Regions Bank 2008 Annual Report Download - page 28

financial institutions are undergoing continuous change, and the ultimate effect of such changes cannot be
predicted. Regulations and laws may be modified at any time, and new legislation may be enacted that will affect
us, Regions Bank and our subsidiaries.
Given the current disruption in the financial markets and regulatory initiatives that are likely to be proposed
by the new administration and Congress, new regulations and laws that may affect us are increasingly likely.
Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities.
Also, participation in specific programs may subject us to additional restrictions. We cannot assure you that such
modifications or new laws will not adversely affect us. Our regulatory position is discussed in greater detail
under Item 1. “Business—Supervision and Regulation” of this Annual Report on Form 10-K.
In addition, Regions will be required to pay significantly higher FDIC premiums because market
developments have significantly depleted the insurance fund of the FDIC and reduced the ratio of reserves to
insured deposits.
We may need to raise additional capital in the future and such capital may not be available when needed or at
all.
We may need to raise additional capital in the future to provide us with sufficient capital resources and
liquidity to meet our commitments and business needs. Our ability to raise additional capital, if needed, will
depend on, among other things, conditions in the capital markets at that time, which are outside of our control,
and our financial performance. The ongoing liquidity crisis and the loss of confidence in financial institutions
may increase our cost of funding and limit our access to some of our customary sources of capital, including, but
not limited to, inter-bank borrowings, repurchase agreements and borrowings from the discount window of the
Federal Reserve.
We cannot assure you that such capital will be available to us on acceptable terms or at all. Any occurrence
that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, depositors
of Regions Bank or counterparties participating in the capital markets, or a downgrade of our debt rating, may
adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. An inability to raise
additional capital on acceptable terms when needed could have a materially adverse effect on our businesses,
financial condition and results of operations.
We are a holding company and depend on our subsidiaries for dividends, distributions and other payments.
We are a legal entity separate and distinct from our banking and other subsidiaries. Our principal source of
cash flow, including cash flow to pay dividends to our stockholders and principal and interest on our outstanding
debt, is dividends from Regions Bank. There are statutory and regulatory limitations on the payment of dividends
by Regions Bank to us, as well as by us to our stockholders. Regulations of both the Federal Reserve and the
State of Alabama affect the ability of Regions Bank to pay dividends and other distributions to us and to make
loans to us. Given the loss recorded at Regions Bank during the fourth quarter of 2008, under the Federal
Reserve’s rules, Regions Bank does not expect to be able to pay dividends to us in the near term without first
obtaining regulatory approval. If Regions Bank is unable to make dividend payments to us and sufficient capital
is not otherwise available, we may not be able to make dividend payments to our common stockholders or
principal and interest payments on our outstanding debt. See “Supervision and Regulation—Payment of
Dividends” of this Annual Report on Form 10-K.
In addition, our right to participate in a distribution of assets upon a subsidiary’s liquidation or
reorganization is subject to the prior claims of the subsidiary’s creditors.
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