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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
ýQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2018March 31, 2019
or
¨Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from to                               
Commission File Number: 001-34034
   
Regions Financial Corporation
(Exact name of registrant as specified in its charter)
   
 
   
Delaware 63-0589368
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
  
1900 Fifth Avenue North
Birmingham, Alabama
 35203
(Address of principal executive offices) (Zip Code)
(800) 734-4667
(Registrant’s telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ý  Yes    ¨  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ý  Yes    ¨  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company  ¨
Emerging growth company  ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    ý  No
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueRFNew York Stock Exchange
Depositary Shares, each representing a 1/40th Interest in a Share of 6.375% Non-Cumulative Perpetual Preferred Stock, Series A
RF PRANew York Stock Exchange
Depositary Shares, each representing a 1/40th Interest in a Share of 6.375% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B
RF PRBNew York Stock Exchange
Depositary Shares, each representing a 1/40th Interest in a Share of 5.700% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C
RF PRCNew York Stock Exchange

The number of shares outstanding of each of the issuer’s classes of common stock was 1,102,470,1891,013,224,918 shares of common stock, par value $.01, outstanding as of AugustMay 6, 2018.2019.

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REGIONS FINANCIAL CORPORATION
FORM 10-Q
INDEX
 
    Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)  
  
Consolidated Balance Sheets—June 30, 2018March 31, 2019 and December 31, 20172018
 
8
  
Consolidated Statements of Income—Three and six months ended June 30,March 31, 2019 and 2018 and 2017
 
9
  
Consolidated Statements of Comprehensive Income—Three and six months ended June 30,March 31, 2019 and 2018 and 2017
 
10
  
Consolidated Statements of Changes in Stockholders’ Equity—SixThree months ended June 30,March 31, 2019 and 2018 and 2017
 
11
  
Consolidated Statements of Cash Flows—SixThree months ended June 30,March 31, 2019 and 2018 and 2017
 
12
  
Notes to Consolidated Financial Statements
 
13
Item 2. 
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
5950
Item 3. 
Quantitative and Qualitative Disclosures about Market Risk
 
9179
Item 4. 
Controls and Procedures
 
9179
   
Part II. Other Information  
Item 1. 
Legal Proceedings
 
9280
Item 2. 
Unregistered Sales of Equity Securities and Use of Proceeds
 
9280
Item 6. 
Exhibits
 
9381
   
Signatures
 
9482

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Glossary of Defined Terms
Agencies - collectively, FNMA, FHLMC and GNMA.
ALCO - Asset/Liability Management Committee.
AOCI - Accumulated other comprehensive income (loss).income.
ASC - Accounting Standards Codification.
ASU - Accounting Standards Update.
ATM - Automated teller machine.
Bank - Regions Bank.
Basel I - Basel Committee's 1988 Regulatory Capital Framework (First Accord).
Basel III - Basel Committee's 2010 Regulatory Capital Framework (Third Accord).
Basel III Rules - Final capital rules adopting the Basel III capital framework approved by U.S. federal
regulators in 2013.
Basel Committee - Basel Committee on Banking Supervision.
BHC - Bank Holding Company.
BITS - Technology arm of the Financial Services Roundtable.
Board - The Company’s Board of Directors.
CAP - Customer Assistance Program.
CCAR - Comprehensive Capital Analysis and Review.
CD - Certificate of deposit.
CECL - Current expected credit loss.Expected Credit Loss Approach.
CEO - Chief Executive Officer.
CET1 - Common Equity Tier 1.
CFPB - Consumer Financial Protection Bureau.
Company - Regions Financial Corporation and its subsidiaries.
CPR - Constant (or Conditional) Prepayment Rate.
CRA - Community Reinvestment Act of 1977.
Dodd-Frank Act - The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
DPD - Days Past Due.
DUS - Fannie Mae Delegated Underwriting & Servicing.
EGRRCPA - The Economic Growth, Regulatory Relief, and Consumer Protection Act.
EPSERI - Earnings (loss) per common share.Eligible Retained Income.
FASB - Financial Accounting Standards Board.
FDIC - The Federal Deposit Insurance Corporation.
Federal Reserve - The Board of Governors of the Federal Reserve System.
FHA - Federal Housing Administration.
FHLB - Federal Home Loan Bank.
FHLMC - Federal Home Loan Mortgage Corporation, known as Freddie Mac.
FICO - The Financing Corporation, established by the Competitive Equality Banking Act of
1987.
FICO scores - Personal credit scores based on the model introduced by the Fair Isaac Corporation.
FNMA - Federal National Mortgage Association, known as Fannie Mae.

