Item 1. Financial Statements (Unaudited)

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Item 1. Financial Statements (Unaudited)

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	September 30, 2021		December 31, 2020
	(In millions, except share data)
Assets
Cash and due from banks	$	1,741	$	1,558
Interest-bearing deposits in other banks	25,766		16,398
Debt securities held to maturity (estimated fair value of $1,010 and $1,215, respectively)	945		1,122
Debt securities available for sale (amortized cost of $28,480 and $26,092, respectively)	28,986		27,154
Loans held for sale (includes $857 and $1,446 measured at fair value, respectively)	934		1,905
Loans, net of unearned income	83,270		85,266
Allowance for loan losses	(1,428)		(2,167)
Net loans	81,842		83,099
Other earning assets	1,269		1,217
Premises and equipment, net	1,805		1,897
Interest receivable	304		346
Goodwill	5,181		5,190
Residential mortgage servicing rights at fair value	410		296
Other identifiable intangible assets, net	101		122
Other assets	6,869		7,085
Total assets	$	156,153	$	147,389
Liabilities and Equity
Deposits:
Non-interest-bearing	$	57,145	$	51,289
Interest-bearing	74,894		71,190
Total deposits	132,039		122,479
Borrowed funds:




Long-term borrowings	2,451		3,569
Total borrowed funds	2,451		3,569
Other liabilities	3,040		3,230
Total liabilities	137,530		129,278
Equity:
Preferred stock, authorized 10 million shares, par value $1.00 per share
Non-cumulative perpetual, including related surplus, net of issuance costs; issued—1,750,000 and 1,850,000 shares, respectively	1,659		1,656
Common stock, authorized 3 billion shares, par value $0.01 per share:
Issued including treasury stock— 995,602,823 and 1,001,507,052 shares, respectively	10		10
Additional paid-in capital	12,479		12,731
Retained earnings	5,296		3,770
Treasury stock, at cost— 41,032,676 shares	(1,371)		(1,371)
Accumulated other comprehensive income, net	532		1,315
Total shareholders’ equity	18,605		18,111
Noncontrolling interest	18		—
Total equity	18,623		18,111
Total liabilities and equity	$	156,153	$	147,389

See notes to consolidated financial statements.

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions, except per share data)
Interest income on:
Loans, including fees	$	847	$	903	$	2,550	$	2,704
Debt securities	135		140		399		446
Loans held for sale	7		8		31		19
Other earning assets	17		8		45		32

Total interest income	1,006		1,059		3,025		3,201
Interest expense on:
Deposits	15		32		51		156
Short-term borrowings	—		—		—		10
Long-term borrowings	26		39		79		147
Total interest expense	41		71		130		313


Net interest income	965		988		2,895		2,888
Provision for (benefit from) credit losses	(155)		113		(634)		1,368
Net interest income after provision for (benefit from) credit losses	1,120		875		3,529		1,520
Non-interest income:
Service charges on deposit accounts	162		152		482		461
Card and ATM fees	129		115		372		321
Investment management and trust fee income	69		62		204		186
Capital markets income	87		61		248		165
Mortgage income	50		108		193		258
Securities gains (losses), net	1		3		3		4
Other	151		154		407		318
Total non-interest income	649		655		1,909		1,713
Non-interest expense:
Salaries and employee benefits	552		525		1,630		1,519
Equipment and software expense	90		89		269		258
Net occupancy expense	75		80		227		235
Other	221		202		638		644
Total non-interest expense	938		896		2,764		2,656
Income before income taxes	831		634		2,674		577
Income tax expense	180		104		591		99





Net income	$	651	$	530	$	2,083	$	478

Net income available to common shareholders	$	624	$	501	$	1,986	$	403
Weighted-average number of shares outstanding:
Basic	955		960		958		959
Diluted	962		962		965		961



Earnings per common share:
Basic	$	0.65	$	0.52	$	2.07	$	0.42
Diluted	$	0.65	$	0.52	$	2.06	$	0.42

See notes to consolidated financial statements.

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended September 30
	2021		2020
	(In millions)
Net income (loss)	$	651	$	530
Other comprehensive income, 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 and zero tax effect, respectively)	—		—
Less: reclassification adjustments for amortization of unrealized losses on securities transferred to held to maturity (net of zero and ($2) tax effect, respectively)	(2)		(2)
Net change in unrealized losses on securities transferred to held to maturity, net of tax	2		2
Unrealized gains on securities available for sale:
Unrealized holding gains (losses) arising during the period (net of ($24) and zero tax effect, respectively)	(75)		(2)
Less: reclassification adjustments for securities gains (losses) realized in net income (net of $1 and $1 tax effect, respectively)	—		2
Net change in unrealized gains on securities available for sale, net of tax	(75)		(4)
Unrealized gains on derivative instruments designated as cash flow hedges:
Unrealized holding gains (losses) on derivatives arising during the period (net of $6 and zero tax effect, respectively)	18		2
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of $27 and $24 tax effect, respectively)	81		70
Net change in unrealized gains on derivative instruments, net of tax	(63)		(68)
Defined benefit pension plans and other post employment benefits:
Net actuarial gains (losses) arising during the period (net of zero and zero tax effect, respectively)	—		—
Less: reclassification adjustments for amortization of actuarial loss and settlements realized in net income (net of ($4) and ($2) tax effect, respectively)	(17)		(9)
Net change from defined benefit pension plans and other post employment benefits, net of tax	17		9
Other comprehensive income (loss), net of tax	(119)		(61)
Comprehensive income	$	532	$	469

	Nine Months Ended September 30
	2021		2020
	(In millions)
Net income (loss)	$	2,083	$	478
Other comprehensive income, 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 and zero tax effect, respectively)	—		—
Less: reclassification adjustments for amortization of unrealized losses on securities transferred to held to maturity (net of ($1) and ($2) tax effect, respectively)	(5)		(4)
Net change in unrealized losses on securities transferred to held to maturity, net of tax	5		4
Unrealized gains on securities available for sale:
Unrealized holding gains (losses) arising during the period (net of ($139) and $212 tax effect, respectively)	(414)		629
Less: reclassification adjustments for securities gains (losses) realized in net income (net of $1 and $1 tax effect, respectively)	2		3
Net change in unrealized gains on securities available for sale, net of tax	(416)		626
Unrealized gains on derivative instruments designated as cash flow hedges:
Unrealized holding gains (losses) on derivatives arising during the period (net of ($59) and $377 tax effect, respectively)	(174)		1,121
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of $79 and $41 tax effect, respectively)	235		122
Net change in unrealized gains on derivative instruments, net of tax	(409)		999
Defined benefit pension plans and other post employment benefits:
Net actuarial gains (losses) arising during the period (net of zero and zero tax effect, respectively)	—		—
Less: reclassification adjustments for amortization of actuarial loss and settlements realized in net income (net of ($11) and ($8) tax effect, respectively)	(37)		(26)
Net change from defined benefit pension plans and other post employment benefits, net of tax	37		26
Other comprehensive income (loss), net of tax	(783)		1,655
Comprehensive income	$	1,300	$	2,133

See notes to consolidated financial statements.

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


	Shareholders' Equity
	Preferred Stock			Common Stock			Additional Paid-In Capital		Retained Earnings		Treasury Stock, At Cost		Accumulated Other Comprehensive Income (Loss), Net		Total		Non- controlling Interest
	Shares	Amount		Shares	Amount
	(In millions)
BALANCE AT JANUARY 1, 2020	2	$	1,310	957	$	10	$	12,685	$	3,751	$	(1,371)	$	(90)	$	16,295	$	—
Cumulative effect from change in accounting guidance	—	—		—	—		—		(377)		—		—		(377)		—
Net income	—	—		—	—		—		162		—		—		162		—
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		—		1,414		1,414		—

Cash dividends declared	—	—		—	—		—		(149)		—		—		(149)		—

Preferred stock dividends	—	—		—	—		—		(23)		—		—		(23)		—


Impact of stock transactions under compensation plans, net	—	—		—	—		10		—		—		—		10		—

BALANCE AT MARCH 31, 2020	2	$	1,310	957	$	10	$	12,695	$	3,364	$	(1,371)	$	1,324	$	17,332	$	—

BALANCE AT APRIL 1, 2020	2	$	1,310	957	$	10	$	12,695	$	3,364	$	(1,371)	$	1,324	$	17,332	$	—

Net income (loss)	—	—		—	—		—		(214)		—		—		(214)		—
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		—		302		302		—
Cash dividends declared	—	—		—	—		—		(149)		—		—		(149)		—
Preferred stock dividends	—	—		—	—		—		(23)		—		—		(23)		—

Net proceeds from issuance of Series D preferred stock	—	346		—	—		—		—		—		—		346		—


Impact of stock transactions under compensation plans, net and other	—	—		3	—		8		—		—		—		8		—
Other	—	—		—	—		—		—		—		—		—		26
BALANCE AT JUNE 30, 2020	2	$	1,656	960	$	10	$	12,703	$	2,978	$	(1,371)	$	1,626	$	17,602	$	26

BALANCE AT JULY 1, 2020	2	$	1,656	960	$	10	$	12,703	$	2,978	$	(1,371)	$	1,626	$	17,602	$	26

Net income	—	—		—	—		—		530		—		—		530		—
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		—		(61)		(61)		—
Cash dividends declared	—	—		—	—		—		(149)		—		—		(149)		—
Preferred stock dividends	—	—		—	—		—		(29)		—		—		(29)		—


Impact of stock transactions under compensation plans, net and other	—	—		—	—		11		—		—		—		11		—
Other	—	—		—	—		—		—		—		—		—		(26)
BALANCE AT SEPTEMBER 30, 2020	2	$	1,656	960	$	10	$	12,714	$	3,330	$	(1,371)	$	1,565	$	17,904	—











BALANCE AT JANUARY 1, 2021	2	$	1,656	960	$	10	$	12,731	$	3,770	$	(1,371)	$	1,315	$	18,111	$	—

Net income	—	—		—	—		—		642		—		—		642		—
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		—		(723)		(723)		—
Cash dividends declared	—	—		—	—		—		(149)		—		—		(149)		—
Preferred stock dividends	—	—		—	—		—		(28)		—		—		(28)		—


Impact of common stock transactions under compensation plans, net	—	—		1	—		9		—		—		—		9		—

BALANCE AT MARCH 31, 2021	2	$	1,656	961	$	10	$	12,740	$	4,235	$	(1,371)	$	592	$	17,862	$	—

BALANCE AT APRIL 1, 2021	2	$	1,656	961	$	10	$	12,740	$	4,235	$	(1,371)	$	592	$	17,862	$	—

Net income	—	—		—	—		—		790		—		—		790		—
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		—		59		59		—
Cash dividends declared	—	—		—	—		—		(147)		—		—		(147)		—
Preferred stock dividends	—	—		—	—		—		(29)		—		—		(29)		—
Net proceeds from issuance of Series E preferred stock	—	390		—	—		—		—		—		—		390		—
Redemption of Series A preferred stock	—	(387)		—	—		(100)		(13)		—		—		(500)		—
Impact of common stock share repurchases	—	—		(8)	—		(167)		—		—		—		(167)		—
Impact of common stock transactions under compensation plans, net	—	—		2	—		(6)		—		—		—		(6)		—

BALANCE AT JUNE 30, 2021	2	$	1,659	955	$	10	$	12,467	$	4,836	$	(1,371)	$	651	$	18,252	$	—

BALANCE AT JULY 1, 2021	2	$	1,659	955	$	10	$	12,467	$	4,836	$	(1,371)	$	651	$	18,252	$	—
Net income	—	—		—	—		—		651		—		—		651		—
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		—		(119)		(119)		—
Cash dividends declared	—	—		—	—		—		(164)		—		—		(164)		—
Preferred stock dividends	—	—		—	—		—		(27)		—		—		(27)		—
Impact of stock transactions under compensation plans, net	—	—		—	—		12		—		—		—		12		—
Other	—	—		—	—		—		—		—		—		—		18
BALANCE AT SEPTEMBER 30, 2021	2	$	1,659	955	$	10	$	12,479	$	5,296	$	(1,371)	$	532	$	18,605	$	18

See notes to consolidated financial statements.

