Regions Bank 2012 Annual Report Download - page 39

Ineffective liquidity management could adversely affect our financial results and condition.
Effective liquidity management is essential for the operation of our business. We require sufficient liquidity
to meet customer loan requests, customer deposit maturities/withdrawals, payments on our debt obligations as
they come due and other cash commitments under both normal operating conditions and other unpredictable
circumstances causing industry or general financial market stress. Our access to funding sources in amounts
adequate to finance our activities on terms that are acceptable to us could be impaired by factors that affect us
specifically or the financial services industry or economy generally. Factors that could detrimentally impact our
access to liquidity sources include a downturn in the geographic markets in which our loans and operations are
concentrated or difficult credit markets. Our access to deposits may also be affected by the liquidity needs of our
depositors. In particular, a majority of our liabilities during 2012 were checking accounts and other liquid
deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial majority
of our assets were loans, which cannot be called or sold in the same time frame. Although we have historically
been able to replace maturing deposits and advances as necessary, we might not be able to replace such funds in
the future, especially if a large number of our depositors seek to withdraw their accounts, regardless of the
reason. A failure to maintain adequate liquidity could materially and adversely affect our business, results of
operations or financial condition.
Our operations are concentrated in the Southeastern United States, and adverse changes in the economic
conditions in this region can adversely affect our performance and credit quality.
Our operations are concentrated in the Southeastern United States, particularly in the states of Alabama,
Arkansas, Georgia, Florida, Louisiana, Mississippi and Tennessee. As a result, local economic conditions in the
Southeastern United States can significantly affect the demand for the products offered by Regions Bank
(including real estate, commercial and construction loans), the ability of borrowers to repay these loans and the
value of the collateral securing these loans. Since 2008, the national real estate market has experienced a
significant decline in value, and the value of real estate in the Southeastern United States in particular declined
significantly more than real estate values in the United States as a whole. This decline has had an adverse impact
on some of our borrowers and on the value of the collateral securing many of our loans. This decline may
continue to affect borrowers and collateral values, which could adversely affect our currently performing loans,
leading to future delinquencies or defaults and increases in our provision for loan losses. Further or continued
adverse changes in these economic conditions could materially adversely affect our business, results of
operations or financial condition.
Hurricanes and other weather-related events, as well as man-made disasters, could cause a disruption in our
operations or other consequences that could have an adverse impact on our results of operations.
A significant portion of our operations are located in the areas bordering the Gulf of Mexico and the
Atlantic Ocean, regions that are susceptible to hurricanes, or in areas of the Southeastern United States that are
susceptible to tornadoes and other severe weather events. Such weather events can cause disruption to our
operations and could have a material adverse effect on our overall results of operations. We maintain hurricane
insurance, including coverage for lost profits and extra expense; however, there is no insurance against the
disruption that a catastrophic hurricane could produce to the markets that we serve. Further, a hurricane or severe
tornado in any of our market areas could adversely impact the ability of borrowers to timely repay their loans and
may adversely affect the value of any collateral held by us. Man-made disasters and other events connected with
the Gulf of Mexico or Atlantic Ocean, such as the 2010 Gulf oil spill, could have similar effects. Some of the
states in which we operate have in recent years experienced extreme droughts. The severity and impact of future
hurricanes, severe tornadoes, droughts and other weather-related events are difficult to predict and may be
exacerbated by global climate change. The effects of past or future hurricanes, severe tornadoes, droughts and
other weather-related events, as well as man-made disasters, could have a material adverse effect on our
business, financial condition or results of operations.
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