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FRB - Federal Reserve Bank.
FS-ISAC - Financial Services - Information Sharing & Analysis Center.
GAAP - Generally Accepted Accounting Principles in the United States.

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GCM - Guideline Public Company Method.
GDP - Gross Domestic Product.
GNMA - Government National Mortgage Association.
GTM - Guideline Transaction Method.
HUD - U.S. Department of Housing and Urban Development.
HVCRE - High Volatility Commercial Real Estate.
IP - Intellectual Property.
IPO - Initial public offering.
IRS - Internal Revenue Service.
LCR - Liquidity coverage ratio.
LIBOR - London InterBank Offered Rates.Rate.
LLC - Limited Liability Company.
LROC - Liquidity Risk Oversight Committee.
LTIP - Long-term incentive plan.
LTV - Loan to value.
MBS - Mortgage-backed securities.
Morgan Keegan - Morgan Keegan & Company, Inc.
MSAs - Metropolitan Statistical Areas.
MSR - Mortgage servicing right.
NM - Not meaningful.
NPR - Notice of Proposed Rulemaking.Public Ruling.
OAS - Option-Adjusted Spread.
OCC - Office of the Comptroller of the Currency.
OCI - Other comprehensive income.
OIS - Overnight indexed swap.Indexed Swap.
OTTI - Other-than-temporary impairment.
Raymond James - Raymond James Financial, Inc.
RICORegions Securities - Racketeer Influenced and Corrupt Organizations Act.Regions Securities LLC.
SCB - Stress Capital Buffer.
SEC - U.S. Securities and Exchange Commission.
SERP - Supplemental Executive Retirement Plan.
SSFASOFR - Simplified Supervisory Formula Approach.Secured Overnight Funding Rate.
Tax Reform - H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution
Resolution on the Budget for Fiscal Year 2018.
TDR - Troubled debt restructuring.
U.S. - United States.
U.S. Treasury - The United States Department of the Treasury.
UTB - Unrecognized tax benefits.
VIE - Variable interest entity.


Visa - The Visa, U.S.A. Inc. card association or its affiliates, collectively.

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Forward-Looking Statements
This Quarterly Report on Form 10-Q, other periodic reports filed by Regions Financial Corporation under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by us or on our behalf to analysts, investors, the media and others, may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. The terms “Regions,” the “Company,” “we,” “us” and “our” as used herein mean collectively Regions Financial Corporation, a Delaware corporation, together with its subsidiaries when or where appropriate. The words “future,” “anticipates,” “assumes,” “intends,” “plans,” “seeks,” “believes,” “predicts,” “potential,” “objectives,” “estimates,” “expects,” “targets,” “projects,” “outlook,” “forecast,” “would,” “will,” “may,” “might,” “could,” “should,” “can,” and similar terms and expressions often signify forward-looking statements. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results or other developments. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, and because they also relate to the future they are likewise subject to inherent uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. Therefore, we caution you against relying on any of these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, those described below:
Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of possible declines in property values, increases in unemployment rates and potential reductions of economic growth, which may adversely affect our lending and other businesses and our financial results and conditions.
Possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations, which could have a material adverse effect on our earnings.
The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook, which could result in risks to us and general economic conditions that we are not able to predict.
Possible changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital and liquidity.
Any impairment of our goodwill or other intangibles, any repricing of assets, or any adjustment of valuation allowances on our deferred tax assets due to changes in law, adverse changes in the economic environment, declining operations of the reporting unit or other factors.
The effect of changes in tax laws, including the effect of Tax Reform and any future interpretations of or amendments to Tax Reform, which may impact our earnings, capital ratios and our ability to return capital to shareholders.stockholders.
Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans and leases, including operating leases.
Changes in the speed of loan prepayments, loan origination and sale volumes, charge-offs, loan loss provisions or actual loan losses where our allowance for loan losses may not be adequate to cover our eventual losses.
Possible acceleration of prepayments on mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on those securities.
Loss of customer checking and savings account deposits as customers pursue other, higher-yield investments, which could increase our funding costs.
Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits, which could adversely affect our net income.
Our ability to effectively compete with other traditional and non-traditional financial services companies, some of whom possess greater financial resources than we do or are subject to different regulatory standards than we are.
Our inability to develop and gain acceptance from current and prospective customers for new products and services and the enhancement of existing products and services to meet customers’ needs and respond to emerging technological trends in a timely manner could have a negative impact on our revenue.
Our inability to keep pace with technological changes could result in losing business to competitors.
Changes in laws and regulations affecting our businesses, including legislation and regulations relating to bank products and services, as well as changes in the enforcement and interpretation of such laws and regulations by applicable governmental and self-regulatory agencies, which could require us to change certain business practices, increase compliance risk, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.
Our ability to obtain a regulatory non-objection (as part of the CCAR process or otherwise) to take certain capital actions, including paying dividends and any plans to increase common stock dividends, repurchase common stock under current