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30
	2021		2020
	(In millions)
Operating activities:
Net income	$	2,083	$	478
Adjustments to reconcile net income to net cash from operating activities:
Provision for (benefit from) credit losses	(634)		1,368
Depreciation, amortization and accretion, net	293		360

Securities (gains) losses, net	(3)		(4)

Deferred income tax expense (benefit)	200		(234)
Originations and purchases of loans held for sale	(5,236)		(4,684)
Proceeds from sales of loans held for sale	6,024		4,328

(Gain) loss on sale of loans, net	(194)		(181)
(Gain) loss on early extinguishment of debt	20		8
Net change in operating assets and liabilities:

Other earning assets	(67)		269
Interest receivable and other assets	(192)		—

Other liabilities	(84)		513
Other	59		104
Net cash from operating activities	2,269		2,325
Investing activities:
Proceeds from maturities of debt securities held to maturity	177		141
Proceeds from sales of debt securities available for sale	77		175
Proceeds from maturities of debt securities available for sale	4,400		3,360
Purchases of debt securities available for sale	(7,128)		(6,396)

Net proceeds from (payments for) bank-owned life insurance	(2)		(3)
Proceeds from sales of loans	436		193
Purchases of loans	(1,004)		(1,266)
Purchases of mortgage servicing rights	(58)		(35)
Net change in loans	2,804		(2,522)
Net purchases of other assets	(54)		(96)
Payment for acquisition of a business, net of cash received	—		(381)
Net cash from investing activities	(352)		(6,830)
Financing activities:
Net change in deposits	9,560		20,970
Net change in short-term borrowings	—		(2,050)
Proceeds from long-term borrowings	647		4,698
Payments on long-term borrowings	(1,749)		(9,569)
Net proceeds from issuance of preferred stock	390		346
Payment for redemption of preferred stock	(500)		—
Cash dividends on common stock	(446)		(446)
Cash dividends on preferred stock	(84)		(75)
Repurchases of common stock	(167)		—
Taxes paid related to net share settlement of equity awards	(20)		(7)
Other	3		(3)
Net cash from financing activities	7,634		13,864
Net change in cash and cash equivalents	9,551		9,359
Cash and cash equivalents at beginning of year	17,956		4,114
Cash and cash equivalents at end of period	$	27,507	$	13,473

See notes to consolidated financial statements.

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Nine Months Ended September 30, 2021 and 2020

NOTE 1. BASIS OF PRESENTATION

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. The Company competes with other financial institutions located in the states in which it operates, as well as other adjoining states. Regions is subject to the regulations of certain government agencies and undergoes periodic examinations by certain 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. The accompanying interim financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements have been included. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in Regions’ Annual Report on Form 10-K for the year ended December 31, 2020. Regions has evaluated all subsequent events for potential recognition and disclosure through the filing date of this Form 10-Q.

During 2021, the Company adopted new accounting guidance related to several topics. See Note 12 for related disclosures.

NOTE 2. 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:


	September 30, 2021
			Recognized in OCI (1)						Not Recognized in OCI
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency	$	405	$	—	$	(14)	$	391	$	25	$	—	$	416
Commercial agency	555		—		(1)		554		40		—		594
	$	960	$	—	$	(15)	$	945	$	65	$	—	$	1,010

Debt securities available for sale:
U.S. Treasury securities	$	783	$	2	$	(1)	$	784					$	784
Federal agency securities	96		2		(1)		97						97
Mortgage-backed securities:
Residential agency	19,414		404		(133)		19,685						19,685
Residential non-agency	1		—		—		1						1
Commercial agency	6,207		219		(41)		6,385						6,385
Commercial non-agency	557		7		—		564						564
Corporate and other debt securities	1,422		49		(1)		1,470						1,470
	$	28,480	$	683	$	(177)	$	28,986					$	28,986


	December 31, 2020
			Recognized in OCI (1)						Not Recognized in OCI
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In millions)
Debt securities held to maturity:
Mortgage-backed securities:
Residential agency	$	554	$	—	$	(19)	$	535	$	34	$	—	$	569
Commercial agency	589		—		(2)		587		59		—		646
	$	1,143	$	—	$	(21)	$	1,122	$	93	$	—	$	1,215

Debt securities available for sale:
U.S. Treasury securities	$	178	$	5	$	—	$	183					$	183
Federal agency securities	102		3		—		105						105
Mortgage-backed securities:
Residential agency	18,455		625		(4)		19,076						19,076
Residential non-agency	1		—		—		1						1
Commercial agency	5,659		346		(6)		5,999						5,999
Commercial non-agency	571		15		—		586						586
Corporate and other debt securities	1,126		78		—		1,204						1,204
	$	26,092	$	1,072	$	(10)	$	27,154					$	27,154

(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 $9.4 billion and $10.3 billion at September 30, 2021, and December 31, 2020, respectively, were pledged to secure public funds, trust deposits and certain borrowing arrangements. Included within total pledged securities is approximately $24 million of encumbered U.S. Treasury securities at both September 30, 2021, and December 31, 2020.

The amortized cost and estimated fair value of debt securities held to maturity and debt securities available for sale at September 30, 2021, 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.


	Amortized Cost		Estimated Fair Value
	(In millions)
Debt securities held to maturity:




Mortgage-backed securities:
Residential agency	$	405	$	416
Commercial agency	555		594
	$	960	$	1,010
Debt securities available for sale:
Due in one year or less	$	324	$	327
Due after one year through five years	1,098		1,129
Due after five years through ten years	765		779
Due after ten years	114		116
Mortgage-backed securities:
Residential agency	19,414		19,685
Residential non-agency	1		1
Commercial agency	6,207		6,385
Commercial non-agency	557		564
	$	28,480	$	28,986

The following tables present gross unrealized losses and the related estimated fair value of debt securities available for sale at September 30, 2021, and December 31, 2020. These securities are segregated between investments that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more.


	September 30, 2021
	Less Than Twelve Months				Twelve Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(In millions)








Debt securities available for sale:
U.S. Treasury securities	$	360	$	(1)	$	4	$	—	$	364	$	(1)
Federal agency securities	64		(1)		—		—		64		(1)
Mortgage-backed securities:
Residential agency	$	7,849	$	(128)	$	220	$	(5)	$	8,069	$	(133)
Commercial agency	1,594		(28)		354		(13)		1,948		(41)

Corporate and other debt securities	328		(1)		—		—		328		(1)
	$	10,195	$	(159)	$	578	$	(18)	$	10,773	$	(177)


	December 31, 2020
	Less Than Twelve Months				Twelve Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(In millions)







Debt securities available for sale:


Mortgage-backed securities:
Residential agency	$	914	$	(4)	$	101	$	—	$	1,015	$	(4)

Commercial agency	819		(6)		—		—		819		(6)


	$	1,733	$	(10)	$	101	$	—	$	1,834	$	(10)

The number of individual debt positions in an unrealized loss position in the tables above increased from 129 at December 31, 2020, to 337 at September 30, 2021. The increase in the number of securities and the total amount of unrealized losses from year-end 2020 was primarily due to 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. 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 basis, which may be at maturity.

Gross realized gains and gross realized losses on sales of debt securities available for sale were immaterial for the three and nine months ended September 30, 2021 and 2020. The cost of securities sold is based on the specific identification method. As part of the Company's normal process for evaluating impairment, management did not identify any positions where impairment was believed to exist in either of the three and nine months ended September 30, 2021 or 2020.

NOTE 3. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES

LOANS

The following table presents the distribution of Regions' loan portfolio by segment and class, net of unearned income:


	September 30, 2021		December 31, 2020
	(In millions)
Commercial and industrial	$	41,748	$	42,870
Commercial real estate mortgage—owner-occupied	5,446		5,405
Commercial real estate construction—owner-occupied	252		300
Total commercial	47,446		48,575
Commercial investor real estate mortgage	5,608		5,394
Commercial investor real estate construction	1,704		1,869
Total investor real estate	7,312		7,263
Residential first mortgage	17,347		16,575
Home equity lines	3,875		4,539
Home equity loans	2,556		2,713
Indirect—vehicles	500		934
Indirect—other consumer	2,123		2,431
Consumer credit card	1,136		1,213
Other consumer	975		1,023
Total consumer	28,512		29,428
Total loans, net of unearned income	$	83,270	$	85,266

During the nine months ended September 30, 2021 and 2020, Regions purchased approximately $986 million and $1.3 billion in indirect-other consumer, residential first mortgage and commercial and industrial loans from third parties, respectively.

At September 30, 2021, $16.2 billion in securities and net eligible loans held by Regions were pledged for potential borrowings from the FHLB. At September 30, 2021, an additional $12.8 billion in net eligible loans held by Regions were pledged to the FRB for potential borrowings.

Included in the commercial and industrial loan balance are sales-type and direct financing leases totaling $1.2 billion as of September 30, 2021, with related income of $45 million for the nine months ended September 30, 2021.

ALLOWANCE FOR CREDIT LOSSES

Regions determines the appropriate level of the allowance on a quarterly basis. Refer to Note 1 "Summary of Significant Accounting Policies" to the consolidated financial statements to the Annual Report on Form 10-K for the year ended December 31, 2020, for a description of the methodology.

As of September 30, 2021, Regions' total loans included $1.5 billion of PPP loans. These loans are guaranteed by the Federal government and as the guarantee is not separable from the loans, Regions recorded an immaterial allowance on these loans.

ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES

During the nine months ended September 30, 2021, Regions decreased the allowance by $794 million to $1.5 billion, which represents management's best estimate of expected losses over the life of the portfolio. The decrease was due primarily to continued improvement in the economic outlook and strong credit trends. While the allowance estimate reflects these benefits, elevated levels of imprecision remain due to continued uncertainty regarding the timing of full economic recovery.

Macroeconomic factors utilized in the CECL loss models include, but are not limited to, unemployment rate, GDP, HPI and the S&P 500 index, with unemployment being the most significant macroeconomic factor. Regions' models are sensitive to changes in the economic scenarios. The September 30, 2021 economic forecast was relatively consistent with the June 2021 forecast with the exception of the HPI and S&P 500 index which had increases during the quarter. Risks to the economic forecast and the model limitations are considered through model adjustments and the qualitative framework.

The following tables present analyses of the allowance by portfolio segment for the three and nine months ended September 30, 2021 and 2020.



