Regions Bank 2010 Annual Report Download - page 194

December 31, 2009
Level 1 Level 2 Level 3 Fair Value
(In millions)
Trading account assets, net .................................... $ 419 $ 2,140 $ 214 $ 2,773
Securities available for sale(1) ................................. 184 22,867 53 23,104
Mortgage loans held for sale ................................... — 780 — 780
Mortgage servicing rights(2) ................................... — — 247 247
Derivatives, net(3) ........................................... — 517 3 520
(1) Excludes Federal Reserve Bank and Federal Home Loan Bank Stock totaling $492 million and $473
million, respectively, which are accounted for at amortized cost.
(2) Beginning in 2009, the Company made an election to prospectively change the policy of accounting for
mortgage servicing rights to the fair value method. Prior to this date, mortgage servicing rights were
accounted for under the amortization method and adjusted to the lower of aggregate cost or estimated fair
value as appropriate.
(3) Derivatives include approximately $966 million related to legally enforceable master netting agreements
that allow the Company to settle positive and negative positions. Derivatives, net are also presented
excluding cash collateral received of $70 million and cash collateral posted of $336 million with
counterparties.
Assets and liabilities in all levels could result in volatile and material price fluctuations. Realized and
unrealized gains and losses on Level 3 assets represent only a portion of the risk to market fluctuations in
Regions’ consolidated balance sheets. Further, trading account assets, net and derivatives included in Levels 1, 2
and 3 are used by the Asset and Liability Management Committee of the Company in a holistic approach to
managing price fluctuation risks.
The following tables illustrate a rollforward for all assets and (liabilities) measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2010, 2009 and
2008. The tables do not reflect the change in fair value attributable to any related economic hedges the Company
used to mitigate the interest rate risk associated with these assets and (liabilities).
Year Ended December 31, 2010
Trading account assets(1) Securities available for sale Trading account liabilities Derivatives, net
Obligations
of states
and
political
subdivi-
sions
Commercial
agency
MBS
Other
securities
Obligations
of states and
political
subdivi-
sions
Residential
non-agency
MBS
Mortgage
servicing
rights
Commercial
agency
MBS
Other
securities
Interest
rate
options
Interest
rate
futures
and
forward
commitm-
ents
(In millions)
Beginning balance,
January 1, 2010 ....... $171 $ 40 $ 4 $ 17 $ 36 $247 $ 1 $— $ — $ 3
Total gains (losses)
realized and
unrealized:
Included in
earnings(1) ..... (6) 2 27 — — (61) — — 108 —
Included in other
comprehensive
income ........ — — — 7 — — — — — —
Purchases and
issuances .......... 198 737 12,344 — — 81 5 36 — 2
Settlements .......... (198) (735) (12,382) (7) (14) — — (43) (105) —
Transfers in and/or out
of Level 3, net ...... — 10 17 — — — — 11 — —
Ending balance,
December 31, 2010 .... $165 $ 54 $ 10 $ 17 $ 22 $267 $ 6 $ 4 $ 3 $ 5
(1) Brokerage income from trading account assets primarily represents gains/(losses) on disposition, which
inherently includes commissions on security transactions during the period.
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