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or future programs, or redeem preferred stock or other regulatory capital instruments, may impact our ability to return capital to stockholders and market perceptions of us.

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Our ability to comply with stress testing and capital planning requirements (as part of the CCAR process or otherwise) may continue to require a significant investment of our managerial resources due to the importance and intensity of such tests and requirements.
Our ability to comply with applicable capital and liquidity requirements (including, among other things, the Basel III capital standards and the LCR rule), including our ability to generate capital internally or raise capital on favorable terms, and if we fail to meet requirements, our financial condition could be negatively impacted.
The effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries.
The costs, including possibly incurring fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results.
Our ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support our business.
Our ability to execute on our strategic and operational plans, including our ability to fully realize the financial and non-financial benefits relating to our strategic initiatives.
The risks and uncertainties related to our acquisition or divestiture of businesses.
The success of our marketing efforts in attracting and retaining customers.
Our ability to recruit and retain talented and experienced personnel to assist in the development, management and operation of our products and services may be affected by changes in laws and regulations in effect from time to time.
Fraud or misconduct by our customers, employees or business partners.
Any inaccurate or incomplete information provided to us by our customers or counterparties.
Inability of our framework to manage risks associated with our business such as credit risk and operational risk, including third-party vendors and other service providers, which could, among other things, result in a breach of operating or security systems as a result of a cyber attack or similar act or failure to deliver our services effectively.
Dependence on key suppliers or vendors to obtain equipment and other supplies for our business on acceptable terms.
The inability of our internal controls and procedures to prevent, detect or mitigate any material errors or fraudulent acts.
The effects of geopolitical instability, including wars, conflicts and terrorist attacks and the potential impact, directly or indirectly, on our businesses.
The effects of man-made and natural disasters, including fires, floods, droughts, tornadoes, hurricanes, and environmental damage, which may negatively affect our operations and/or our loan portfolios and increase our cost of conducting business.business.The severity and impact of future earthquakes, fires, hurricanes, tornadoes, droughts, floods and other weather-related events are difficult to predict and may be exacerbated by global climate change.
Changes in commodity market prices and conditions could adversely affect the cash flows of our borrowers operating in industries that are impacted by changes in commodity prices (including businesses indirectly impacted by commodities prices such as businesses that transport commodities or manufacture equipment used in the production of commodities), which could impair their ability to service any loans outstanding to them and/or reduce demand for loans in those industries.
Our ability to identify and address cyber-security risks such as data security breaches, malware, “denial of service” attacks, “hacking” and identity theft, including account take-overs, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage to our systems, increased costs, losses, or adverse effects to our reputation.
Our ability to realize our adjusted efficiency ratio target as part of our expense management initiatives.
Possible cessation or market replacement of LIBOR and the related effect on our LIBOR-based financial products and contracts, including, but not limited to, hedging products, debt obligations, investments, and loans.
Possible downgrades in our credit ratings or outlook could increase the costs of funding from capital markets.
The effects of a possible downgrade in the U.S. government’s sovereign credit rating or outlook, which could result in risks to us and general economic conditions that we are not able to predict.
The effects of problems encountered by other financial institutions that adversely affect us or the banking industry generally could require us to change certain business practices, reduce our revenue, impose additional costs on us, or otherwise negatively affect our businesses.

