Regions Bank 2012 Annual Report Download - page 141

REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Regions Financial Corporation (“Regions” or “the Company”) provides a full range of banking and bank-
related services to individual and corporate customers through its subsidiaries and branch offices located
primarily in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi,
Missouri, North Carolina, South Carolina, Tennessee, Texas and Virginia. The Company is subject to
competition from other financial institutions, is subject to the regulations of certain government agencies and
undergoes periodic examinations by those regulatory authorities.
The accounting and reporting policies of Regions and the methods of applying those policies that materially
affect the accompanying consolidated financial statements conform with accounting principles generally
accepted in the United States (“GAAP”) and with general financial services industry practices. In preparing the
financial statements, management is required to make estimates and assumptions that affect the reported amounts
of assets and liabilities as of the balance sheet dates and revenues and expenses for the periods presented. Actual
results could differ from the estimates and assumptions used in the consolidated financial statements including,
but not limited to, the estimates and assumptions related to the allowance for credit losses, fair value
measurements, intangibles, mortgage servicing rights and income taxes.
Regions has evaluated all subsequent events for potential recognition and disclosure through the filing date
of this Form 10-K.
Certain amounts in prior period financial statements have been reclassified to conform to current period
presentation, except as otherwise noted. These reclassifications are immaterial and have no effect on net income
(loss), comprehensive income (loss), total assets or total stockholders’ equity.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Regions, its subsidiaries and certain variable
interest entities (“VIEs”). Significant intercompany balances and transactions have been eliminated. Regions
considers a voting rights entity to be a subsidiary and consolidates it if Regions has a controlling financial
interest in the entity. VIEs are consolidated if Regions has the power to direct the significant activities of the VIE
that impact financial performance and has the obligation to absorb losses or the right to receive benefits that
could potentially be significant (i.e., Regions is considered to be the primary beneficiary). The assessment of
whether or not Regions is the primary beneficiary of a VIE is performed on an on-going basis. Investments in
companies which are not VIEs, or where Regions is not the primary beneficiary of a VIE but in which Regions
has significant influence over the operating and financing decisions, are accounted for using the equity method of
accounting. These investments are included in other assets in the consolidated balance sheets at cost, adjusted to
reflect the Company’s portion of income, loss, or dividends to the investee. The maximum potential exposure to
losses relative to investments in VIEs is generally limited to the sum of the outstanding balance, future funding
commitments and any related loans to the entity. Loans to these entities are underwritten in substantially the
same manner as are other loans and are generally secured. Refer to Note 2 for additional disclosures regarding
Regions’ significant VIEs.
Unconsolidated equity investments that do not meet the criteria to be accounted for under the equity method
are accounted for under the cost method. Cost method investments are included in other assets in the
consolidated balance sheets and dividends received or receivable from these investments are included as a
component of other non-interest income in the consolidated statements of operations.
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