Regions Financial : 1Q25 Basel III Regulatory Capital Disclosure Report
RF
Published on 05/15/2025 at 16:59
As of and for the quarter ended March 31, 2025
Basel III Regulatory Capital Disclosures Report As of and for the Quarter Ended March 31, 2025
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 9
Table 6 Counterparty Credit Risk-Related Exposures 19
Table 7 Credit Risk Mitigation 21
Table 8 Securitization 23
Table 9 Equity Exposures Not Subject to the Market Risk Rule 24
Table 10 Interest Rate Risk for Non-Trading Activities 26
Appendix 1 Basel III Regulatory Capital Disclosure Matrix 27
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Basel III Basel Committee's 2010 Regulatory Capital Framework (Third Accord).
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.
CECL Accounting Standards Update 2016-13, Measurement of Credit Losses on Financial Instruments
("Current Expected Credit Losses").
Form 10-K Refers to the Annual Report on Form 10-K that is filed with the Securities and Exchange Commission by Regions Financial Corporation.
Form 10-Q Refers to the Quarterly Report on Form 10-Q that is filed with the Securities and Exchange Commission by Regions Financial Corporation.
Federal Reserve The Board of Governors of the Federal Reserve System.
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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 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, the risks identified in Part I, Item 1A. "Risk Factors" and "Forward-Looking Statements" of our 2024 Form 10-K and Regions' Quarterly Reports on Form 10-Q for the subsequent quarters as filed with the SEC and available on its website at https://www.sec.gov in our March 31, 2025 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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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, 2024, and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 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 2024 Form 10-K, as well as the Consolidated Financial Statements for Holding Companies - FR Y-9C dated March 31, 2025. The Regulatory Capital Disclosures Matrix presented in Appendix 1 specifies where all disclosures required by the Basel III Rules are located.
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Regions Financial Corporation is a FHC headquartered in Birmingham, Alabama. 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. 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, 2025, Regions operated 1,249 branch outlets across the South, Midwest and Texas. Regions provides 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 financing. At March 31, 2025, Regions had total consolidated assets of approximately
$159.8 billion, total consolidated deposits of approximately $131.0 billion and total consolidated shareholders' equity of approximately $18.5 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' 2024 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 to Regions in excess of 90% of its net earnings until the banks' 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 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. 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, 2025, none of the Company's subsidiaries that have a capital requirement had capital less than the minimum total capital requirement.
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Regions has issued a variety of capital instruments to meet its regulatory capital requirements. These capital instruments include common stock that qualifies as CET1, noncumulative perpetual preferred stock that qualifies as additional Tier 1 capital and subordinated debt that qualifies as Tier 2 capital. For further information on the Company's capital instruments and regulatory requirements, see Note 11 "Borrowed Funds", Note 12 "Regulatory Capital Requirements and Restrictions", and Note 14 "Shareholders' Equity and Accumulated Other Comprehensive Income (Loss)" to the consolidated financial statements in Part II, Item 8 of the 2024 Form 10-K. See also Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income" to the consolidated financial statements in Part I, Item 1 of the March 31, 2025 Form 10-Q. See also Table 14 " Long-Term Borrowings", in Part I, Item 2 of the March 31, 2025 Form 10-Q.
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 was phased-in over a three-year period beginning in 2022 and concluded in the first quarter of 2025. At December 31, 2024, the net impact of the add-back on CET1 was approximately $102 million or approximately 8 basis points; this amount was zero at March 31, 2025.
In the third quarter of 2023, proposals were issued by the U.S federal banking regulators that, if adopted, would impact the Company related to long-term debt requirements and U.S. implementation of capital requirements under Basel IV rules, more recently referred to as the Basel III "Endgame". The Company is studying the proposals and evaluating their impacts. For more information see "Supervision and Regulation" discussion within Item 1. Business of the 2024 Form 10-K.
The following table represents the amounts of CET1, Tier 1 capital and Total capital along with the related components and regulatory adjustments and deductions.
