Regions Bank 2010 Annual Report Download - page 168

remain at a fixed rate, or Regions will have the option to either pay off the advance or convert from a fixed rate
to a variable rate based on the LIBOR index. The FHLB structured advances had a weighted-average interest rate
of 2.5%, 3.1% and 5.4% at December 31, 2010, 2009 and 2008. Other FHLB advances at December 31, 2010,
2009 and 2008 had a weighted-average interest rate of 1.0%, 3.4% and 3.8%, respectively, with maturities of one
to nineteen years, respectively. FHLB borrowings are contingent upon the amount of collateral pledged to the
FHLB. Regions has pledged certain residential first mortgage loans on one-to-four family dwellings and home
equity lines of credit as collateral for the FHLB advances outstanding. See Note 4 for loans pledged to the FHLB
at December 31, 2010 and 2009. Additionally, membership in the FHLB requires an institution to hold FHLB
stock, and Regions held $419 million at December 31, 2010 and $473 million at December 31, 2009. During
2010, Regions prepaid approximately $2 billion of FHLB advances, realizing a $108 million pre-tax loss on early
extinguishment. These extinguishments were part of the company’s asset/liability management process. Regions’
borrowing availability with the FHLB as of December 31, 2010, based on assets available for collateral at that
date, was $1.2 billion.
As of December 31, 2010, Regions had ten issuances of subordinated notes totaling $4.3 billion, with stated
interest rates ranging from 4.85% to 7.75%. All issuances of these notes are, by definition, subordinated and
subject in right of payment of both principal and interest to the prior payment in full of all senior indebtedness of
the Company, which is generally defined as all indebtedness and other obligations of the Company to its
creditors, except subordinated indebtedness. Payment of the principal of the notes may be accelerated only in the
case of certain events involving bankruptcy, insolvency proceedings or reorganization of the Company. The
subordinated notes described above qualify as Tier 2 capital under Federal Reserve guidelines. None of the
subordinated notes are redeemable prior to maturity.
As of December 31, 2010, Regions had senior notes totaling $3.8 billion. In October 2008, the Federal
Deposit Insurance Corporation (“FDIC”) announced a new program—the Temporary Liquidity Guarantee
Program (“TLGP”)—to strengthen confidence and encourage liquidity in the banking system by guaranteeing
newly issued senior unsecured debt of banks, thrifts and certain holding companies, and by providing full
coverage of non-interest bearing deposit transaction accounts, regardless of dollar amount. Under the original
rules, certain newly issued senior unsecured debt with maturities greater than 30 days issued on or before
June 30, 2009, would be backed by the “full faith and credit” of the U.S. government through June 30, 2012. The
FDIC’s payment obligation under the guarantee for eligible senior unsecured debt would be triggered by a
payment default. The guarantee is limited to 125 percent of senior unsecured debt as of September 30, 2008 that
was scheduled to mature before June 30, 2009. This includes federal funds purchased, promissory notes,
commercial paper and certain types of inter-bank funding. Participants were charged a 50-100 basis point fee to
protect their new debt issues which varies depending on the maturity date. Additionally, participants could elect
to pay a fee of 37.5 basis points on their TLGP capacity for the right to issue non-guaranteed debt during the
program. This fee was non-refundable and used to offset the guarantee fee for issuances until exhausted. In
December 2008, Regions Bank completed an offering of $3.75 billion of qualifying senior bank notes covered by
the TLGP. Payment of principal and interest on the notes will be guaranteed by the full faith and credit of the
United States pursuant to the TLGP. At December 31, 2010, approximately $2 billion of this offering remained
outstanding, and will mature in December of 2011. In June 2010 and December 2010, approximately $250
million and $2 billion of senior notes, respectively, matured. Also during 2010, Regions issued $250 million (par
value) of 4.875% senior notes due April 2013 and $500 million (par value) of 5.75% senior notes due June 2015.
In April 2008, Regions issued $345 million of junior subordinated notes (“JSNs”) bearing an initial fixed
interest rate of 8.875%. These JSNs have a scheduled maturity of June 15, 2048 and a final maturity of June 15,
2078, and are redeemable at Regions’ option on or after June 15, 2013. JSNs were issued to affiliated trusts,
which contemporaneously issued trust preferred securities which Regions guaranteed.
Other long-term debt at December 31, 2010, 2009 and 2008 had weighted-average interest rates of 2.6%,
2.9% and 2.9%, respectively, and a weighted-average maturity of 5.1 years at December 31, 2010. Regions has
$55 million included in other long-term debt in connection with a seller-lessee transaction with continuing
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