Regions Bank 2011 Annual Report Download - page 171

Regions Morgan Keegan Timberland Group, a wholly-owned subsidiary of Regions that is managed by the
trust division, operates and acts as trustee for timber land and related assets in timber land funds, primarily
serving institutional investors. These funds individually meet the definition of a VIE, of which Regions is not the
primary beneficiary, and collectively meet the criteria for a qualified asset manager; accordingly, Regions
Morgan Keegan Timberland Group does not currently consolidate these funds. The accounting standard related
to consolidation accounting for qualified asset managers is expected to be revisited at some point in the future.
Regions periodically invests in various limited partnerships that sponsor affordable housing projects, which
are funded through a combination of debt and equity. These partnerships meet the definition of a VIE. Due to the
nature of the management activities of the general partner, Regions is not the primary beneficiary of these
partnerships and accounts for these investments in other assets on the consolidated balance sheets using the
equity method. Regions reports its equity share of the partnership gains and losses as an adjustment to
non-interest income. Regions reports its commitments to make future investments in other liabilities on the
consolidated balance sheets. The Company also receives tax credits, which are reported as a reduction of income
tax expense (or increase to income tax benefit). Additionally, Regions has short-term construction loans or letters
of credit commitments with certain limited partnerships. The funded portion of the short-term loans and letters of
credit is classified as commercial and industrial loans on the consolidated balance sheets.
A summary of Regions’ equity method investments and related loans and letters of credit, representing
Regions’ maximum exposure to loss as of December 31 is as follows:
2011 2010
(In millions)
Equity method investments included in other assets .................... $873 $893
Unfunded commitments included in other liabilities ................... 184 196
Short-term construction loans and letters of credit commitments ......... 180 213
Funded portion of short-term loans and letters of credit ................. 59 61
NOTE 3. DISCONTINUED OPERATIONS
On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan & Company,
Inc. and related affiliates to Raymond James Financial Inc., for approximately $930 million in cash. As part of
the transaction, Morgan Keegan will also pay Regions a dividend of $250 million before closing, pending
regulatory approval, resulting in total proceeds of approximately $1.18 billion to Regions, subject to adjustment.
The transaction is anticipated to close around the end of the first quarter of 2012, subject to regulatory approvals
and customary closing conditions. Morgan Asset Management and Regions Morgan Keegan Trust are not
included in the sale.
The transaction purchase price is subject to adjustment based on the closing tangible book value of the
entities being sold and retention of Morgan Keegan associates as of 90 days post-closing. Regions believes any
adjustments to the sales price will not have a material impact to the consolidated financial statements. Regions
will indemnify Raymond James for all litigation matters related to pre-closing activities. See Note 23
“Commitments, Contingencies and Guarantees” and Note 25 “Subsequent Event” to the consolidated financial
statements for related discussions.
In connection with the agreement, the results of the entities being sold are reported in the Company’s
consolidated statements of operations separately as discontinued operations for all periods presented because the
pending sale met all of the criteria for reporting as discontinued operations at December 31, 2011.
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