March 31, 2025
Regions Financial
Corporation Regions Bank
(In millions)
Common Equity Tier 1 Capital:
Common stock and surplus (net of treasury stock)
$ 9,799
$ 16,399
Retained earnings (including CECL add-back)
9,299
3,267
Accumulated other comprehensive income (loss), net
(2,283)
(2,284)
Regulatory adjustments and deductions made to CET1
(3,460)
(2,868)
Common Equity Tier 1 Capital
$ 13,355
$ 14,514
Additional Tier 1 Capital:
Preferred stock
$ 1,715
$
-
Tier 1 Capital
$ 15,070
$
14,514
Tier 2 Capital:
Qualifying subordinated debt
$ 298
$ 496
Qualifying allowance for loan and lease losses
1,549
1,544
Total capital minority interest not included in Tier 1 capital
496
-
Total Capital
$ 17,413
$ 16,554
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Regions believes that the prudent management of capital is paramount in ensuring the Company's continued ability to provide uninterrupted high quality service to the businesses and communities it serves. Regions believes that no single tool or model can sufficiently assess capital adequacy. As such, Regions has established a multi-faceted approach which is designed to capture relevant information from across the Company and consolidate it in a way that can be reliably used to facilitate capital adequacy assessments and broader capital planning decision making. This framework is directly integrated with the Enterprise Risk Appetite Statement, as defined by the Board, and includes, but is not limited to, analysis of economic capital, regulatory capital, liquidity, and internal enterprise risk assessments. Certain of these elements are analyzed on a spot and forecasted basis and under a multiple of assumed macroeconomic conditions, including adverse scenarios of varying severity. With respect to these adverse scenarios, this "stress testing" is a critical input into Regions' internal capital adequacy assessment.
A summary of the risk-weighted assets by exposure category under the standardized approach as of March 31, 2025 are shown below.
March 31, 2025
Regions Financial
Risk-Weighted Assets:
Corporation
(In millions)
Exposures to government sponsored enterprises
$
4,979
Exposures to depository institutions, foreign banks and credit unions
533
Exposures to public service entities
2,892
Corporate exposures
57,065
Residential mortgage exposures
14,930
Statutory multi-family mortgage exposures
679
High volatility commercial real estate exposures
797
Past due loans
1,272
Other assets
13,778
Securitization exposures
1,306
Equity exposures(1)
2,969
Other:
Off-balance sheet commitments
20,453
Derivatives
734
Letters of credit and other
1,546
Excess allowance
(178)
Total risk-weighted assets
$ 123,755
(1) See Table 9 for additional information regarding Regions' equity exposures.
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Regions manages its capital to exceed regulatory capital requirements for well-capitalized financial institutions and to exceed minimum levels inclusive of any applicable CCB. For March 31, 2025, the Company's applicable capital requirements for regulatory and supervisory purposes is based upon the ratios determined under the standardized approach expressed in the form of a CET1 capital ratio, a Tier 1 capital ratio, a Total capital ratio, and a Leverage ratio. See Table 15 "Regulatory Capital Requirements" in Part I, Item 2 of the March 31, 2025 Form 10-Q for further details.
The Basel III Rules impose a CCB designed to absorb losses during periods of economic stress. The CCB is on top of minimum risk-weighted asset ratios and is equal to the lowest difference between the three risk-based capital ratios less the applicable minimum required ratio. Standardized approach banking institutions with ratios that are above the minimum but whose CCB is below its SCB, face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall and the institution's ERI. ERI is compiled using the greater of the most recent four quarters' net income, net of distributions and tax effects not reflected in net income or the average of the most recent four quarters' net income. See "Business Section - Regulatory Capital Requirements" in Part I, Item 1 of the 2024 Form 10-K for further details.
Regions participates in supervisory stress testing conducted by the Federal Reserve and its SCB is currently floored at 2.5 percent. See Note 6 "Shareholders' Equity and Accumulated Other Comprehensive Income" to the consolidated financial statements in Part I, Item 1 of the March 31, 2025 Form 10-Q for further details regarding CCAR results.
A summary of the CCB calculations and disclosure requirements under the standardized approach as of March 31, 2025 is shown below.
March 31, 2025 Regions
Financial
Corporation Regions Bank
(Dollars in millions)
CET1
10.79 %
11.77 %
Less: minimum
4.50 %
4.50 %
6.29 %
7.27 %
Tier 1
12.18 %
11.77 %
Less: minimum
6.00 %
6.00 %
6.18 %
5.77 %
Total
14.07 %
13.42 %
Less: minimum
8.00 %
8.00 %
6.07 %
5.42 %
Reportable CCB (lowest of the subtotals above)
6.07 %
5.42 %
ERI
$ 556
$ 582
Regions is not subject to any limitations on its capital distributions or discretionary bonus payments to executive officers because capital levels exceed the defined minimum levels, inclusive of the CCB.
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Credit risk is the risk of loss arising from a borrower or counterparty failing to meet a contractual obligation. Credit risk primarily exists in the securities portfolio, the loan portfolio, and derivatives activities. Regions maintains a highly rated securities portfolio consisting primarily of agency mortgage-backed securities, in order to manage credit risk in the securities portfolio. Regions uses financial derivative instruments for management of interest rate sensitivity, as well as to offset the risks associated with customer derivatives, which include interest rate, credit and foreign exchange risks. Regions manages the credit risk of these derivative instruments in much the same way 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 related to derivatives is also reduced significantly by entering into legally enforceable master netting agreements.