	Three Months Ended September 30, 2021
	Commercial		Investor Real Estate		Consumer		Total
	(In millions)
Allowance for loan losses, July 1, 2021	$	858	$	91	$	648	$	1,597
Provision for (benefit from) loan losses	(122)		(3)		(14)		(139)

Loan losses:
Charge-offs	(22)		—		(37)		(59)
Recoveries	16		1		12		29
Net loan (losses) recoveries	(6)		1		(25)		(30)
Allowance for loan losses, September 30, 2021	730		89		609		1,428
Reserve for unfunded credit commitments, July 1, 2021	61		13		13		87
Provision for (benefit from) unfunded credit commitments	(7)		(5)		(4)		(16)
Reserve for unfunded credit commitments, September 30, 2021	54		8		9		71
Allowance for credit losses, September 30, 2021	$	784	$	97	$	618	$	1,499



	Three Months Ended September 30, 2020
	Commercial		Investor Real Estate		Consumer		Total
	(In millions)
Allowance for loan losses, July 1, 2020	$	1,271	$	160	$	845	$	2,276
Provision for (benefit from) loan losses	59		30		24		113

Loan losses:
Charge-offs	(86)		—		(53)		(139)
Recoveries	11		—		15		26
Net loan (losses) recoveries	(75)		—		(38)		(113)
Allowance for loan losses, September 30, 2020	1,255		190		831		2,276
Reserve for unfunded credit commitments, July 1, 2020	107		27		15		149
Provision for (benefit from) unfunded credit commitments	26		(22)		(4)		—
Reserve for unfunded credit commitments, September 30, 2020	133		5		11		149
Allowance for credit losses, September 30, 2020	$	1,388	$	195	$	842	$	2,425


	Nine Months Ended September 30, 2021
	Commercial		Investor Real Estate		Consumer		Total
	(In millions)


Allowance for loan losses, January 1, 2021	$	1,196	$	183	$	788	$	2,167
Provision for (benefit from) loan losses	(408)		(78)		(93)		(579)

Loan losses:
Charge-offs	(105)		(19)		(132)		(256)
Recoveries	47		3		46		96
Net loan (losses) recoveries	(58)		(16)		(86)		(160)
Allowance for loan losses, September 30, 2021	730		89		609		1,428


Reserve for unfunded credit commitments, January 1, 2021	97		14		15		126
Provision for (benefit from) unfunded credit commitments	(43)		(6)		(6)		(55)
Reserve for unfunded credit commitments, September 30, 2021	54		8		9		71
Allowance for credit losses, September 30, 2021	$	784	$	97	$	618	$	1,499



	Nine Months Ended September 30, 2020
	Commercial		Investor Real Estate		Consumer		Total
	(In millions)
Allowance for loan losses, December 31, 2019	$	537	$	45	$	287	$	869
Cumulative change in accounting guidance	(3)		7		434		438
Allowance for loan losses, January 1, 2020 (adjusted for change in accounting guidance)	$	534	$	52	$	721	$	1,307
Provision for (benefit from) loan losses	932		137		258		1,327
Initial allowance on acquired PCD loans	60		—		—		60
Loan losses:
Charge-offs	(299)		—		(188)		(487)
Recoveries	28		1		40		69
Net loan (losses) recoveries	(271)		1		(148)		(418)
Allowance for loan losses, September 30, 2020	1,255		190		831		2,276
Reserve for unfunded credit commitments, December 31, 2019	41		4		—		45
Cumulative change in accounting guidance	36		13		14		63
Reserve for unfunded credit commitments, January 1, 2020 (adjusted for change in accounting guidance)	77		17		14		108
Provision (credit) for unfunded credit losses	56		(12)		(3)		41
Reserve for unfunded credit commitments, September 30, 2020	133		5		11		149
Allowance for credit losses, September 30, 2020	$	1,388	$	195	$	842	$	2,425

PORTFOLIO SEGMENT RISK FACTORS

Regions’ portfolio segments are commercial, investor real estate and consumer. Classes within each segment present unique credit risks. Refer to Note 6 "Allowance for Credit Losses" in the Annual Report on Form 10-K for the year ended December 31, 2020 for information regarding Regions’ portfolio segments and related classes, as well as the risks specific to each.

CREDIT QUALITY INDICATORS

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. Regions' ratings are aligned to federal banking regulators’ definitions and are utilized to develop the associated allowance. Refer to Note 6 "Allowance for Credit Losses" in the Annual Report on Form 10-K for the year ended December 31, 2020 for information regarding commercial risk ratings.

Regions' consumer portfolio segment has various classes that present unique credit risks. 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 following tables present applicable credit quality indicators for the loan portfolio segments and classes, excluding loans held for sale, by vintage year as of September 30, 2021 and December 31, 2020. 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. Refer to Note 6 "Allowance for Credit Losses" in the Annual Report on Form 10-K for the year ended December 31, 2020 for more information regarding Regions' credit quality indicators.


	September 30, 2021
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2021	2020		2019		2018		2017		Prior
(In millions)
Commercial and industrial:
Risk Rating:
Pass(2)	$	9,076	$	6,132	$	4,429	$	2,155	$	1,813	$	2,835		$	13,312		$	—		$	(105)		$	39,647
Special Mention	39		80		187		177		$	24	$	77		515			—			—			1,099
Substandard Accrual	74		45		60		100		$	23	$	9		332			—			—			643
Non-accrual	73		25		54		11		$	14	$	17		165			—			—			359
Total commercial and industrial	$	9,262	$	6,282	$	4,730	$	2,443	$	1,874	$	2,938		$	14,324		$	—		$	(105)		$	41,748

Commercial real estate mortgage—owner-occupied:
Risk Rating:
Pass	$	1,114	$	1,213	$	740	$	734	$	425	$	845		$	139		$	—		$	(5)		$	5,205
Special Mention	3		41		4		19		6		18			1			—			—			92
Substandard Accrual	1		8		38		8		9		17			—			—			—			81
Non-accrual	2		6		11		14		20		14			1			—			—			68
Total commercial real estate mortgage—owner-occupied:	$	1,120	$	1,268	$	793	$	775	$	460	$	894		$	141		$	—		$	(5)		$	5,446

Commercial real estate construction—owner-occupied:
Risk Rating:
Pass	$	43	$	61	$	28	$	31	$	22	$	46		$	1		$	—		$	—		$	232
Special Mention	—		—		—		2		—		1			—			—			—			3
Substandard Accrual	—		—		—		2		3		1			—			—			—			6
Non-accrual	—		1		1		—		1		8			—			—			—			11
Total commercial real estate construction—owner-occupied:	$	43	$	62	$	29	$	35	$	26	$	56		$	1		$	—		$	—		$	252
Total commercial	$	10,425	$	7,612	$	5,552	$	3,253	$	2,360	$	3,888		$	14,466		$	—		$	(110)		$	47,446

Commercial investor real estate mortgage:
Risk Rating:
Pass	$	1,464	$	841	$	1,138	$	770	$	139	$	103		$	479		$	—		$	(6)		$	4,928
Special Mention	28		107		163		2		8		9			—			—			—			317
Substandard Accrual	39		67		166		57		15		8			7			—			—			359
Non-accrual	—		—		—		1		—		3			—			—			—			4
Total commercial investor real estate mortgage	$	1,531	$	1,015	$	1,467	$	830	$	162	$	123		$	486		$	—		$	(6)		$	5,608


	September 30, 2021
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2021	2020		2019		2018		2017		Prior
(In millions)
Commercial investor real estate construction:
Risk Rating:
Pass	$	133	$	295	$	524	$	79	$	1	$	2		$	668		$	—		$	(10)		$	1,692
Special Mention	1		8		3		—		—		—			—			—			—			12
Substandard Accrual	—		—		—		—		—		—			—			—			—			—
Non-accrual	—		—		—		—		—		—			—			—			—			—
Total commercial investor real estate construction	$	134	$	303	$	527	$	79	$	1	$	2		$	668		$	—		$	(10)		$	1,704
Total investor real estate	$	1,665	$	1,318	$	1,994	$	909	$	163	$	125		$	1,154		$	—		$	(16)		$	7,312

Residential first mortgage:
FICO scores
Above 720	$	3,148	$	5,452	$	1,248	$	491	$	694	$	2,878		$	—		$	—		$	—		$	13,911
681-720	365		385		125		65		70		388			—			—			—			1,398
620-680	172		176		86		58		52		390			—			—			—			934
Below 620	28		47		44		47		48		471			—			—			—			685
Data not available	47		47		21		9		11		117			10			—			157			419
Total residential first mortgage	$	3,760	$	6,107	$	1,524	$	670	$	875	$	4,244		$	10		$	—		$	157		$	17,347

Home equity lines:
FICO scores
Above 720	$	—	$	—	$	—	$	—	$	—	$	—		$	2,855		$	48		$	—		$	2,903
681-720	—		—		—		—		—		—			398			12			—			410
620-680	—		—		—		—		—		—			269			12			—			281
Below 620	—		—		—		—		—		—			142			8			—			150
Data not available	—		—		—		—		—		—			98			4			29			131
Total home equity lines	$	—	$	—	$	—	$	—	$	—	$	—		$	3,762		$	84		$	29		$	3,875

Home equity loans
FICO scores
Above 720	$	430	$	348	$	176	$	164	$	239	$	653		$	—		$	—		$	—		$	2,010
681-720	65		40		28		22		26		81			—			—			—			262
620-680	24		15		14		14		17		67			—			—			—			151
Below 620	4		3		6		8		11		49			—			—			—			81
Data not available	1		2		2		3		5		20			—			—			19			52
Total home equity loans	$	524	$	408	$	226	$	211	$	298	$	870		$	—		$	—		$	19		$	2,556

Indirect—vehicles:
FICO scores
Above 720	$	—	$	—	$	12	$	189	$	75	$	46		$	—		$	—		$	—		$	322
681-720	—		—		3		29		12		9			—			—			—			53
620-680	—		—		2		27		12		10			—			—			—			51
Below 620	—		—		2		25		15		14			—			—			—			56
Data not available	—		—		—		3		3		3			—			—			9			18
Total indirect- vehicles	$	—	$	—	$	19	$	273	$	117	$	82		$	—		$	—		$	9		$	500


	September 30, 2021
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2021	2020		2019		2018		2017		Prior
(In millions)
Indirect—other consumer:
FICO scores
Above 720	$	314	$	311	$	430	$	260	$	96	$	60		$	—		$	—		$	—		$	1,471
681-720	58		53		109		74		28		17			—			—			—			339
620-680	11		14		49		41		17		11			—			—			—			143
Below 620	—		3		14		12		5		4			—			—			—			38
Data not available	—		—		3		3		1		1			—			—			124			132
Total indirect- other consumer	$	383	$	381	$	605	$	390	$	147	$	93		$	—		$	—		$	124		$	2,123

Consumer credit card:
FICO scores
Above 720	$	—	$	—	$	—	$	—	$	—	$	—		$	642		$	—		$	—		$	642
681-720	—		—		—		—		—		—			236			—			—			236
620-680	—		—		—		—		—		—			189			—			—			189
Below 620	—		—		—		—		—		—			75			—			—			75
Data not available	—		—		—		—		—		—			8			—			(14)			(6)
Total consumer credit card	$	—	$	—	$	—	$	—	$	—	$	—		$	1,150		$	—		$	(14)		$	1,136

Other consumer:
FICO scores
Above 720	$	174	$	131	$	89	$	41	$	12	$	3		$	113		$	—		$	—		$	563
681-720	56		33		22		8		2		1			53			—			—			175
620-680	38		22		14		5		1		1			39			—			—			120
Below 620	9		7		6		3		1		—			15			—			—			41
Data not available	71		—		—		—		—		—			3			—			2			76
Total other consumer	$	348	$	193	$	131	$	57	$	16	$	5		$	223		$	—		$	2		$	975
Total consumer loans	$	5,015	$	7,089	$	2,505	$	1,601	$	1,453	$	5,294		$	5,145		$	84		$	326		$	28,512
Total Loans	$	17,105	$	16,019	$	10,051	$	5,763	$	3,976	$	9,307		$	20,765		$	84		$	200		$	83,270


