Regions Bank 2011 Annual Report Download - page 240

In December 2009, Regions and certain current and former directors and officers were named in a
consolidated shareholder derivative action filed in Jefferson County, Alabama. The complaint alleges
mismanagement, waste of corporate assets, breach of fiduciary duty and unjust enrichment relating to bonuses
and other benefits received by executive management. Plaintiffs have requested equitable relief and unspecified
monetary damages. A motion to dismiss all claims is pending.
In September 2009, Regions was named as a defendant in a purported class-action lawsuit filed by customers
of Regions Bank in the U.S. District Court for the Northern District of Georgia challenging the manner in which
non-sufficient funds and overdraft fees were charged and the policies related to posting order. The case was
transferred to multidistrict litigation in the U.S. District Court for the Southern District of Florida, and in May 2010
an order to compel arbitration was denied. Regions appealed the denial and on April 29, 2011, the Eleventh Circuit
Court of Appeals vacated the denial and remanded the case to the district court for reconsideration of Regions’
motion to compel arbitration. On September 1, 2011, the trial court again denied Regions’ motion to compel
arbitration. Regions is again appealing the denial to the Eleventh Circuit, and the case is stayed pending a resolution
of the appeal. Another purported class action alleging these claims was filed in the U.S. District Court for the
Northern District of Georgia in January 2012. The case is still early in its development and no class has been
certified. Plaintiffs in these cases have requested equitable relief and unspecified monetary damages.
GUARANTEES
As a member of the Visa USA network, Regions, along with other members, indemnified Visa USA against
litigation. On October 3, 2007, Visa USA was restructured and acquired several Visa affiliates. In conjunction
with this restructuring, Regions’ indemnification of Visa USA was modified to cover specific litigation
(“covered litigation”). Regions’ liability recognized under this indemnification was approximately $22 million
and $24 million at December 31, 2011 and 2010, respectively.
On March 25, 2008, Visa executed an initial public offering (“IPO”) of common stock and, in connection
with the IPO, Regions’ ownership interest in Visa was converted into Class B common stock of approximately
3.8 million shares. In the first quarter of 2008, Visa redeemed approximately 1.5 million shares of the Class B
common stock from Regions for proceeds of approximately $63 million, all of which was recorded as other
income in the consolidated statements of operations. In the second quarter of 2009, Regions sold the remaining
Class B common stock to a third party. The sale resulted in a pre-tax gain of $80 million.
A portion of Visa’s proceeds from the IPO was escrowed to fund the covered litigation. To the extent that
the amount available under the escrow arrangement is insufficient to fully resolve the covered litigation, Visa
will enforce the indemnification obligations of Visa USA’s members for any excess amount.
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