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The effects of the failure of any component of our business infrastructure provided by a third party could disrupt our businesses, result in the disclosure of and/or misuse of confidential information or proprietary information, increase our costs, negatively affect our reputation, and cause losses.
Our ability to receive dividends from our subsidiaries could affect our liquidity and ability to pay dividends to stockholders.

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shareholders.
Changes in accounting policies or procedures as may be required by the FASB or other regulatory agencies could materially affect our financial statements and how we report those results, and expectations and preliminary analyses relating to how such changes will affect our financial results.results could prove incorrect.
Other risks identified from time to time in reports that we file with the SEC.
Fluctuations in the price of our common stock and inability to complete stock repurchases in the time frame and/or on the terms anticipated.
The effects of any damage to our reputation resulting from developments related to any of the items identified above.
You should not place undue reliance on any forward-looking statements, which speak only as of the date made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible to predict all of them. We assume no obligation and do not intend to update or revise any forward-looking statements that are made from time to time, either as a result of future developments, new information or otherwise, except as may be required by law.
See also the reports filed with the Securities and Exchange Commission,SEC, including the discussion under the “Risk Factors” section of Regions’ Annual Report on Form 10-K for the year ended December 31, 20172018 as filed with the Securities and Exchange CommissionSEC and available on its website at www.sec.gov.

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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions, except share data)(In millions, except share data)
Assets      
Cash and due from banks$1,844
 $2,012
$1,666
 $2,018
Interest-bearing deposits in other banks2,442
 1,899
2,141
 1,520
Federal funds sold and securities purchased under agreements to resell—
 70
Debt securities held to maturity (estimated fair value of $1,530 and $1,667, respectively)1,568
 1,658
Debt securities held to maturity (estimated fair value of $1,454 and $1,460, respectively)1,451
 1,482
Debt securities available for sale22,935
 23,403
23,786
 22,729
Loans held for sale (includes $343 and $325 measured at fair value, respectively)490
 348
Loans held for sale (includes $284 and $251 measured at fair value, respectively)318
 304
Loans, net of unearned income80,478
 79,947
84,430
 83,152
Allowance for loan losses(838) (934)(853) (840)
Net loans79,640
 79,013
83,577
 82,312
Other earning assets1,672
 1,891
1,617
 1,719
Premises and equipment, net2,050
 2,064
2,026
 2,045
Interest receivable347
 337
388
 375
Goodwill4,904
 4,904
4,829
 4,829
Residential mortgage servicing rights at fair value362
 336
386
 418
Other identifiable intangible assets156
 177
Other identifiable intangible assets, net108
 115
Other assets6,147
 6,182
6,509
 5,822
Total assets$124,557
 $124,294
$128,802
 $125,688
Liabilities and Stockholders’ Equity   
Liabilities and Equity   
Deposits:      
Non-interest-bearing$36,055
 $36,127
$34,775
 $35,053
Interest-bearing59,228
 60,762
60,945
 59,438
Total deposits95,283
 96,889
95,720
 94,491
Borrowed funds:      
Short-term borrowings:      
Other short-term borrowings1,400
 500
1,600
 1,600
Total short-term borrowings1,400
 500
1,600
 1,600
Long-term borrowings9,890
 8,132
12,957
 12,424
Total borrowed funds11,290
 8,632
14,557
 14,024
Other liabilities2,207
 2,581
3,002
 2,083
Total liabilities108,780
 108,102
113,279
 110,598
Stockholders’ equity:   
Equity:   
Preferred stock, authorized 10 million shares, par value $1.00 per share      
Non-cumulative perpetual, liquidation preference $1,000.00 per share, including related surplus, net of issuance costs; issued—1,000,000 shares820
 820
820
 820
Common stock, authorized 3 billion shares, par value $.01 per share:      
Issued including treasury stock—1,155,415,500 and 1,175,327,565 shares, respectively12
 12
Issued including treasury stock—1,053,966,945 and 1,065,858,925 shares, respectively11
 11
Additional paid-in capital15,389
 15,858
13,584
 13,766
Retained earnings2,182
 1,628
3,066
 2,828
Treasury stock, at cost—41,032,676 and 41,259,320 shares, respectively(1,371) (1,377)
Treasury stock, at cost—41,032,675 and 41,032,676 shares, respectively(1,371) (1,371)
Accumulated other comprehensive income (loss), net(1,255) (749)(598) (964)
Total stockholders’ equity15,777
 16,192
15,512
 15,090
Total liabilities and stockholders’ equity$124,557
 $124,294
Noncontrolling interest11
 —
Total equity15,523
 15,090
Total liabilities and equity$128,802
 $125,688