	December 31, 2020
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2020	2019		2018		2017		2016		Prior
(In millions)
Commercial and industrial:
Risk Rating:
Pass(2)	$	12,260	$	6,115	$	3,550	$	2,413	$	1,166	$	2,493		$	12,138		$	—		$	(39)		$	40,096
Special Mention	133		250		376		84		5		48			722			—			—			1,618
Substandard Accrual	41		50		78		55		20		4			490			—			—			738
Non-accrual	42		59		97		20		23		19			158			—			—			418
Total commercial and industrial	$	12,476	$	6,474	$	4,101	$	2,572	$	1,214	$	2,564		$	13,508		$	—		$	(39)		$	42,870


	December 31, 2020
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2020	2019		2018		2017		2016		Prior
(In millions)
Commercial real estate mortgage—owner-occupied:
Risk Rating:
Pass	$	1,379	$	882	$	913	$	547	$	401	$	801		$	140		$	—		$	(3)		$	5,060
Special Mention	18		31		23		22		10		44			6			—			—			154
Substandard Accrual	3		38		16		16		4		15			2			—			—			94
Non-accrual	14		23		19		21		6		14			—			—			—			97
Total commercial real estate mortgage—owner-occupied:	$	1,414	$	974	$	971	$	606	$	421	$	874		$	148		$	—		$	(3)		$	5,405

Commercial real estate construction—owner-occupied:
Risk Rating:
Pass	$	61	$	75	$	39	$	24	$	24	$	40		$	9		$	—		$	—		$	272
Special Mention	1		—		—		2		2		—			—			—			—			5
Substandard Accrual	—		3		1		3		4		3			—			—			—			14
Non-accrual	—		—		—		1		—		8			—			—			—			9
Total commercial real estate construction—owner-occupied:	$	62	$	78	$	40	$	30	$	30	$	51		$	9		$	—		$	—		$	300
Total commercial	$	13,952	$	7,526	$	5,112	$	3,208	$	1,665	$	3,489		$	13,665		$	—		$	(42)		$	48,575

Commercial investor real estate mortgage:
Risk Rating:
Pass	$	1,663	$	1,243	$	1,137	$	252	$	65	$	162		$	332		$	—		$	(5)		$	4,849
Special Mention	5		77		76		15		—		7			—			—			—			180
Substandard Accrual	69		114		57		—		2		9			—			—			—			251
Non-accrual	—		44		1		—		—		1			68			—			—			114
Total commercial investor real estate mortgage	$	1,737	$	1,478	$	1,271	$	267	$	67	$	179		$	400		$	—		$	(5)		$	5,394

Commercial investor real estate construction:
Risk Rating:
Pass	$	224	$	601	$	266	$	1	$	—	$	1		$	679		$	—		$	(11)		$	1,761
Special Mention	30		36		31		—		—		—			9			—			—			106
Substandard Accrual	1		1		—		—		—		—			—			—			—			2
Non-accrual	—		—		—		—		—		—			—			—			—			—
Total commercial investor real estate construction	$	255	$	638	$	297	$	1	$	—	$	1		$	688		$	—		$	(11)		$	1,869
Total investor real estate	$	1,992	$	2,116	$	1,568	$	268	$	67	$	180		$	1,088		$	—		$	(16)		$	7,263

Residential first mortgage:
FICO scores
Above 720	$	5,564	$	1,738	$	809	$	1,023	$	1,279	$	2,709		$	—		$	—		$	—		$	13,122
681-720	525		189		103		112		113		360			—			—			—			1,402
620-680	211		100		73		64		67		404			—			—			—			919
Below 620	31		44		50		51		60		499			—			—			—			735
Data not available	52		23		13		16		15		126			10			—			142			397
Total residential first mortgage	$	6,383	$	2,094	$	1,048	$	1,266	$	1,534	$	4,098		$	10		$	—		$	142		$	16,575


	December 31, 2020
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2020	2019		2018		2017		2016		Prior
(In millions)

Home equity lines:
FICO scores
Above 720	$	—	$	—	$	—	$	—	$	—	$	—		$	3,334		$	45		$	—		$	3,379
681-720	—		—		—		—		—		—			492			10			—			502
620-680	—		—		—		—		—		—			319			11			—			330
Below 620	—		—		—		—		—		—			181			7			—			188
Data not available	—		—		—		—		—		—			107			3			30			140
Total home equity lines	$	—	$	—	$	—	$	—	$	—	$	—		$	4,433		$	76		$	30		$	4,539

Home equity loans
FICO scores
Above 720	$	417	$	251	$	233	$	325	$	304	$	580		$	—		$	—		$	—		$	2,110
681-720	57		40		35		39		37		76			—			—			—			284
620-680	21		17		19		22		25		65			—			—			—			169
Below 620	2		7		9		13		15		52			—			—			—			98
Data not available	1		2		2		4		5		17			—			—			21			52
Total home equity loans	$	498	$	317	$	298	$	403	$	386	$	790		$	—		$	—		$	21		$	2,713

Indirect—vehicles:
FICO scores
Above 720	$	—	$	18	$	305	$	137	$	92	$	40		$	—		$	—		$	—		$	592
681-720	—		5		50		22		16		8			—			—			—			101
620-680	—		4		44		23		18		8			—			—			—			97
Below 620	—		3		42		26		24		14			—			—			—			109
Data not available	—		—		4		6		4		4			—			—			17			35
Total indirect- vehicles	$	—	$	30	$	445	$	214	$	154	$	74		$	—		$	—		$	17		$	934

Indirect—other consumer:
FICO scores
Above 720	$	297	$	721	$	392	$	138	$	60	$	31		$	—		$	—		$	—		$	1,639
681-720	39		173		116		41		18		9			—			—			—			396
620-680	9		73		63		27		12		6			—			—			—			190
Below 620	1		22		22		9		5		2			—			—			—			61
Data not available	—		3		3		2		1		1			—			—			135			145
Total indirect- other consumer	$	346	$	992	$	596	$	217	$	96	$	49		$	—		$	—		$	135		$	2,431

Consumer credit card:
FICO scores
Above 720	$	—	$	—	$	—	$	—	$	—	$	—		$	667		$	—		$	—		$	667
681-720	—		—		—		—		—		—			255			—			—			255
620-680	—		—		—		—		—		—			208			—			—			208
Below 620	—		—		—		—		—		—			91			—			—			91
Data not available	—		—		—		—		—		—			7			—			(15)			(8)
Total consumer credit card	$	—	$	—	$	—	$	—	$	—	$	—		$	1,228		$	—		$	(15)		$	1,213


	December 31, 2020
Term Loans													Revolving Loans			Revolving Loans Converted to Amortizing			Unallocated (1)			Total
Origination Year
2020	2019		2018		2017		2016		Prior
(In millions)
Other consumer:
FICO scores
Above 720	$	209	$	163	$	84	$	30	$	7	$	3		$	117		$	—		$	—		$	613
681-720	61		44		20		5		1		1			52			—			—			184
620-680	34		28		13		4		1		1			42			—			—			123
Below 620	11		11		6		3		1		—			19			—			—			51
Data not available	46		1		—		—		—		—			3			—			2			52
Total other consumer	$	361	$	247	$	123	$	42	$	10	$	5		$	233		$	—		$	2		$	1,023
Total consumer loans	$	7,588	$	3,680	$	2,510	$	2,142	$	2,180	$	5,016		$	5,904		$	76		$	332		$	29,428
Total Loans	$	23,532	$	13,322	$	9,190	$	5,618	$	3,912	$	8,685		$	20,657		$	76		$	274		$	85,266

(1)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.

(2)Commercial and industrial lending includes PPP lending in the 2020 and 2021 vintage years.

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 September 30, 2021 and December 31, 2020. Loans on non-accrual status with no related allowance included $150 million and $112 million of commercial and industrial loans as of September 30, 2021 and December 31, 2020, respectively. 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.


	September 30, 2021
	Accrual Loans
	30-59 DPD		60-89 DPD		90+ DPD		Total 30+ DPD		Total Accrual		Non-accrual		Total
	(In millions)
Commercial and industrial	$	26	$	8	$	3	$	37	$	41,389	$	359	$	41,748
Commercial real estate mortgage—owner-occupied	5		2		2		9		5,378		68		5,446
Commercial real estate construction—owner-occupied	—		1		—		1		241		11		252
Total commercial	31		11		5		47		47,008		438		47,446
Commercial investor real estate mortgage	—		—		—		—		5,604		4		5,608
Commercial investor real estate construction	—		—		—		—		1,704		—		1,704
Total investor real estate	—		—		—		—		7,308		4		7,312
Residential first mortgage	71		29		112		212		17,310		37		17,347
Home equity lines	17		5		20		42		3,831		44		3,875
Home equity loans	6		4		13		23		2,549		7		2,556
Indirect—vehicles	6		2		2		10		500		—		500
Indirect—other consumer	7		4		3		14		2,123		—		2,123
Consumer credit card	7		5		11		23		1,136		—		1,136
Other consumer	11		1		2		14		975		—		975
Total consumer	125		50		163		338		28,424		88		28,512
	$	156	$	61	$	168	$	385	$	82,740	$	530	$	83,270


	December 31, 2020
	Accrual Loans
	30-59 DPD		60-89 DPD		90+ DPD		Total 30+ DPD		Total Accrual		Non-accrual		Total
	(In millions)
Commercial and industrial	$	37	$	22	$	7	$	66	$	42,452	$	418	$	42,870
Commercial real estate mortgage—owner-occupied	4		1		1		6		5,308		97		5,405
Commercial real estate construction—owner-occupied	1		—		—		1		291		9		300
Total commercial	42		23		8		73		48,051		524		48,575
Commercial investor real estate mortgage	3		—		—		3		5,280		114		5,394
Commercial investor real estate construction	—		—		—		—		1,869		—		1,869
Total investor real estate	3		—		—		3		7,149		114		7,263
Residential first mortgage	104		41		156		301		16,522		53		16,575
Home equity lines	24		11		19		54		4,493		46		4,539
Home equity loans	10		7		13		30		2,705		8		2,713
Indirect—vehicles	15		4		4		23		934		—		934
Indirect—other consumer	12		8		5		25		2,431		—		2,431
Consumer credit card	8		6		14		28		1,213		—		1,213
Other consumer	12		3		2		17		1,023		—		1,023
Total consumer	185		80		213		478		29,321		107		29,428
	$	230	$	103	$	221	$	554	$	84,521	$	745	$	85,266

TROUBLED DEBT RESTRUCTURINGS

Regions regularly modifies commercial and investor real estate loans in order to facilitate a workout strategy. Similarly, Regions works to meet the individual needs of consumer borrowers to stem foreclosure through its CAP. Refer to Note 1 "Summary of Significant Accounting Policies" and Note 6 "Allowance for Credit Losses" in the Annual Report on Form 10-K for the year ended December 31, 2020 for additional information regarding the Company's TDRs, including their impact on the allowance and designation of TDRs in periods subsequent to the modification.

As provided in the Consolidated Appropriations Act passed into law on December 27, 2020, which extended initial guidance provided in the CARES Act, certain loan modifications related to the COVID-19 pandemic beginning March 1, 2020 through the earlier of 60 days after the end of the pandemic or January 1, 2022 are eligible for relief from TDR classification. Regions elected this provision; therefore, modified loans that met the required guidelines for relief are not considered TDRs and are excluded from the disclosures below. The Consolidated Appropriations Act relief and short-term nature of most COVID-19 deferrals precluded the majority of Regions' COVID-19 loan modifications from being classified as TDRs as of September 30, 2021 and December 31, 2020.

The following tables present the end of period balance for loans modified in a TDR during the periods presented by portfolio segment and class, and the financial impact of those modifications. The tables include modifications made to new TDRs, as well as renewals of existing TDRs.



