Regions Bank 2008 Annual Report Download - page 14

Corporation (“FDIC”) and the banking system as a whole, and generally is not intended for the protection of
stockholders or other investors. Described below are the material elements of selected laws and regulations
applicable to Regions and its subsidiaries. The descriptions are not intended to be complete and are qualified in
their entirety by reference to the full text of the statutes and regulations described. Changes in applicable law or
regulation, and in their application by regulatory agencies, cannot be predicted, but they may have a material
effect on the business and results of Regions and its subsidiaries.
General. Regions is a bank holding company, registered with the Board of Governors of the Federal
Reserve System (the “Federal Reserve”) and a financial holding company under the Bank Holding Company Act
of 1956, as amended (“BHC Act”). As such, Regions and its subsidiaries are subject to the supervision,
examination and reporting requirements of the BHC Act and the regulations of the Federal Reserve.
Under the BHC Act, an eligible bank holding company may elect to be a “financial holding company” and
thereafter may engage in a range of activities that are financial in nature and that are not permissible for bank
holding companies that are not financial holding companies. A financial holding company may engage directly
or through a subsidiary in the statutorily authorized activities of securities dealing, underwriting and market
making, insurance underwriting and agency activities, merchant banking and insurance company portfolio
investments. A financial holding company also may engage in any activity that the Federal Reserve determines
by rule or order to be financial in nature, incidental to such financial activity, or complementary to a financial
activity and that does not pose a substantial risk to the safety and soundness of an institution or to the financial
system generally.
In addition to these activities, a financial holding company may engage in those activities permissible for a
bank holding company that has not elected to be treated as a financial holding company, including factoring
accounts receivable, acquiring and servicing loans, leasing personal property, performing certain data processing
services, acting as agent or broker in selling credit life insurance and certain other types of insurance in
connection with credit transactions and conducting certain insurance underwriting activities. The BHC Act does
not place territorial limitations on permissible non-banking activities of bank holding companies. The Federal
Reserve has the power to order any bank holding company or its subsidiaries to terminate any activity or to
terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe
that continuation of such activity or such ownership or control constitutes a serious risk to the financial
soundness, safety or stability of any bank subsidiary of the bank holding company.
The BHC Act provides generally for “umbrella” regulation of financial holding companies by the Federal
Reserve, and for functional regulation of banking activities by bank regulators, securities activities by securities
regulators, and insurance activities by insurance regulators.
For a bank holding company to be eligible for financial holding company status, all of its subsidiary insured
depository institutions must be well capitalized and well managed. A bank holding company may become a
financial holding company by filing a declaration with the Federal Reserve that it elects to become a financial
holding company. The Federal Reserve must deny expanded authority to any bank holding company with a
subsidiary insured depository institution that received less than a satisfactory rating on its most recent
Community Reinvestment Act of 1977 (the “CRA”) review as of the time it submits its declaration. If, after
becoming a financial holding company and undertaking activities not permissible for a bank holding company
that is not a financial holding company, the company fails to continue to meet any of the prerequisites for
financial holding company status, the company must enter into an agreement with the Federal Reserve to comply
with all applicable capital and management requirements. If the company does not return to compliance within
180 days, the Federal Reserve may order the company to divest its subsidiary banks or the company may
discontinue or divest investments in companies engaged in activities permissible only for a bank holding
company that has elected to be treated as a financial holding company.
The BHC Act requires every bank holding company to obtain the prior approval of the Federal Reserve
before: (1) it may acquire direct or indirect ownership or control of any voting shares of any bank or savings and
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