See notes to consolidated financial statements.

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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30		 Six Months Ended June 30Three Months Ended March 31
2018 2017 2018 20172019 2018
(In millions, except per share data)(In millions, except per share data)
Interest income, including other financing income on:          
Loans, including fees$881
 $801
 $1,732
 $1,574
$981
 $851
Debt securities - taxable156
 150
 310
 297
165
 154
Loans held for sale4
 4
 7
 8
3
 3
Other earning assets17
 10
 36
 25
19
 19
Operating lease assets18
 24
 38
 51
15
 20
Total interest income, including other financing income1,076
 989
 2,123
 1,955
1,183
 1,047
Interest expense on:          
Deposits57
 37
 106
 72
108
 49
Short-term borrowings6
 2
 7
 2
13
 1
Long-term borrowings73
 50
 145
 100
102
 72
Total interest expense136
 89
 258
 174
223
 122
Depreciation expense on operating lease assets14
 18
 30
 40
12
 16
Total interest expense and depreciation expense on operating lease assets150
 107
 288
 214
235
 138
Net interest income and other financing income926
 882
 1,835
 1,741
948
 909
Provision for loan losses60
 48
 50
 118
Net interest income and other financing income after provision for loan losses866
 834
 1,785
 1,623
Provision (credit) for loan losses91
 (10)
Net interest income and other financing income after provision (credit) for loan losses857
 919
Non-interest income:          
Service charges on deposit accounts175
 169
 346
 337
175
 171
Card and ATM fees112
 104
 216
 208
109
 104
Investment management and trust fee income58
 57
 116
 113
57
 58
Capital markets income57
 38
 107
 70
42
 50
Mortgage income37
 40
 75
 81
27
 38
Securities gains (losses), net1
 1
 1
 1
(7) —
Other72
 81
 158
 154
99
 86
Total non-interest income512
 490
 1,019
 964
502
 507
Non-interest expense:          
Salaries and employee benefits511
 470
 1,006
 931
478
 495
Net occupancy expense84
 85
 167
 168
82
 83
Furniture and equipment expense81
 84
 162
 163
76
 81
Other235
 236
 460
 456
224
 225
Total non-interest expense911
 875
 1,795
 1,718
860
 884
Income from continuing operations before income taxes467
 449
 1,009
 869
499
 542
Income tax expense89
 133
 217
 260
105
 128
Income from continuing operations378
 316
 792
 609
394
 414
Discontinued operations:          
Income (loss) from discontinued operations before income taxes(3) —
 (3) 13
—
 —
Income tax expense (benefit)—
 —
 —
 5
—
 —
Income (loss) from discontinued operations, net of tax(3) —
 (3) 8
—
 —
Net income$375
 $316
 $789
 $617
$394
 $414
Net income from continuing operations available to common shareholders$362
 $300
 $760
 $577
$378
 $398
Net income available to common shareholders$359
 $300
 $757
 $585
$378
 $398
Weighted-average number of shares outstanding:          
Basic1,119
 1,202
 1,123
 1,205
1,019
 1,127
Diluted1,128
 1,212
 1,135
 1,218
1,028
 1,141
Earnings per common share from continuing operations:          
Basic$0.32
 $0.25
 $0.68
 $0.48
$0.37
 $0.35
Diluted0.32
 0.25
 0.67
 0.47
0.37
 0.35
Earnings per common share:          
Basic$0.32
 $0.25
 $0.67
 $0.49
$0.37
 $0.35
Diluted0.32
 0.25
 0.67
 0.48
0.37
 0.35
Cash dividends declared per common share0.09
 0.07
 0.18
 0.135
See notes to consolidated financial statements.