	Three Months Ended September 30, 2021
				Financial Impact of Modifications Considered TDRs
	Number of Obligors	Recorded Investment		Increase in Allowance at Modification
	(Dollars in millions)
Commercial and industrial	18	$	24	$	—
Commercial real estate mortgage—owner-occupied	10	4		—
Commercial real estate construction—owner-occupied	1	1		—
Total commercial	29	29		—
Commercial investor real estate mortgage	1	1		—
Commercial investor real estate construction	—	—		—
Total investor real estate	1	1		—
Residential first mortgage	99	16		2
Home equity lines	1	—		—
Home equity loans	33	3		—
Consumer credit card	1	—		—
Indirect—vehicles and other consumer	16	1		—
Total consumer	150	20		2
	180	$	50	$	2



	Three Months Ended September 30, 2020
				Financial Impact of Modifications Considered TDRs
	Number of Obligors	Recorded Investment		Increase in Allowance at Modification
	(Dollars in millions)
Commercial and industrial	26	$	27	$	—
Commercial real estate mortgage—owner-occupied	7	9		—
Commercial real estate construction—owner-occupied	—	—		—
Total commercial	33	36		—
Commercial investor real estate mortgage	2	36		—
Commercial investor real estate construction	2	4		—
Total investor real estate	4	40		—
Residential first mortgage	94	32		4
Home equity lines	—	—		—
Home equity loans	9	1		—
Consumer credit card	1	—		—
Indirect—vehicles and other consumer	11	—		—
Total consumer	115	33		4
	152	$	109	$	4



	Nine Months Ended September 30, 2021
				Financial Impact of Modifications Considered TDRs
	Number of Obligors	Recorded Investment		Increase in Allowance at Modification
	(Dollars in millions)
Commercial and industrial	59	$	74	$	—
Commercial real estate mortgage—owner-occupied	24	7		—
Commercial real estate construction—owner-occupied	2	2		—
Total commercial	85	83		—
Commercial investor real estate mortgage	7	77		—
Commercial investor real estate construction	—	—		—
Total investor real estate	7	77		—
Residential first mortgage	435	77		7
Home equity lines	6	1		—
Home equity loans	40	4		—
Consumer credit card	1	—		—
Indirect—vehicles and other consumer	68	2		—
Total consumer	550	84		7
	642	$	244	$	7



	Nine Months Ended September 30, 2020
				Financial Impact of Modifications Considered TDRs
	Number of Obligors	Recorded Investment		Increase in Allowance at Modification
	(Dollars in millions)
Commercial and industrial	119	$	221	$	—
Commercial real estate mortgage—owner-occupied	17	14		—
Commercial real estate construction—owner-occupied	1	1		—
Total commercial	137	236		—
Commercial investor real estate mortgage	9	37		—
Commercial investor real estate construction	3	4		—
Total investor real estate	12	41		—
Residential first mortgage	177	43		6
Home equity lines	—	—		—
Home equity loans	36	3		—
Consumer credit card	12	—		—
Indirect—vehicles and other consumer	22	—		—
Total consumer	247	46		6
	396	$	323	$	6

NOTE 4. 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:


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)
Carrying value, beginning of period	$	392	$	249	$	296	$	345
Additions	39		32		116		67
Increase (decrease) in fair value:
Due to change in valuation inputs or assumptions	(3)		—		49		(94)
Economic amortization associated with borrower repayments (1)	(18)		(14)		(51)		(51)
Carrying value, end of period	$	410	$	267	$	410	$	267

(1)"Economic amortization associated with borrower repayments" includes both total loan payoffs as well as partial paydowns. Regions' MSR decay methodology is a discounted net cash flow approach.

In the nine months ended 2021 and 2020, the Company purchased the rights to service residential mortgage loans on a flow basis for approximately $58 million and $35 million, respectively.

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) are as follows:


	September 30
	2021			2020
	(Dollars in millions)
Unpaid principal balance	$	36,370		$	33,740
Weighted-average CPR (%)	10.3		%	16.3		%
Estimated impact on fair value of a 10% increase	$	(30)		$	(22)
Estimated impact on fair value of a 20% increase	$	(53)		$	(40)
Option-adjusted spread (basis points)	530			621
Estimated impact on fair value of a 10% increase	$	(9)		$	(6)
Estimated impact on fair value of a 20% increase	$	(18)		$	(12)
Weighted-average coupon interest rate	3.6		%	4.0		%
Weighted-average remaining maturity (months)	294			283
Weighted-average servicing fee (basis points)	27.3			27.4

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.

The following table presents servicing related fees, which includes contractually specified servicing fees, late fees and other ancillary income resulting from the servicing of residential mortgage loans:


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)				(In millions)
Servicing related fees and other ancillary income	$	26	$	23	$	75	$	71

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 "Summary of Significant Accounting Policies" in the 2020 Annual Report on Form 10-K for additional information. Also see Note 11 for additional information.

The table below presents an analysis of commercial MSRs under the amortization measurement method:


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)				(In millions)
Carrying value, beginning of period	$	86	$	64	$	74	$	59
Additions	5		11		24		21
Economic amortization associated with borrower repayments (1)	(4)		(3)		(11)		(8)
Carrying value, end of period	$	87	$	72	$	87	$	72

(1)"Economic amortization associated with borrower repayments" includes both total loan payoffs as well as partial paydowns.

Regions periodically evaluates the commercial MSRs for impairment based on fair value. The estimated fair value of the commercial MSRs was approximately $96 million at September 30, 2021 and $81 million December 31, 2020.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)				(In millions)
Servicing related fees and other ancillary income	$	8	$	4	$	18	$	14

NOTE 5. SHAREHOLDERS’ EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME

PREFERRED STOCK

The following table presents a summary of the non-cumulative perpetual preferred stock:


													September 30, 2021		December 31, 2020
	Issuance Date	Earliest Redemption Date	Dividend Rate (1)			Liquidation Amount		Liquidation Preference per Share		Liquidation preference per Depositary Share		Ownership Interest per Depositary Share	Carrying Amount		Carrying Amount
	(Dollars in millions, except per share data)
Series A (2)	11/1/2012	12/15/2017	6.375	%		$	—	$	1,000	$	25	1/40th	$	—	$	387
Series B	4/29/2014	9/15/2024	6.375	%	(3)	500		1,000		25		1/40th	433		433
Series C	4/30/2019	5/15/2029	5.700	%	(4)	500		1,000		25		1/40th	490		490
Series D	6/5/2020	9/15/2025	5.750	%	(5)	350		100,000		1,000		1/100th	346		346
Series E	5/4/2021	6/15/2026	4.450	%		400		1,000		25		1/40th	390		—
						$	1,750						$	1,659	$	1,656

(1)Dividends on all series of preferred stock, if declared, accrue and are payable quarterly in arrears.

(2)The shares were fully redeemed on June 15, 2021.

(3)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 LIBOR plus 3.536%.

(4)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 LIBOR plus 3.148%.

(5)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.

Regions completed the issuance of Series E preferred stock during the second quarter of 2021, The Company incurred $10 million of issuance costs associated with the transaction. The Company began paying quarterly dividends on September 15, 2021. The Series A preferred stock was redeemed in the second quarter of 2021.

The Board declared a total of $62 million and $69 million in cash dividends on Series A, Series B, and Series C preferred stock during the first nine months of 2021 and 2020, respectively. The Board declared $15 million in cash dividends on Series D preferred stock during the first nine months of 2021; the initial quarterly dividend for Series D was declared in the third quarter of 2020 for $6 million. The initial quarterly dividend of $7 million for the Series E preferred stock was declared in the third quarter of 2021. Therefore, a total of $84 million in cash dividends on total preferred stock was declared in the first nine months of 2021 compared to the total of $75 million in cash dividends on total preferred stock for the same period in 2020.

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

Regions was not required to participate in the 2021 CCAR; the Company chose to participate in part to have the Federal Reserve re-evaluate Regions' SCB. Regions received the results of the voluntary test on June 28, 2021. The Federal Reserve communicated that the Company exceeded all minimum capital levels under the Federal Reserve's Supervisory Stress Test. Effective October 1, 2021, Regions' preliminary SCB requirement for the fourth quarter of 2021 through the third quarter of 2022 will be floored at 2.5 percent.

As part of the Company's capital plan, on April 21, 2021, the Board authorized the repurchase of up to $2.5 billion of the Company's common stock, permitting purchases from the second quarter of 2021 through the first quarter of 2022. In the second quarter of 2021, Regions repurchased approximately 8.0 million shares of common stock under this plan which reduced shareholders' equity by $167 million. Included in these share repurchases were approximately 1.0 million shares that were repurchased as part of the amendment to the Company’s deferred investment plan for its directors. All of these shares were immediately retired upon repurchase and therefore, were not be included in treasury stock. The Company did not repurchase shares in either the first or third quarters of 2021 or throughout 2020.

During the third quarter of 2020, the Federal Reserve mandated that banks must not increase their quarterly per share common dividend and implemented an earnings-based payout restriction in connection with the supervisory stress test, requiring the third quarter 2020 dividend to not exceed the average of the prior four quarters of net income excluding preferred dividends. This mandate was subsequently extended through the second quarter of 2021, but was lifted in the third quarter of 2021. The Board approved a common stock increase to $0.17 per share for the third quarter of 2021. Prior to the common stock increase, Regions declared $0.155 per share in dividends for both the first six months of 2021 and the first nine months of 2020. Therefore, Regions declared a total of $0.48 per common share for the first nine months of 2021 compared to a total of $0.465 per common share for the first nine months of 2020.

ACCUMULATED OTHER COMPREHENSIVE INCOME

The following tables present the balances and activity in AOCI on a pre-tax and net of tax basis for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30, 2021
	Pre-tax AOCI Activity		Tax Effect (1)		Net AOCI Activity
	(In millions)
Total accumulated other comprehensive income (loss), beginning of period	$	871	$	(220)	$	651

Unrealized losses on securities transferred to held to maturity:
Beginning balance	$	(17)	$	4	$	(13)

Reclassification adjustments for amortization of unrealized losses (2)	2		—		2
Ending balance	$	(15)	$	4	$	(11)
Unrealized gains (losses) on securities available for sale:
Beginning balance	$	606	$	(153)	$	453
Unrealized gains (losses) arising during the period	(99)		24		(75)
Reclassification adjustments for securities (gains) losses realized in net income(3)	(1)		1		—
Change in AOCI from securities available for sale activity in the period	(100)		25		(75)
Ending balance	$	506	$	(128)	$	378
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance	$	1,147	$	(289)	$	858
Unrealized holding gains (losses) on derivatives arising during the period	24		(6)		18

Reclassification adjustments for (gains) losses realized in net income (2)	(108)		27		(81)
Change in AOCI from derivative activity in the period	(84)		21		(63)
Ending balance	$	1,063	$	(268)	$	795
Defined benefit pension plans and other post employment benefit plans:
Beginning balance	$	(865)	$	218	$	(647)

Reclassification adjustments for amortization of actuarial gains (losses) and settlements realized in net income (4)	21		(4)		17

Ending balance	$	(844)	$	214	$	(630)

Total other comprehensive income (loss)	(161)		42		(119)
Total accumulated other comprehensive income (loss), end of period	$	710	$	(178)	$	532


	Three Months Ended September 30, 2020
	Pre-tax AOCI Activity		Tax Effect (1)		Net AOCI Activity
	(In millions)
Total accumulated other comprehensive income (loss), beginning of period	$	2,174	$	(548)	$	1,626

Unrealized losses on securities transferred to held to maturity:
Beginning balance	$	(27)	$	7	$	(20)

