Regions Bank 2010 Annual Report Download - page 186

December 31, 2009
Asset Derivatives Liability Derivatives
Notional
Value
Balance Sheet
Location
Fair
Value
Balance Sheet
Location
Fair
Value
(In millions)
Derivatives in fair value hedging relationships:
Interest rate swaps .......................... $ 10,258 Other assets $ 217 Other liabilities $ 22
Total ..................................... 10,258 217 22
Derivatives in cash flow hedging relationships:
Interest rate swaps .......................... 5,300 Other assets 173 Other liabilities —
Interest rate options ......................... 2,000 Other assets 52 Other liabilities —
Eurodollar futures(1) ........................ 30,225 Other assets — Other liabilities —
Total ......................................... 37,525 225 —
Total derivatives designated as hedging instruments . . . $ 47,783 $ 442 $ 22
Derivatives not designated as hedging instruments:
Interest rate swaps .......................... $ 55,474 Other assets $1,518 Other liabilities $1,505
Interest rate options ......................... 3,097 Other assets 26 Other liabilities 33
Interest rate futures and forward commitments .... 4,272 Other assets 13 Other liabilities —
Other contracts ............................. 1,323 Other assets 20 Other liabilities 19
Total derivatives not designated as hedging
instruments .................................. $ 64,166 $1,577 $1,557
Total derivatives ....................... $111,949 $2,019 $1,579
(1) Changes in fair value are cash-settled daily; therefore there is no ending balance at any given reporting
period.
HEDGING DERIVATIVES
Regions enters into interest rate swap agreements to manage overall cash flow changes related to interest
rate risk exposure on LIBOR-based loans. The agreements effectively modify the Company’s exposure to interest
rate risk by utilizing receive fixed/pay LIBOR interest rate swaps.
Regions issues long-term fixed-rate debt for various funding needs. Regions enters into receive LIBOR/pay-
fixed forward starting swaps to hedge risks of changes in the projected quarterly interest payments attributable to
changes in the benchmark interest rate (LIBOR) during the time leading up to the probable issuance date of the
new long term fixed-rate debt.
Regions enters into interest rate option contracts to protect cash flows through the maturity date of the
hedging instrument on designated one-month LIBOR floating-rate loans from adverse extreme market interest
rate changes. Regions purchases Eurodollar futures to hedge the variability in future cash flows based on
forecasted resets of one-month LIBOR-based floating rate loans due to changes in the benchmark interest rate.
Regions realized an after-tax benefit of $37 million and $13 million in accumulated other comprehensive income
at December 31, 2010 and 2009, respectively, related to terminated cash flow hedges of loan and debt
instruments which will be amortized into earnings in conjunction with the recognition of interest payments
through the end of 2011. Regions recognized pre-tax income of $41 million and $39 million during the years
ended 2010 and 2009, respectively, related to this amortization of cash flow hedges of loan and debt instruments.
Regions expects to reclassify out of other comprehensive income and into earnings approximately $143
million in pre-tax income due to the receipt of interest payments on all cash flow hedges within the next twelve
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