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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended June 30Three Months Ended March 31
2018 20172019 2018
(In millions)(In millions)
Net income$375
 $316
$394
 $414
Other comprehensive income (loss), net of tax:      
Unrealized losses on securities transferred to held to maturity:      
Unrealized losses on securities transferred to held to maturity during the period (net of zero and zero tax effect, respectively)—
 —
—
 —
Less: reclassification adjustments for amortization of unrealized losses on securities transferred to held to maturity (net of zero and ($1) tax effect, respectively)(1) (1)(1) (2)
Net change in unrealized losses on securities transferred to held to maturity, net of tax1
 1
1
 2
Unrealized gains (losses) on securities available for sale:      
Unrealized holding gains (losses) arising during the period (net of ($23) and $30 tax effect, respectively)(66) 51
Less: reclassification adjustments for securities gains (losses) realized in net income (net of zero and zero tax effect, respectively)1
 1
Unrealized holding gains (losses) arising during the period (net of $77 and ($104) tax effect, respectively)240
 (310)
Less: reclassification adjustments for securities gains (losses) realized in net income (net of ($2) and zero tax effect, respectively)(5) —
Net change in unrealized gains (losses) on securities available for sale, net of tax(67) 50
245
 (310)
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:      
Unrealized holding gains (losses) on derivatives arising during the period (net of ($14) and $21 tax effect, respectively)(42) 37
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of $1 and $8 tax effect, respectively)4
 14
Unrealized holding gains (losses) on derivatives arising during the period (net of $36 and ($31) tax effect, respectively)107
 (92)
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of ($2) and $3 tax effect, respectively)(6) 8
Net change in unrealized gains (losses) on derivative instruments, net of tax(46) 23
113
 (100)
Defined benefit pension plans and other post employment benefits:      
Net actuarial gains (losses) arising during the period (net of zero and zero tax effect, respectively)—
 —
—
 (1)
Less: reclassification adjustments for amortization of actuarial loss and settlements realized in net income (net of ($2) and ($7) tax effect, respectively)(8) (12)
Less: reclassification adjustments for amortization of actuarial loss realized in net income (net of ($2) and ($2) tax effect, respectively)(7) (7)
Net change from defined benefit pension plans and other post employment benefits, net of tax8
 12
7
 6
Other comprehensive income (loss), net of tax(104) 86
366
 (402)
Comprehensive income$271
 $402
$760
 $12
   
Six Months Ended June 30
2018 2017
(In millions)
Net income$789
 $617
Other comprehensive income (loss), net of tax:   
Unrealized losses on securities transferred to held to maturity:   
Unrealized losses on securities transferred to held to maturity during the period (net of zero and zero tax effect, respectively)—
 —
Less: reclassification adjustments for amortization of unrealized losses on securities transferred to held to maturity (net of ($1) and ($2) tax effect, respectively)(3) (3)
Net change in unrealized losses on securities transferred to held to maturity, net of tax3
 3
Unrealized gains (losses) on securities available for sale:   
Unrealized holding gains (losses) arising during the period (net of ($127) and $31 tax effect, respectively)(376) 52
Less: reclassification adjustments for securities gains (losses) realized in net income (net of zero and zero tax effect, respectively)1
 1
Net change in unrealized gains (losses) on securities available for sale, net of tax(377) 51
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:   
Unrealized holding gains (losses) on derivatives arising during the period (net of ($45) and $20 tax effect, respectively)(134) 33
Less: reclassification adjustments for gains (losses) on derivative instruments realized in net income (net of $4 and $20 tax effect, respectively)12
 33
Net change in unrealized gains (losses) on derivative instruments, net of tax(146) —
Defined benefit pension plans and other post employment benefits:   
Net actuarial gains (losses) arising during the period (net of zero and zero tax effect, respectively)(1) (1)
Less: reclassification adjustments for amortization of actuarial loss and settlements realized in net income (net of ($4) and ($10) tax effect, respectively)(15) (18)
Net change from defined benefit pension plans and other post employment benefits, net of tax14
 17
Other comprehensive income (loss), net of tax(506) 71
Comprehensive income$283
 $688
See notes to consolidated financial statements.