Reclassification adjustments for amortization of unrealized losses (2)	4		(2)		2
Ending balance	$	(23)	$	5	$	(18)
Unrealized gains (losses) on securities available for sale:
Beginning balance	$	1,116	$	(281)	$	835
Unrealized gains (losses) arising during the period	(2)		—		(2)
Reclassification adjustments for securities (gains) losses realized in net income(3)	(3)		1		(2)
Change in AOCI from securities available for sale activity in the period	(5)		1		(4)
Ending balance	$	1,111	$	(280)	$	831
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance	$	1,857	$	(468)	$	1,389
Unrealized holding gains (losses) on derivatives arising during the period	2		—		2
Reclassification adjustments for (gains) losses realized in net income (2)	(94)		24		(70)
Change in AOCI from derivative activity in the period	(92)		24		(68)
Ending balance	$	1,765	$	(444)	$	1,321
Defined benefit pension plans and other post employment benefit plans:
Beginning balance	$	(772)	$	194	$	(578)

Reclassification adjustments for amortization of actuarial gains (losses) and settlements realized in net income (4)	11		(2)		9

Ending balance	$	(761)	$	192	$	(569)

Total other comprehensive income (loss)	(82)		21		(61)
Total accumulated other comprehensive income (loss), end of period	$	2,092	$	(527)	$	1,565



	Nine Months Ended September 30, 2021
	Pre-tax AOCI Activity		Tax Effect (1)		Net AOCI Activity
	(In millions)
Total accumulated other comprehensive income (loss), beginning of period	$	1,759	$	(444)	$	1,315

Unrealized losses on securities transferred to held to maturity:
Beginning balance	$	(21)	$	5	$	(16)

Reclassification adjustments for amortization of unrealized losses (2)	6		(1)		5
Ending balance	$	(15)	$	4	$	(11)
Unrealized gains (losses) on securities available for sale:
Beginning balance	$	1,062	$	(268)	$	794
Unrealized gains (losses) arising during the period	(553)		139		(414)
Reclassification adjustments for securities (gains) losses realized in net income(3)	(3)		1		(2)
Change in AOCI from securities available for sale activity in the period	(556)		140		(416)
Ending balance	$	506	$	(128)	$	378
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance	$	1,610	$	(406)	$	1,204
Unrealized holding gains (losses) on active hedges arising during the period	(233)		59		(174)
Reclassification adjustments for (gains) losses realized in net income (2)	(314)		79		(235)
Change in AOCI from derivative activity in the period	(547)		138		(409)
Ending balance	$	1,063	$	(268)	$	795
Defined benefit pension plans and other post employment benefit plans:
Beginning balance	$	(892)	$	225	$	(667)

Reclassification adjustments for amortization of actuarial gains (losses) and settlements realized in net income (4)	48		(11)		37

Ending balance	$	(844)	$	214	$	(630)

Total other comprehensive income (loss)	(1,049)		266		(783)
Total accumulated other comprehensive income (loss), end of period	$	710	$	(178)	$	532



	Nine Months Ended September 30, 2020
	Pre-tax AOCI Activity		Tax Effect (1)		Net AOCI Activity
	(In millions)
Total accumulated other comprehensive income (loss), beginning of period	$	(120)	$	30	$	(90)

Unrealized losses on securities transferred to held to maturity:
Beginning balance	$	(29)	$	7	$	(22)

Reclassification adjustments for amortization of unrealized losses (2)	6		(2)		4
Ending balance	$	(23)	$	5	$	(18)
Unrealized gains (losses) on securities available for sale:
Beginning balance	$	274	$	(69)	$	205
Unrealized gains (losses) arising during the period	841		(212)		629
Reclassification adjustments for securities (gains) losses realized in net income(3)	(4)		1		(3)
Change in AOCI from securities available for sale activity in the period	837		(211)		626
Ending balance	$	1,111	$	(280)	$	831
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Beginning balance	$	430	$	(108)	$	322
Unrealized holding gains (losses) on derivatives arising during the period	1,498		(377)		1,121

Reclassification adjustments for (gains) losses realized in net income (2)	(163)		41		(122)
Change in AOCI from derivative activity in the period	1,335		(336)		999
Ending balance	$	1,765	$	(444)	$	1,321
Defined benefit pension plans and other post employment benefit plans:
Beginning balance	$	(795)	$	200	$	(595)

Amounts reclassified for amortization of actuarial gains (losses) and settlements realized in net income (4)	34		(8)		26

Ending balance	$	(761)	$	192	$	(569)

Total other comprehensive income	2,212		(557)		1,655
Total accumulated other comprehensive income, end of period	$	2,092	$	(527)	$	1,565

(1)The impact of all AOCI activity is shown net of the related tax impact, calculated using an effective tax rate of approximately 25%.

(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 7 for additional details).

NOTE 6. EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic earnings per common share and diluted earnings per common share:


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions, except per share amounts)
Numerator:
Net income	$	651	$	530	$	2,083	$	478
Preferred stock dividends and other (1)	(27)		(29)		(97)		(75)


Net income available to common shareholders	$	624	$	501	$	1,986	$	403
Denominator:
Weighted-average common shares outstanding—basic	955		960		958		959
Potential common shares	7		2		7		2
Weighted-average common shares outstanding—diluted	962		962		965		961






Earnings per common share:
Basic	$	0.65	$	0.52	$	2.07	$	0.42
Diluted	0.65		0.52		2.06		0.42

(1)Preferred stock dividends and other for the nine months ended September 30, 2021 includes $13 million of issuance costs associated with the redemption of Series A preferred shares in the second quarter of 2021.

The effects from the assumed exercise of 4 million in restricted stock units and awards and performance stock units for both the three months and nine months ended September 30, 2021 was 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. The effects from the assumed exercise of 9 million and 8 million in stock options, restricted stock united and awards and performance stock units for the three and nine months ended September 30, 2020, respectively, 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 share.

NOTE 7. PENSION AND OTHER POSTRETIREMENT BENEFITS

Regions' defined benefit pension plans cover certain employees as the pension plans are closed to new entrants. 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.

Net periodic pension cost (credit) includes the following components:


	Qualified Plans				Non-qualified Plans				Total
	Three Months Ended September 30
	2021		2020		2021		2020		2021		2020
	(In millions)
Service cost	$	9	$	9	$	—	$	2	$	9	$	11
Interest cost	12		17		—		1		12		18
Expected return on plan assets	(35)		(37)		—		—		(35)		(37)
Amortization of actuarial loss	12		9		1		2		13		11
Settlement charge	—		—		8		—		8		—
Net periodic pension cost (credit)	$	(2)	$	(2)	$	9	$	5	$	7	$	3



	Qualified Plans				Non-qualified Plans				Total
	Nine Months Ended September 30
	2021		2020		2021		2020		2021		2020
	(In millions)
Service cost	$	28	$	26	$	3	$	4	$	31	$	30
Interest cost	36		49		1		3		37		52
Expected return on plan assets	(106)		(112)		—		—		(106)		(112)
Amortization of actuarial loss	35		29		5		5		40		34

Settlement charge	—		—		8		—		8		—
Net periodic pension cost (credit)	$	(7)	$	(8)	$	17	$	12	$	10	$	4

The service cost component of net periodic pension cost (credit) 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 settlement charge relates to the settlement of liabilities under the SERP for certain plan participants in 2021.

Regions' funding policy for the qualified plans is to contribute annually at least the amount required by IRS minimum funding standards. Regions made no contributions during the first nine months of 2021.

Regions also provides other postretirement benefits, such as defined benefit health care plans and life insurance plans, that cover certain retired employees. There was no material impact from other postretirement benefits on the consolidated financial statements for the nine months ended September 30, 2021 or 2020.

NOTE 8. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

The following tables present the notional amount and estimated fair value of derivative instruments on a gross basis.


	September 30, 2021						December 31, 2020
	Notional Amount		Estimated Fair Value				Notional Amount		Estimated Fair Value
	Gain(1)		Loss(1)		Gain(1)		Loss(1)
	(In millions)
Derivatives in fair value hedging relationships:
Interest rate swaps	$	1,400	$	—	$	19	$	2,100	$	77	$	—
Derivatives in cash flow hedging relationships:
Interest rate swaps (2)	17,000		260		1		16,000		1,181		—
Interest rate floors (3)(4)	3,500		178		—		5,750		430		—
Total derivatives in cash flow hedging relationships	20,500		438		1		21,750		1,611		—
Total derivatives designated as hedging instruments	$	21,900	$	438	$	20	$	23,850	$	1,688	$	—
Derivatives not designated as hedging instruments:
Interest rate swaps	$	79,155	$	911	$	953	$	76,764	$	1,492	$	1,464
Interest rate options	15,329		54		20		13,806		90		28
Interest rate futures and forward commitments	3,040		13		5		4,270		11		26
Other contracts	9,415		216		217		9,924		68		80
Total derivatives not designated as hedging instruments	$	106,939	$	1,194	$	1,195	$	104,764	$	1,661	$	1,598
Total derivatives	$	128,839	$	1,632	$	1,215	$	128,614	$	3,349	$	1,598

Total gross derivative instruments, before netting			$	1,632	$	1,215			$	3,349	$	1,598



Less: Netting adjustments (5)			991		1,159				2,428		1,545
Total gross derivative instruments, after netting (6)			$	641	$	56			$	921	$	53

(1)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.

(2)Includes accrued interest of $12 million at September 30, 2021 and $28 million at December 31, 2020, respectively.

(3)Includes accrued interest of $9 million at September 30, 2021 and $12 million at December 31, 2020, respectively.

(4)Estimated fair value includes premium of approximately $41 million as of September 30, 2021 and $83 million as of December 31, 2020 to be amortized over the remaining life. Approximately $32 million of the decrease since December 31, 2020 related to hedges that were terminated during the first nine months of 2021 and were not amortized into earnings as of the date of termination.

(5)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.

(6)The gain amounts, which are not collateralized with cash or other assets or reserved for, represent the net credit risk on all trading and other derivative positions. As of September 30, 2021 and December 31, 2020, financial instruments posted of $24 million, for both periods, were not offset in the consolidated balance sheets.

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 "Summary of Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2020, 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. These agreements involve the receipt of fixed-rate amounts in exchange for floating-rate interest payments over the life of the agreements. Regions enters into interest rate swap agreements to manage interest rate exposure on certain of the Company's fixed-rate available for sale debt securities. 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 swap and floor agreements to manage overall cash flow changes related to interest rate risk exposure on LIBOR-based loans. The agreements effectively modify the Company’s exposure to interest rate risk by utilizing receive fixed/pay LIBOR interest rate swaps and interest rate floors. As of September 30, 2021, Regions is hedging its exposure to the variability in future cash flows for forecasted transactions through 2025.

During the nine months ended September 30, 2021, the Company terminated $2.3 billion in notional of floor hedges. During the three and nine months ended September 30, 2021, the Company terminated $5.0 billion and $10.6 billion, respectively, in notional of cash flow swap hedges. The following table presents the pre-tax impact of terminated cash flow hedges on AOCI. The balance of terminated cash flow hedges in AOCI will be amortized into earnings through 2026.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)
Unrealized gains on terminated hedges included in AOCI- Beginning	$	494	$	68	$	121	$	78
Unrealized gains on terminated hedges arising during the period	243		62		658		56
Reclassification adjustments for amortization of unrealized (gains) into net income	(49)		(3)		(91)		(7)
Unrealized gains on terminated hedges included in AOCI-Ending	$	688	$	127	$	688	$	127

Regions expects to reclassify into earnings approximately $341 million in pre-tax income due to the receipt or payment of interest payments and floor premium amortization on all cash flow hedges within the next twelve months. Included in this amount is $259 million in pre-tax net gains related to the amortization of discontinued cash flow hedges.

