2 to
Form 10-Q Quarterly Report filed by registrant on November 4, 2021.
Amendment Two to the Regions Financial Corporation Non-Qualified Excess 401(k) Plan
(Amended and Restated as of June 1, 2020), incorporated by reference to Exhibit 10.34 to
Form 10-K Annual Report filed by registrant on February 24, 2022.
172
Table of Contents
SEC Assigned
Exhibit Number
Description of Exhibits
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
21
23
24
Regions Financial Corporation Post 2006 Supplemental Executive Retirement Plan Amended
and Restated as of January 1, 2020, incorporated by reference to Exhibit 10.42 to Form 10-K
Annual Report filed by registrant on February 21, 2020.
Amendment Number One to the Regions Financial Corporation Post 2006 Supplemental
Executive Retirement Plan Amended and Restated as of January 1, 2020, incorporated by
reference to Exhibit 10.1 to Form 10-Q Quarterly Report filed by registrant on November 5,
2020.
Amendment Number Two to the Regions Financial Corporation Post 2006 Supplemental
Executive Retirement Plan Amended and Restated as of January 1, 2020, incorporated by
reference to Exhibit 10.1 to Form 8-K filed by registrant on October 19, 2021.
Amendment Number Three to the Regions Financial Corporation Post 2006 Supplemental
Executive Retirement Plan Amended and Restated as of January 1, 2020, incorporated by
reference to Exhibit 10.38 to Form 10-K Annual Report filed by registrant on February 24,
2022.
AmSouth Bancorporation Deferred Compensation Plan, incorporated by reference to
Exhibit 10.13 to Form 10-K Annual Report filed by AmSouth Bancorporation on March 15,
2005.
Amendment Number 1 to AmSouth Bancorporation Deferred Compensation Plan effective
November 4, 2006, incorporated by reference to Exhibit 10.59 to Form 10-K Annual Report
filed by registrant on March 1, 2007.
Amendment 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.
Amendment Number Three to the AmSouth Bancorporation Deferred Compensation Plan,
incorporated by reference to Exhibit 10.1 to Form 10-Q Quarterly Report filed by registrant
on November 5, 2014.
Regions Financial Corporation Executive Severance Plan (Amended and Restated effective
January 1, 2020), incorporated by reference to Exhibit 10.32 to Form 10-K Annual Report
filed by registrant on February 21, 2020.
Form of Aircraft Time Sharing Agreement, incorporated by reference to Exhibit 99.2 to Form
8-K Current Report filed by registrant on June 19, 2018.
Regions Financial Corporation Use of Corporate Aircraft Policy, amended and restated
December 2022, incorporated by reference to Exhibit 10.43 to Form 10-K Annual Report
filed by registrant on February 24, 2023.
Regions Financial Corporation Use of Corporate Aircraft Policy, amended and restated
December 2023.
List of subsidiaries of registrant.
Consent of independent registered public accounting firm.
Power of Attorney.
173
Table of Contents
SEC Assigned
Exhibit Number
31.1
31.2
32
101
104
Description of Exhibits
Certifications of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certifications of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
the Consolidated Statements of Income; (iii)
The following materials are formatted in Inline XBRL: (i) the Consolidated Balance Sheets;
the Consolidated Statements of
(ii)
Comprehensive Income; (iv) the Consolidated Statements of Changes in Stockholders' Equity;
(v) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated
Financial Statements.
Cover Page Interactive Data File, formatted in Inline XBRL (included within the Exhibit 101
attachments).
* Compensatory plan or agreement.
______
Copies of exhibits not included herein may be obtained free of charge, electronically through Regions’ website at
www.regions.com or through the SEC’s website at www.sec.gov or upon request to:
Investor Relations
Regions Financial Corporation
1900 Fifth Avenue North
Birmingham, Alabama 35203
(205) 264-7040
Item 16. Form 10-K Summary
Not applicable.
174
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DATE: February 23, 2024
Regions Financial Corporation
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated
By:
/S/ JOHN M. TURNER, JR.
John M. Turner, Jr.
President and Chief Executive Officer
175
Table of Contents
Signature
Title
Date
/S/ JOHN M. TURNER, JR.
John M. Turner, Jr.
/S/ DAVID J. TURNER, JR.
David J. Turner, Jr.
/S/ Karin K. Allen
Karin K. Allen
President and Chief Executive Officer, and
Director (principal executive officer)
February 23, 2024
Senior Executive Vice President and Chief
Financial Officer (principal financial officer)
February 23, 2024
Executive Vice President and Assistant
Controller (Chief Accounting Officer and
Authorized Officer)
February 23, 2024
*
Mark A. Crosswhite
*
Noopur Davis
*
Zhanna Golodryga
*
J. Thomas Hill
*
John D. Johns
*
Joia M. Johnson
*
Ruth Ann Marshall
*
Charles D. McCrary
*
James T. Prokopanko
*
Alison S. Rand
*
Lee J. Styslinger III
*
José S. Suquet
*
Timothy Vines
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
176
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
Table of Contents
* Tara A. Plimpton, by signing her 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/ Tara A. Plimpton
Tara A. Plimpton
Attorney in Fact
177
I, John M. Turner, Jr., certify that:
CERTIFICATIONS
EXHIBIT 31.1
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Regions Financial Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
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 23, 2024
/S/ JOHN M. TURNER, JR.
John M. Turner, Jr.
President and Chief Executive Officer
I, David J. Turner, Jr., certify that:
CERTIFICATIONS
EXHIBIT 31.2
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Regions Financial Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
b)
c)
d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a)
b)
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
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 23, 2024
/S/ DAVID J. TURNER, JR.
David J. Turner, Jr.
Senior Executive Vice President and
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32
In connection with the Annual Report of Regions Financial Corporation (the “Company”) on Form 10-K for the year
ended December 31, 2023 (the “Report”), I, John M. Turner, Jr., Chief Executive Officer of the Company, and David J. Turner,
Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that to our knowledge:
1)
2)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
/S/ JOHN M. TURNER, JR.
John M. Turner, Jr.
President and Chief Executive Officer
/S/ DAVID J. TURNER, JR.
David J. Turner, Jr.
Chief Financial Officer
Date: February 23, 2024
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by
Section 906, has been provided to Regions Financial Corporation and will be retained by Regions Financial Corporation and
furnished to the Securities and Exchange Commission or its staff upon request.