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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 
Preferred Stock Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Treasury
Stock,
At Cost
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 TotalStockholders' Equity  
Shares Amount Shares Amount Preferred Stock Common Stock 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Treasury
Stock,
At Cost
 
Accumulated
Other
Comprehensive
Income (Loss), Net
 Total 
Non-
controlling
Interest
(In millions, except per share data)Shares Amount Shares Amount 
BALANCE AT JANUARY 1, 20171
 $820
 1,214
 $13
 $17,092
 $666
 $(1,377) $(550) $16,664
Net income—
 —
 —
 —
 —
 617
 —
 —
 617
Other comprehensive income (loss), net of tax—
 —
 —
 —
 —
 —
 —
 71
 71
Cash dividends declared—$0.135 per share—
 —
 —
 —
 —
 (162) —
 —
 (162)
Preferred stock dividends—
 —
 —
 —
 —
 (32) —
 —
 (32)
Common stock transactions:                 
Impact of share repurchases—
 —
 (19) (1) (274) —
 —
 —
 (275)
Impact of stock transactions under compensation plans, net and other—
 —
 4
 —
 10
 —
 —
 —
 10
BALANCE AT JUNE 30, 20171
 $820
 1,199
 $12
 $16,828
 $1,089
 $(1,377) $(479) $16,893
                 (In millions, except per share data)
BALANCE AT JANUARY 1, 20181
 $820
 1,133
 $12
 $15,858
 $1,628
 $(1,377) $(749) $16,192
1
 $820
 1,133
 $12
 $15,858
 $1,628
 $(1,377) $(749) $16,192
 $—
Cumulative effect from change in accounting guidance—
 —
 —
 —
 —
 (2) —
 —
 (2)—
 —
 —
 —
 —
 (2) —
 —
 (2) —
Net income—
 —
 —
 —
 —
 789
 —
 —
 789
—
 —
 —
 —
 —
 414
 —
 —
 414
 —
Other comprehensive income (loss), net of tax—
 —
 —
 —
 —
 —
 —
 (506) (506)—
 —
 —
 —
 —
 —
 —
 (402) (402) —
Cash dividends declared—$0.18 per share—
 —
 —
 —
 —
 (201) —
 —
 (201)
Cash dividends declared—
 —
 —
 —
 —
 (101) —
 —
 (101) —
Preferred stock dividends—
 —
 —
 —
 —
 (32) —
 —
 (32)—
 —
 —
 —
 —
 (16) —
 —
 (16) —
Common stock transactions:                                    
Impact of share repurchases—
 —
 (25) —
 (470) —
 —
 —
 (470)—
 —
 (12) —
 (235) —
 —
 —
 (235) —
Impact of stock transactions under compensation plans, net and other—
 —
 6
 —
 1
 —
 6
 —
 7
BALANCE AT JUNE 30, 20181
 $820
 1,114
 $12
 $15,389
 $2,182
 $(1,371) $(1,255) $15,777
Impact of stock transactions under compensation plans, net—
 —
 1
 —
 16
 —
 —
 —
 16
 —
BALANCE AT MARCH 31, 20181
 $820
 1,122
 $12
 $15,639
 $1,923
 $(1,377) $(1,151) $15,866
 $—
                   
BALANCE AT JANUARY 1, 20191
 $820
 1,025
 $11
 $13,766
 $2,828
 $(1,371) $(964) $15,090
 $—
Cumulative effect from change in accounting guidance—
 —
 —
 —
 —
 2
 —
 —
 2
 —
Net income—
 —
 —
 —
 —
 394
 —
 —
 394
 —
Other comprehensive income (loss), net of tax—
 —
 —
 —
 —
 —
 —
 366
 366
 —
Cash dividends declared—
 —
 —
 —
 —
 (142) —
 —
 (142) —
Preferred stock dividends—
 —
 —
 —
 —
 (16) —
 —
 (16) —
Common stock transactions:                   
Impact of share repurchases—
 —
 (12) —
 (190) —
 —
 —
 (190) —
Impact of stock transactions under compensation plans, net—
 —
 —
 —
 8
 —
 —
 —
 8
 —
Other—
 —
 —
 —
 —
 —
 —
 —
 —
 11
BALANCE AT MARCH 31, 20191
 $820
 1,013
 $11
 $13,584
 $3,066
 $(1,371) $(598) $15,512
 $11

See notes to consolidated financial statements.