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 effected:


	Three Months Ended September 30, 2021
	Interest Income		Interest Expense
	Loans, Including Fees		Long-term Borrowings
	(In millions)
Total amounts presented in the consolidated statements of income	$	847	$	26

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	—	$	3
Recognized on derivatives	—		(11)
Recognized on hedged items	—		11
Net income recognized on fair value hedges	$	—	$	3

Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)	$	108	$	—
Income (expense) recognized on cash flow hedges	$	108	$	—


	Three Months Ended September 30, 2020
	Interest Income		Interest Expense
	Loans, Including Fees		Long-term Borrowings
	(In millions)
Total amounts presented in the consolidated statements of income	$	903	$	39

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	—	$	12
Recognized on derivatives	—		(12)
Recognized on hedged items	—		12
Net income recognized on fair value hedges	$	—	$	12

Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)	$	94	$	—
Income (expense) recognized on cash flow hedges	$	94	$	—



	Nine Months Ended September 30, 2021
	Interest Income		Interest Expense
	Loans, Including Fees		Long-term Borrowings
	(In millions)
Total amounts presented in the consolidated statements of income	$	2,550	$	79

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	—	$	17
Recognized on derivatives	—		(37)
Recognized on hedged items	—		37
Income (expense) recognized on fair value hedges	$	—	$	17

Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)	$	314	$	—
Income (expense) recognized on cash flow hedges	$	314	$	—



	Nine Months Ended September 30, 2020
	Interest Income		Interest Expense
	Loans, Including Fees		Long-term Borrowings
	(In millions)
Total amounts presented in the consolidated statements of income	$	2,704	$	147

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	—	$	27
Recognized on derivatives	—		65
Recognized on hedged items	—		(65)
Income (expense) recognized on fair value hedges	$	—	$	27

Gains/(losses) on cash flow hedging relationships: (1)
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income (2)	$	163	$	—
Income (expense) recognized on cash flow hedges	$	163	$	—

(1)See Note 5 for gain or (loss) recognized for cash flow hedges in AOCI.

(2)Pre-tax.

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.


	September 30, 2021				December 31, 2020
	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)

Long-term borrowings	$	(1,376)	$	21	$	(2,171)	$	(64)

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 fee 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 September 30, 2021 and December 31, 2020, Regions had $695 million and $924 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 September 30, 2021 and December 31, 2020, Regions had $1.4 billion and $1.9 billion, 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 has 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 began using 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 residential MSRs in its consolidated statements of income. As of September 30, 2021 and December 31, 2020, the total notional amount related to these contracts was $4.3 billion and $4.1 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:


	Three Months Ended September 30				Nine Months Ended September 30
Derivatives Not Designated as Hedging Instruments	2021		2020		2021		2020
	(In millions)
Capital markets income:
Interest rate swaps	$	5	$	15	$	25	$	7
Interest rate options	8		(1)		25		31
Interest rate futures and forward commitments	2		4		14		11
Other contracts	1		2		8		2
Total capital markets income	16		20		72		51
Mortgage income:
Interest rate swaps	(8)		(6)		(46)		98
Interest rate options	(9)		12		(24)		38
Interest rate futures and forward commitments	6		11		17		12
Total mortgage income	(11)		17		(53)		148
	$	5	$	37	$	19	$	199

CREDIT DERIVATIVES

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 2022 and 2029. Swap participations, whereby Regions has sold credit protection have maturities between 2021 and 2038. 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 September 30, 2021 was approximately $476 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 September 30, 2021 and 2020 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 September 30, 2021 and December 31, 2020, were $109 million and $74 million, respectively, for which Regions had posted collateral of $108 million and $74 million, respectively, in the normal course of business.

NOTE 9. FAIR VALUE MEASUREMENTS

See Note 1 "Summary of Significant Accounting Policies" to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2020 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 and non-recurring basis:


	September 30, 2021								December 31, 2020
	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	$	784	$	—	$	—	$	784	$	183	$	—	$	—	$	183
Federal agency securities	—		97		—		97		—		105		—		105
Mortgage-backed securities (MBS):
Residential agency	—		19,685		—		19,685		—		19,076		—		19,076
Residential non-agency	—		—		1		1		—		—		1		1
Commercial agency	—		6,385		—		6,385		—		5,999		—		5,999
Commercial non-agency	—		564		—		564		—		586		—		586
Corporate and other debt securities	—		1,469		1		1,470		—		1,200		4		1,204
Total debt securities available for sale	$	784	$	28,200	$	2	$	28,986	$	183	$	26,966	$	5	$	27,154
Loans held for sale	$	—	$	857	$	—	$	857	$	—	$	1,446	$	—	$	1,446
Marketable equity securities	$	507	$	—	$	—	$	507	$	388	$	—	$	—	$	388
Residential mortgage servicing rights	$	—	$	—	$	410	$	410	$	—	$	—	$	296	$	296
Derivative assets(2):
Interest rate swaps	$	—	$	1,171	$	—	$	1,171	$	—	$	2,750	$	—	$	2,750
Interest rate options	—		212		20		232		—		477		43		520
Interest rate futures and forward commitments	—		13		—		13		—		11		—		11
Other contracts	—		216		—		216		2		65		1		68
Total derivative assets	$	—	$	1,612	$	20	$	1,632	$	2	$	3,303	$	44	$	3,349
Equity investments	$	—	$	—	$	—	$	—	$	—	$	74	$	—	$	74
Derivative liabilities(2):
Interest rate swaps	$	—	$	973	$	—	$	973	$	—	$	1,464	$	—	$	1,464
Interest rate options	—		20		—		20		—		28		—		28
Interest rate futures and forward commitments	—		5		—		5		—		26		—		26
Other contracts	—		214		3		217		2		72		6		80
Total derivative liabilities	$	—	$	1,212	$	3	$	1,215	$	2	$	1,590	$	6	$	1,598
Non-recurring fair value measurements(3)
Loans held for sale	$	—	$	—	$	9	$	9	$	—	$	—	$	4	$	4
Equity investments without a readily determinable fair value	—		—		25		25		—		—		12		12
Foreclosed property and other real estate	—		—		10		10		—		—		5		5

(1)All following disclosures related to Level 3 recurring and non-recurring assets do not include those deemed to be immaterial.

(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.

(3)From time to time, certain assets may be recorded at fair value on a non-recurring basis, and the related fair value adjustments disclosed are typically a result of the application of lower of cost or fair value accounting or a write-down occurring during the periods indicated.

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. Further, derivatives included in Levels 2 and 3 are used by ALCO in a holistic approach to managing price fluctuation risks.

The following tables illustrate rollforwards for residential mortgage servicing rights, which are the only material assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine months ended September 30, 2021 and 2020, respectively.


	Residential mortgage servicing rights
	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)
Carrying value, beginning of period	$	392	$	249	$	296	$	345
Total realized/unrealized gains (losses) included in earnings (1)	(21)		(14)		(2)		(145)

Additions	39		32		116		67





Carrying value, end of period	$	410	$	267	$	410	$	267

(1)Included in mortgage income. Amounts presented exclude offsetting impact from related derivatives.

The following table presents the fair value adjustments related to non-recurring fair value measurements:


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)
Loans held for sale	$	(1)	$	(1)	$	(1)	$	(6)
Equity investments without a readily determinable fair value	13		—		14		(3)
Foreclosed property and other real estate	(4)		(3)		(4)		(13)

The following tables present detailed information regarding material assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2021, and December 31, 2020. 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 September 30, 2021, and December 31, 2020, are included. Following the tables are descriptions of the valuation techniques and the sensitivity of the techniques to changes in the significant unobservable inputs.


	September 30, 2021
	Level 3 Estimated Fair Value at September 30, 2021	Valuation Technique	Unobservable Input(s)	Quantitative Range of Unobservable Inputs and (Weighted-Average)
	(Dollars in millions)
Recurring fair value measurements:
Residential mortgage servicing rights(1)	$410	Discounted cash flow	Weighted-average CPR (%)	6.9% - 21.3% (10.3%)
			OAS (%)	4.2% - 9.6% (5.3%)

(1)See Note 4 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.


	December 31, 2020
	Level 3 Estimated Fair Value at December 31, 2020	Valuation Technique	Unobservable Input(s)	Quantitative Range of Unobservable Inputs and (Weighted-Average)
	(Dollars in millions)
Recurring fair value measurements:
Residential mortgage servicing rights(1)	$296	Discounted cash flow	Weighted-average CPR (%)	8.1% - 31.2% (15.6%)
			OAS (%)	4.8% - 9.5% (5.6%)

(1)See Note 7 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2020 for additional disclosures related to assumptions used in the fair value calculation for 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 4.

FAIR VALUE OPTION

Regions has elected the fair value option for all eligible agency residential mortgage loans and certain commercial loans originated with the intent to sell. These elections allow 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. Regions has not elected the fair value option for other loans held for sale primarily because they are not economically hedged using derivative instruments. 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 in the consolidated balance sheets.

The Company also elected to measure certain commercial 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 commercial loans held for sale was immaterial at September 30, 2021 and December 31, 2020.

The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential first mortgage loans held for sale measured at fair value:


	September 30, 2021						December 31, 2020
	Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal		Aggregate Fair Value		Aggregate Unpaid Principal		Aggregate Fair Value Less Aggregate Unpaid Principal
	(In millions)
Residential first mortgage loans held for sale, at fair value	$	848	$	822	$	26	$	1,439	$	1,362	$	77

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 in the consolidated statements of income. The following table details net gains and losses resulting from changes in fair value of these loans, which were recorded in mortgage income in the consolidated statements of income during the three and nine months ended September 30, 2021 and 2020. 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.


	Three Months Ended September 30				Nine Months Ended September 30
	2021		2020		2021		2020
	(In millions)
Net gains (losses) resulting for the change in fair value of mortgage loans held for sale	$	(10)	$	7	$	(50)	$	37

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 September 30, 2021 are as follows:


	September 30, 2021
	Carrying Amount		Estimated Fair Value(1)		Level 1		Level 2		Level 3
	(In millions)
Financial assets:
Cash and cash equivalents	$	27,507	$	27,507	$	27,507	$	—	$	—
Debt securities held to maturity	945		1,010		—		1,010		—
Debt securities available for sale	28,986		28,986		784		28,200		2
Loans held for sale	934		934		—		925		9
Loans (excluding leases), net of unearned income and allowance for loan losses(2)(3)	80,403		80,800		—		—		80,800
Other earning assets(4)	1,149		1,149		507		642		—
Derivative assets	1,632		1,632		—		1,612		20
Financial liabilities:
Derivative liabilities	1,215		1,215		—		1,212		3
Deposits	132,039		132,046		—		132,046		—

Long-term borrowings	2,451		2,917		—		2,886		31
Loan commitments and letters of credit	102		102		—		—		102

(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 premium on the loan portfolio's net carrying amount at September 30, 2021 was $397 million or 0.5 percent.

(3)Excluded from this table is the sales-type, direct financing, and leveraged lease carrying amount of $1.4 billion at September 30, 2021.

(4)Excluded from this table is the operating lease carrying amount of $120 million at September 30, 2021.

