Regions Financial : 1Q21 Basel III Regulatory Capital Disclosure Report - pdf, 298KB, opens in a new window

Regions Financial Corporation

Basel III Regulatory Capital Disclosures Report

As of and for the quarter ended March 31, 2021

Regions Financial Corporation

Basel III Regulatory Capital Disclosures Report

As of and for the Quarter Ended March 31, 2021

Table of Contents

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Glossary		3
Forward Looking Statements	4
Background and Overview	5
Table 1	Scope of Application	5
Table 2	Capital Structure	6
Table 3	Capital Adequacy	7
Table 4	Capital Ratios and Capital Conservation Buffer	8
Table 5	Credit Risk: General Disclosures	10
Table 6	Counterparty Credit Risk-Related Exposures	20
Table 7	Credit Risk Mitigation	22
Table 8	Securitization	24
Table 9	Equity Exposures Not Subject to the Market Risk Rule	25
Table 10	Interest Rate Risk for Non-Trading Activities	27
Appendix 1	Basel III Regulatory Capital Disclosure Matrix	28

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Glossary

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Bank	Regions Bank.
Basel III	Basel Committee's 2010 Regulatory Capital Framework (Third Accord).
Basel III Rules	Final capital rules adopting the Basel III capital framework approved by U.S. federal
	regulators in 2013.
Board	The Company's Board of Directors.
BOLI	Bank-owned life insurance.
CCB	Capital Conservation Buffer.
CCAR	Comprehensive Capital Analysis and Review.
CECL	Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments
	("Current Expected Credit Losses")
CET1	Common Equity Tier 1.
Company	Regions Financial Corporation and its subsidiaries.
CSA	Credit Support Annexes.
ERI	Eligible Retained Income.
FHA	Federal Housing Administration.
FHC	Financial Holding Company.
FHLB	Federal Home Loan Bank.
Form 10-K	Refers to the Annual Report on Form 10-K that is filed with the Securities and Exchange Commission
Form 10-Q	by Regions Financial Corporation.
Refers to the Quarterly Report on Form 10-Q that is filed with the Securities and Exchange Commission
	by Regions Financial Corporation.
FRB	Federal Reserve Bank.
GNMA	Government National Mortgage Association.
GSE	Government Sponsored Enterprise.
ISDA	International Swaps and Derivatives Association.
MRA	Master Repurchase Agreement.
OCI	Other Comprehensive Income.
OTC	Over the counter (derivatives which are not centrally cleared).
Regions	Regions Financial Corporation and its subsidiaries.
RPA	Risk Participation Agreement.
RWA	Risk-weighted assets.
SEC	U.S. Securities and Exchange Commission.
SCB	Stress Capital Buffer.
SPE	Special purpose entity.
SSFA	Simplified Supervisory Formula Approach.
U.S.	United States.
U.S. GAAP	Generally Accepted Accounting Principles in the United States.
U.S. Treasury	The United States Department of Treasury.

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Forward Looking Statements

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This report may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect Regions' current views with respect to future events and financial performance. 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 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, the risks identified in Part II, Item 1A. "Risk Factors" and "Forward-Looking Statements" of our 2020 Form 10-K and in our March 31, 2021 Form 10-Q.

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.

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Background and Overview

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Under the Basel III Rules, Regions is designated as a standardized approach bank. The Basel III Rules also prescribe a standardized approach for risk-weightings of assets and off-balance sheet exposures to derive the capital ratios. In addition, the Basel III Rules provide for a number of deductions from and adjustments to CET1. Regions is currently not subject to the U.S. market risk capital rule, which applies only to banking institutions with significant trading activity.

This document and certain of the Company's public filings present the Regulatory Capital Disclosures in compliance with Basel III as described in Section 63 of the final rules. The Company's Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 filed with the SEC contains management's discussion of the overall risk profile of the Company and related management strategies. These Regulatory Capital Disclosures should be read in conjunction with the 2020 Form 10-K, as well as the Consolidated Financial Statements for Holding Companies - FR Y-9C dated March 31, 2021. The Regulatory Capital Disclosures Matrix presented in Appendix 1 specifies where all disclosures required by the Basel III Rules are located.

Table 1 Scope of Application

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Regions Financial Corporation is a FHC headquartered in Birmingham, Alabama. The terms "we," "us" and "our" mean Regions Financial Corporation, a Delaware corporation and its subsidiaries, when appropriate. Regions conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank that is a member of the Federal Reserve System. At March 31, 2021, Regions operated 1,366 branch outlets across the South, Midwest and Texas. 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, trust services, merger and acquisition advisory services and other specialty financing. At March 31, 2021, Regions had total consolidated assets of approximately $153.3 billion, total consolidated deposits of approximately $129.6 billion and total consolidated stockholders' equity of approximately $17.9 billion.

The Company's accounting and reporting policies conform to U.S. GAAP. Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. See Note 1, "Summary of Significant Accounting Policies" to the consolidated financial statements included in Regions' 2020 Form 10-K. The basis of consolidation for accounting and regulatory purposes is the same.

Regions is a legal entity separate and distinct from its banking and other subsidiaries. The principal source of cash flow to Regions, including cash flow to pay dividends to its stockholders and principal and interest on any of its outstanding debt, is dividends from Regions Bank. There are statutory and regulatory limitations on the payment of dividends by Regions Bank to Regions. 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.

At March 31, 2021, none of the Company's subsidiaries that have a capital requirement had capital less than the minimum total capital requirement.

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