Regions Bank 2009 Annual Report Download - page 20

For further discussion regarding the general regulatory environment applicable to Regions and its
subsidiaries, please see “General Regulatory Framework” below.
Recent Regulatory Developments
FDIC Temporary Liquidity Guarantee Program. Regions and Regions Bank have chosen to participate in
the FDIC’s Temporary Liquidity Guarantee Program (the “TLGP”), which applies to, among others, all U.S.
depository institutions insured by the FDIC and all United States bank holding companies, unless they have opted
out. Under the TLGP, the FDIC guarantees certain senior unsecured debt of Regions and Regions Bank, as well
as non-interest bearing transaction account deposits at Regions Bank. Under the transaction account guarantee
component of the TLGP, all non-interest bearing transaction accounts maintained at Regions Bank are insured in
full by the FDIC until June 30, 2010, regardless of the standard maximum deposit insurance amounts. Although
the transaction account guarantee program was originally scheduled to expire on December 31, 2009, the FDIC
implemented a final rule, effective as of October 1, 2009, extending the transaction account guarantee program
by six months until June 30, 2010 (subject to the option of participating institutions to opt out of such six-month
extension). Regions Bank did not choose to opt out of the six-month extension.
On December 11, 2008, Regions Bank issued and sold $3.5 billion aggregate principal amount of its senior
bank notes guaranteed under the TLGP. Regions Bank issued and sold an additional $250 million aggregate
principal amount of guaranteed senior bank notes on December 16, 2008. Under the debt guarantee component of
the TLGP, the FDIC will pay the unpaid principal and/or interest on such FDIC-guaranteed debt instruments
upon the uncured failure of Regions Bank to make a timely payment of principal and/or interest. Neither Regions
nor Regions Bank is permitted to use the proceeds from the sale of securities guaranteed under the TLGP to
prepay any of its other debt that is not guaranteed by the FDIC. The deadline to issue debt guaranteed by the
FDIC under the debt guarantee component of the TLGP has expired and, therefore, neither Regions nor Regions
Bank may in the future issue any new securities guaranteed under such program.
U.S. Treasury Capital Purchase Program. Pursuant to the U.S. Department of the Treasury’s (the “U.S.
Treasury”) Capital Purchase Program (the “CPP”), on November 14, 2008, Regions issued and sold to the U.S.
Treasury in an offering exempt from registration under Section 4(2) of the Securities Act of 1933, (i) 3.5 million
shares of Regions’ Fixed Rate Cumulative Perpetual Preferred Stock, Series A, par value $1.00 and liquidation
preference $1,000 per share ($3.5 billion aggregate liquidation preference) (the “Series A Preferred Stock”) and
(ii) a warrant (the “Warrant”) to purchase 48,253,677 shares of Regions’ common stock, at an exercise price of
$10.88 per share, subject to certain anti-dilution and other adjustments for an aggregate purchase price of $3.5
billion in cash. The securities purchase agreement, dated November 14, 2008, pursuant to which the securities
issued to the U.S. Treasury under the CPP were sold, limits the payment of dividends on Regions’ common stock
to $0.10 per share without prior approval of the U.S. Treasury, limits Regions’ ability to repurchase shares of its
common stock (with certain exceptions, including the repurchase of our common stock to offset share dilution
from equity-based compensation awards), grants the holders of the Series A Preferred Stock, the Warrant and the
common stock of Regions to be issued under the Warrant certain registration rights, and subjects Regions to
certain of the executive compensation limitations included in the Emergency Economic Stabilization Act of
2008, as amended by the American Recovery and Reinvestment Act of 2009. Regions has reduced its quarterly
dividend to $0.01 per share and does not expect to increase its quarterly dividend above such level for the
foreseeable future.
Comprehensive Financial Stability Plan of 2009. On February 10, 2009, Treasury Secretary Timothy
Geithner announced a new comprehensive financial stability plan (the “Financial Stability Plan”), which
earmarked the second $350 billion of unused funds originally authorized under the Emergency Economic
Stabilization Act of 2008.
The major elements of the Financial Stability Plan included: (i) a capital assistance program that has
invested in convertible preferred stock of certain qualifying institutions, (ii) a consumer and business lending
6