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, 2020 are as follows:


	December 31, 2020
	Carrying Amount		Estimated Fair Value(1)		Level 1		Level 2		Level 3
	(In millions)
Financial assets:
Cash and cash equivalents	$	17,956	$	17,956	$	17,956	$	—	$	—
Debt securities held to maturity	1,122		1,215		—		1,215		—
Debt securities available for sale	27,154		27,154		183		26,966		5
Loans held for sale	1,905		1,905		—		1,901		4
Loans (excluding leases), net of unearned income and allowance for loan losses(2)(3)	81,597		82,773		—		—		82,773
Other earning assets(4)	1,017		1,017		388		629		—
Derivative assets	3,349		3,349		2		3,303		44
Equity investments	74		74		—		74		—
Financial liabilities:
Derivative liabilities	1,598		1,598		2		1,590		6
Deposits	122,479		122,511		—		122,511		—

Long-term borrowings	3,569		4,063		—		3,592		471
Loan commitments and letters of credit	151		151		—		—		151

(3)Excluded from this table is the sales-type, direct financing, and leveraged lease carrying amount of $1.5 billion at December 31, 2020.

(4)Excluded from this table is the operating lease carrying amount of $200 million at December 31, 2020.

NOTE 10. 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. Additional information about the Company's reportable segments is included in Regions' Annual Report on Form 10-K for the year ended December 31, 2020.

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 period was updated to reflect these enhancements. In the first quarter of 2021, the net interest income allocation methodology was enhanced. All net interest income including the FTP offset, activities of the treasury function, securities portfolio and interest rate risk activities is allocated to the three reporting segments.

The following tables present financial information for each reportable segment for the period indicated.


	Three Months Ended September 30, 2021
	Corporate Bank		Consumer Bank		Wealth Management		Other		Consolidated
	(In millions)
Net interest income	$	444	$	486	$	35	$	—	$	965
Provision for (benefit from) credit losses	75		58		2		(290)		(155)
Non-interest income	208		307		96		38		649
Non-interest expense	274		531		98		35		938
Income before income taxes	303		204		31		293		831
Income tax expense	76		51		8		45		180
Net income	227		153		23		248		651
Average assets	$	58,644	$	33,003	$	2,030	$	61,953	$	155,630


	Three Months Ended September 30, 2020
	Corporate Bank		Consumer Bank		Wealth Management		Other		Consolidated
	(In millions)
Net interest income	$	445	$	510	$	33	$	—	$	988
Provision for credit losses	83		71		3		(44)		113
Non-interest income	159		343		87		66		655
Non-interest expense	248		521		85		42		896
Income before income taxes	273		261		32		68		634
Income tax expense (benefit)	68		65		8		(37)		104
Net income	205		196		24		105		530
Average assets	$	63,464	$	34,570	$	2,014	$	42,797	$	142,845


	Nine Months Ended September 30, 2021
	Corporate Bank		Consumer Bank		Wealth Management		Other		Consolidated
	(In millions)
Net interest income	$	1,321	$	1,471	$	103	$	—	$	2,895
Provision for (benefit from) credit losses	230		183		8		(1,055)		(634)
Non-interest income	564		952		288		105		1,909
Non-interest expense	802		1,596		283		83		2,764
Income before income taxes	853		644		100		1,077		2,674
Income tax expense	213		161		25		192		591
Net income	640		483		75		885		2,083
Average assets	$	59,315	$	33,498	$	2,037	$	57,470	$	152,320


	Nine Months Ended September 30, 2020
	Corporate Bank		Consumer Bank		Wealth Management		Other		Consolidated
	(In millions)
Net interest income	$	1,227	$	1,557	$	104	$	—	$	2,888
Provision for credit losses	210		234		9		915		1,368
Non-interest income	444		944		254		71		1,713
Non-interest expense	741		1,529		257		129		2,656
Income (loss) before income taxes	720		738		92		(973)		577
Income tax expense (benefit)	180		185		23		(289)		99
Net income (loss)	540		553		69		(684)		478
Average assets	$	61,374	$	34,531	$	2,028	$	37,905	$	135,838

NOTE 11. 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. Refer to Note 24 "Commitments, Contingencies and Guarantees" in the Annual Report on Form 10-K for the year ended December 31, 2020 for more information regarding these instruments.

Credit risk associated with these instruments is represented by the contractual amounts indicated in the following table:


	September 30, 2021		December 31, 2020
	(In millions)
Unused commitments to extend credit	$	60,653	$	56,644
Standby letters of credit	1,783		1,742
Commercial letters of credit	52		132
Liabilities associated with standby letters of credit	31		25
Assets associated with standby letters of credit	32		25
Reserve for unfunded credit commitments	71		126

LEGAL CONTINGENCIES

Regions and its subsidiaries are subject to loss contingencies related to litigation, claims, investigations and legal and administrative cases and proceedings arising in the ordinary course of business. Regions evaluates these contingencies based on information currently available, including advice of counsel. Regions establishes accruals for those matters when a loss contingency is considered probable and the related amount is reasonably estimable. Any accruals are periodically reviewed and may be adjusted as circumstances change. Some of Regions' exposure with respect to loss contingencies may be offset by applicable insurance coverage. In determining the amounts of any accruals or estimates of possible loss contingencies however, 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.

When it is practicable, Regions estimates possible loss contingencies, whether or not there is an accrued probable loss. When Regions is able to estimate such possible losses, and when it is reasonably possible Regions could incur losses in excess of amounts accrued, Regions discloses the aggregate estimation of such possible losses. Regions currently estimates that it is reasonably possible that it may experience losses in excess of what Regions has accrued in an aggregate amount of up to approximately $20 million as of September 30, 2021, with it also being reasonably possible that Regions could incur no losses in excess of amounts accrued. However, as available information changes, the matters for which Regions is able to estimate, as well as the estimates themselves will be adjusted accordingly.

Assessments of litigation and claims exposure are difficult because they involve inherently unpredictable factors including, but not limited to, the following: whether the proceeding is in the early stages; whether damages 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 has begun or is not complete; whether meaningful settlement discussions have commenced; and whether the lawsuit involves class allegations. Assessments of class action litigation, which is generally more complex than other types of litigation, are particularly difficult, especially in the early stages of the proceeding when it is not known whether a class will be certified or how a potential class, if certified, will be defined. As a result, Regions may be unable to estimate reasonably possible losses with respect to some of the matters disclosed below, and the aggregated estimated amount discussed above may not include an estimate for every matter disclosed below.

Regions is involved in formal and informal information-gathering requests, investigations, reviews, examinations and proceedings by various governmental regulatory agencies, law enforcement authorities and self-regulatory bodies regarding Regions’ business, Regions' business practices and policies, and the conduct of persons with whom Regions does business. As previously disclosed, Regions is cooperating with an investigation by the CFPB into certain of Regions' overdraft practices and policies. Additional inquiries will arise from time to time. In connection with those inquiries, Regions receives document requests, subpoenas and other requests for information. The inquiries could develop into administrative, civil or criminal proceedings or enforcement actions that could result in consequences that have a material effect on Regions' consolidated financial position, results of operations or cash flows as a whole. Such consequences could include adverse judgments, findings, settlements, penalties, fines, orders, injunctions, restitution, or alterations in our business practices, and could result in additional expenses and collateral costs, including reputational damage.

While the final outcome of litigation and claims exposures or of any inquiries is inherently unpredictable, management is currently of the opinion that the outcome of pending and threatened litigation and inquiries will not have a material effect on Regions’ business, consolidated financial position, results of operations or cash flows as a whole. However, in the event of unexpected future developments, it is reasonably possible that an adverse outcome in any of the matters discussed above could be material to Regions’ business, consolidated financial position, results of operations or cash flows for any particular reporting period of occurrence.

GUARANTEES

FANNIE MAE DUS LOSS SHARE GUARANTEE

Regions is a DUS lender. 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 for the majority of its DUS servicing portfolio. At September 30, 2021 and December 31, 2020, the Company's DUS servicing portfolio totaled approximately $4.8 billion and $4.5 billion, respectively. Regions' maximum quantifiable contingent liability related to its loss share guarantee was approximately $1.6 billion and $1.5 billion at September 30, 2021 and December 31, 2020, respectively. 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 approximately $5 million at both September 30, 2021 and December 31, 2020. Refer to Note 1 "Summary of Significant Accounting Policies" in the Annual Report on Form 10-K for the year ended December 31, 2020, for additional information.

NOTE 12. RECENT ACCOUNTING PRONOUNCEMENTS


Standard	Description	Required Date of Adoption	Effect on Regions' financial statements or other significant matters
Standards Adopted (or partially adopted) in 2021
ASU 2019-12 Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes	The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.	January 1, 2021	The adoption of this guidance did not have a material impact.
ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)	The amendments clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815.	January 1, 2021	The adoption of this guidance did not have a material impact.
ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs	The amendments in this Update were issued to clarify that entities should reevaluate at each reporting period whether callable debt securities are within the scope of the guidance in Topic 310-20, which requires the premium on such debt securities to be amortized to the next call date.	January 1, 2021	The adoption of this guidance did not have a material impact.
ASU 2020-10, Codification Improvements	This Update was issued to make minor technical corrections and improvements to the Codification as part of an ongoing FASB project to clarify guidance and correct inconsistent application of unclear guidance. The ASU codifies in Section 50 (Disclosure) of various Codification Topics the disclosure guidance that includes an option to provide certain information either on the face of the financial statements or in notes to the financial statements that was previously codified only in Section 45 (Other Presentation Matters). It also amends various Codification Topics to clarify guidance that may have been unclear when originally codified and that has resulted in inconsistent application.	January 1, 2021	The adoption of this guidance did not have a material impact.


Standard	Description	Required Date of Adoption	Effect on Regions' financial statements or other significant matters
Standards Adopted (or partially adopted) in 2021
ASU 2021-01 Reference Rate Reform (Topic 848)	The Update was issued to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to contracts that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, would apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Amendments in this ASU to the expedients and exceptions in Topic 848 are included to capture the incremental consequences of the scope refinement and to tailor the existing guidance to derivative instruments affected by the discounting transition.	The Update is effective upon issuance and can be applied through December 31, 2022	The adoption of this guidance did not have a material impact.
ASU 2021-06 Presentation of Financial Statements (Topic 205), Financial Services—Depository and Lending (Topic 942), and Financial Services— Investment Companies (Topic 946)	The FASB issued this Update to amend certain guidance pursuant to SEC rulemaking, including amendments to financial disclosures about acquired and disposed businesses and updates of statistical disclosures required for banking and savings loan registrants.	The Update is effective upon issuance	The adoption of this guidance did not have a material impact.


Standard	Description	Required Date of Adoption	Effect on Regions' financial statements or other significant matters
Standards Not Yet Adopted
ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)	This Update simplifies accounting for convertible instruments by removing certain separation models. Additionally, it revises and clarifies guidance on the derivatives scope exception to make the exception easier to apply.	January 1, 2022	Regions is evaluating the impact upon adoption; however, the impact is not expected to be material.
ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40)	The Update clarified how an issuer should account for modifications made to equity-classified written call options (i.e. a warrant to purchase the issuer’s common stock). The guidance in the Update requires the issuer to treat a modification of an equity-classified warrant that does not cause the warrant to become liability-classified as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant.	January 1, 2022	Regions is evaluating the impact upon adoption; however, the impact is not expected to be material.
ASU 2021-05 Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments	The Board issued this ASU to amend the lessor lease classification guidance under ASC 842. Under the amendments, a lessor must classify a lease that includes variable lease payments that do not depend on an index or rate as an operating lease if it would otherwise be classified as a sales-type or direct financing lease and would result in the recognition of a selling loss at a lease commencement. The amendments address concerns raised during the FASB’s post implementation review that recognizing an immediate loss for these leases, as would otherwise be required	January 1, 2022	Regions is evaluating the impact upon adoption; however, the impact is not expected to be material.

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