Regions has established a risk management framework to manage risks and provide reasonable assurance of the achievement of the Company's strategic objectives. Regions' risk management framework outlines the Company's approach for managing risk that includes four components: 1) collaborative risk culture, 2) sound risk appetite, 3) sustainable risk processes and 4) responsible risk governance. 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. 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. 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 controls as conditions or risk tolerances change. Management, with the assistance of the Risk Management Group, follows a formal process for identifying, measuring and documenting key risks (including credit risk) 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 Committee's Enterprise Risk Appetite Statement.
For further information on Regions' credit risk, derivative credit risk, and risk management framework, see "Quantitative and Qualitative Disclosures about Market Risk-Risk Management," and "Quantitative and Qualitative Disclosures about Market Risk-Credit Risk," as well as "Quantitative and Qualitative Disclosures about Market Risk-Interest Rate Risk" in Part II, Item 7 of the 2024 Form 10-K.
Regions has documented policies related to determining past due or delinquency status of a loan, placing loans on non-accrual status, returning loans to accrual status, and charging-off uncollectible loans. See Note 1 "Summary of Significant Accounting Policies" to the consolidated financial statements included in Regions' 2024 Form 10-K for further information.
Disclosures included in this Credit Risk: General Disclosures section report classifications consistent with the 2024 Form 10-K. Credit risk associated with loans combined with related commitments to extend credit and letters of credit, corporate and other debt securities and OTC derivatives are presented in this section since they represent Regions' major types of credit exposure.
The Company categorizes its loan portfolio into three segments, which is the level at which it develops and documents a systematic methodology to determine the allowance for credit losses. The Company's three loan portfolio segments are commercial lending, investor real estate lending and consumer lending. Regions further disaggregates its loans into various classes based on their underlying risk characteristics. The three classes within the commercial lending segment are commercial and industrial, commercial real estate mortgage-owner occupied and commercial real estate construction-owner occupied. The two classes within investor real estate lending are commercial investor real estate mortgage and commercial investor real estate construction. The four classes within the consumer lending segment are residential first mortgage, home equity, consumer credit card and other consumer loans. The following tables present certain of the Company's on and off-balance sheet positions for which the Company is subject to credit risk exposure and are presented on a U.S. GAAP basis. These amounts do not include the effects of certain credit risk mitigation techniques (for example, netting not permitted under U.S. GAAP), equity investments or liability positions that also would be subject to credit risk capital calculations, and amounts related to items that are deducted from regulatory capital. For the tables below, the residential first mortgage and home equity lending classes have been combined into "consumer real estate" and the consumer credit card and other consumer loan classes have been combined into "other consumer". For further information on the Company's loan portfolios, see the "Portfolio Characteristics" sections of Management's Discussion and Analysis in Part II, Item 7 of the 2024 Form 10-K and in Part I, Item 2 of the March 31, 2025 Form 10-Q.
Table 5a provides the geographic distribution of loans and related commitments by the top ten states within the United States and all other. The table includes loans, contractual commitments to extend credit and letters of credit, and excludes loans held for sale.
March 31, 2025
Commercial (1)
Investor Real Estate (2)
Consumer Real Estate (2)
Other
Consumer (1)Total (4)
Percent of Total
(Dollars in millions)
Florida
$ 10,861
$ 2,267
$ 8,993
$ 2,359
$ 24,480
15.1 %
Texas
13,912
2,619
1,929
1,356
19,816
12.2 %
Alabama
9,052
420
4,815
2,031
16,318
10.1 %
Tennessee
7,322
403
4,589
1,825
14,139
8.7 %
Georgia
6,059
412
3,422
951
10,844
6.7 %
Louisiana
4,109
90
1,551
688
6,438
4.0 %
North Carolina
2,346
896
1,471
242
4,955
3.1 %
Mississippi
2,847
198
1,054
764
4,863
3.0 %
Missouri
3,307
184
823
365
4,679
2.9 %
Indiana
2,228
110
877
265
3,480
2.1 %
Other (3)
39,863
4,606
3,787
4,020
52,276
32.1 %
$ 101,906 $ 12,205 $ 33,311 $ 14,866 $ 162,288 100.0 %
Geography defined by location of customer.
Geography defined by location of collateral.
Includes commitments to make commitments of approximately $531 million.
Excludes loans held for sale.
Disclaimer
Regions Financial Corporation published this content on May 15, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 15, 2025 at 20:58 UTC.