Regions Bank 2008 Annual Report Download - page 70

SHORT-TERM BORROWINGS
Regions’ short-term borrowings consist primarily of federal funds purchased, securities sold under
agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances, and TAF borrowings. See Note 13
“Short-Term Borrowings” to the consolidated financial statements for further detail and discussion.
Federal funds purchased from downstream sources and securities sold under agreements to repurchase
totaled $3.1 billion at December 31, 2008, compared to $8.8 billion at year-end 2007. Regions had zero balances
in federal funds purchased from up-stream correspondents at December 31, 2008. The level of federal funds
purchased and securities sold under agreements to repurchase can fluctuate significantly on a day-to-day basis,
depending on funding requirements and which sources of funds are used to satisfy those needs. The balance of
federal funds purchased and security repurchase agreements, net of federal funds sold and security reverse
repurchase agreements, decreased $5.7 billion in 2008.
As one source of funding, the Company utilized short-term borrowings through the issuance of FHLB
advances. FHLB borrowings are used to satisfy short-term funding requirements and can fluctuate between
periods. FHLB borrowings totaled $1.5 billion at December 31, 2008 compared to $100.0 million at
December 31, 2007. The increase in FHLB borrowings reflects the opportunity during 2008 to reduce overnight
funding and diversify into slightly longer-term maturities at preferable rates.
During 2008, Regions was an active participant in the Federal Reserve’s TAF, which was designed to
address pressures in short-term funding markets. Under the TAF, the Federal Reserve auctions term funds to
depository institutions with maturities of 28 or 84 days. All depository institutions that are eligible to borrow
under the primary credit program are eligible to participate in TAF auctions. All advances are fully collateralized
using collateral values and margins applicable for other Federal Reserve lending programs. As of December 31,
2008, Regions had outstanding through the TAF, $10.0 billion at an average rate of 1.1 percent. Consistent with
the Treasury’s purpose for TAF, Regions used TAF to provide additional liquidity at low rates and to build
excess reserves in the Federal Reserve Bank account. This program provides Regions with an alternative source
of short-term funding and aids in maintaining the stability of the financial markets by reducing uncertainty about
the supply of reserves in the banking system and simplifying the Federal Reserve’s implementation of monetary
policy.
As of December 31, 2008, Regions had $125 thousand outstanding in the Federal Reserve’s Treasury, Tax,
and Loan Program, compared to $1.2 billion at December 31, 2007.
Regions maintains a liability for its brokerage customer position through Morgan Keegan. This liability
represents liquid funds in customers’ brokerage accounts. Balances due to brokerage customers totaled $430.6
million at December 31, 2008 as compared to $505.5 million at December 31, 2007. The short-sale liability,
which is primarily maintained at Morgan Keegan in connection with trading obligations related to customer
accounts, was $628.7 million at December 31, 2008 compared to $451.3 million at December 31, 2007. The
balance of this account fluctuates frequently based on customer activity.
Other short-term borrowings increased by $27.0 million to $120.1 million at December 31, 2008. This
balance includes certain lines of credit that Morgan Keegan maintains with unaffiliated banks and derivative
collateral. The lines of credit had maximum borrowings of $585 million at December 31, 2008.
Table 17 “Selected Short-Term Borrowings Data” provides selected information for short-term borrowing
for years 2008, 2007, and 2006.
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