Regions Bank 2009 Annual Report Download - page 41

business climate or slower growth rates could result in further impairment of goodwill. If we were to conclude
that a future write-down of our goodwill is necessary, then we would record the appropriate charge, which could
be materially adverse to our operating results and financial position. For further discussion, see Notes 1 and 9,
“Summary of Significant Accounting Policies” and “Intangible Assets”, to the Consolidated Financial Statements
included in Item 7. of this Annual Report on Form 10-K.
Rapid and significant changes in market interest rates may adversely affect our performance.
Most of our assets and liabilities are monetary in nature and subject us to significant risks from changes in
interest rates. Our profitability depends to a large extent on our net interest income, and changes in interest rates
can impact our net interest income as well as the valuation of our assets and liabilities.
Our current one-year interest rate sensitivity position is asset sensitive, meaning that an immediate or
gradual increase in interest rates would likely have a positive cumulative impact on Regions’ twelve-month net
interest income. Alternatively, an immediate or gradual decrease in rates over a twelve-month period would
likely have a negative impact on twelve-month net interest income. However, like most financial institutions, our
results of operations are affected by changes in interest rates and our ability to manage interest rate risks.
Changes in market interest rates, or changes in the relationships between short-term and long-term market
interest rates, or changes in the relationships between different interest rate indices, can affect the interest rates
charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. This
difference could result in an increase in interest expense relative to interest income, or a decrease in our interest
rate spread. For a more detailed discussion of these risks and our management strategies for these risks, see the
“Net Interest Income and Margin” and “Interest Rate Risk” sections of Item 6. “Management’s Discussion and
Analysis of Financial Condition and Results of Operation” of this Annual Report on Form 10-K. Our net interest
margin depends on many factors that are partly or completely out of our control, including competition, federal
economic monetary and fiscal policies, and general economic conditions. Despite our strategies to manage
interest rate risks, changes in interest rates can still have a material adverse impact on our business, financial
condition and results of operations.
The performance of our investment portfolio is subject to fluctuations due to changes in interest rates and
market conditions.
Changes in interest rates can negatively affect the performance of most of our investments. Interest rate
volatility can reduce unrealized gains or create unrealized losses in our portfolios. Interest rates are highly
sensitive to many factors, including governmental monetary policies, domestic and international economic and
political conditions, and other factors beyond our control. Fluctuations in interest rates affect our returns on, and
the market value of, our investment securities.
The fair market value of the securities in our portfolio and the investment income from these securities also
fluctuate depending on general economic and market conditions. In addition, actual net investment income and/or
cash flows from investments that carry prepayment risk, such as mortgage-backed and other asset-backed
securities, may differ from those anticipated at the time of investment as a result of interest rate fluctuations. See
the “Securities” section of Item 6. “Management’s Discussion and Analysis of Financial Condition and Results
of Operation” of this Annual Report on Form 10-K.
Hurricanes and other weather-related events could cause a disruption in our operations or other
consequences that could have an adverse impact on our results of operations.
A significant portion of our operations are located in the areas bordering the Gulf of Mexico and the
Atlantic Ocean, regions that are susceptible to hurricanes. Such weather events can cause disruption to our
operations and could have a material adverse effect on our overall results of operations. We maintain hurricane
insurance, including coverage for lost profits and extra expense; however, there is no insurance against the
disruption to the markets that we serve that a catastrophic hurricane could produce. Further, a hurricane in any of
27