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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30Three Months Ended March 31
2018 20172019 2018
(In millions)(In millions)
Operating activities:      
Net income$789
 $617
$394
 $414
Adjustments to reconcile net income to net cash from operating activities:      
Provision for loan losses50
 118
Provision (credit) for loan losses91
 (10)
Depreciation, amortization and accretion, net239
 274
105
 121
Securities (gains) losses, net(1) (1)7
 —
Deferred income tax expense109
 62
19
 103
Originations and purchases of loans held for sale(1,645) (1,729)(510) (690)
Proceeds from sales of loans held for sale1,525
 1,922
515
 587
(Gain) loss on sale of loans, net(33) (54)(25) (14)
Net change in operating assets and liabilities:      
Other earning assets189
 11
90
 235
Interest receivable and other assets(92) (22)(381) (61)
Other liabilities(439) (88)222
 (529)
Other(31) 42
51
 (2)
Net cash from operating activities660
 1,152
578
 154
Investing activities:      
Proceeds from maturities of debt securities held to maturity89
 101
30
 46
Proceeds from sales of debt securities available for sale67
 576
139
 7
Proceeds from maturities of debt securities available for sale1,680
 1,741
799
 798
Net proceeds from bank-owned life insurance2
 1
Purchases of debt securities available for sale(1,774) (2,176)(1,241) (876)
Purchases of debt securities held to maturity—
 (494)
Net proceeds from (payments for) bank-owned life insurance(2) 1
Proceeds from sales of loans280
 13
185
 272
Purchases of loans(215) (147)(171) (70)
Purchases of mortgage servicing rights(2) (18)(8) (2)
Net change in loans(767) (110)(1,383) (164)
Net purchases of other assets(74) (45)(36) (56)
Net cash from investing activities(714) (558)(1,688) (44)
Financing activities:      
Net change in deposits(1,606) (942)1,229
 101
Net change in short-term borrowings900
 600
—
 (500)
Proceeds from long-term borrowings8,100
 1,250
12,025
 4,350
Payments on long-term borrowings(6,301) (2,252)(11,525) (4,500)
Cash dividends on common stock(203) (241)(143) (102)
Cash dividends on preferred stock(32) (32)(16) (16)
Repurchases of common stock(470) (275)(190) (235)
Taxes paid related to net share settlement of equity awards(32) (22)—
 (1)
Other3
 —
(1) (3)
Net cash from financing activities359
 (1,914)1,379
 (906)
Net change in cash and cash equivalents305
 (1,320)269
 (796)
Cash and cash equivalents at beginning of year3,981
 5,451
3,538
 3,981
Cash and cash equivalents at end of period$4,286
 $4,131
$3,807
 $3,185

See notes to consolidated financial statements.

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REGIONS FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Three andSix Months Ended June 30,March 31, 2019 and 2018 and 2017
NOTE 1. BASIS OF PRESENTATION
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 across the South, Midwest and Texas. The Company competes with other financial institutions located in the states in which it operates, as well as other adjoining states. Regions is subject to the regulations of certain government agencies and undergoes periodic examinations by certain regulatory authorities.
The accounting and reporting policies of Regions and the methods of applying those policies that materially affect the consolidated financial statements conform with GAAP and with general financial services industry practices. The accompanying interim financial statements have been prepared in accordance with the instructions for Form 10-Q and, therefore, do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements have been included. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in Regions’ Annual Report on Form 10-K for the year ended December 31, 2017.2018. Regions has evaluated all subsequent events for potential recognition and disclosure through the filing date of this Form 10-Q.
On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc. and related affiliates to BB&T Holdings, Inc. The transaction closed on July 2, 2018. Regions sold Morgan Keegan and related affiliates in April 2012. See Note 2 and Note 13 for related disclosure.
Effective January 1, 2018,2019, the Company adopted new accounting guidance related to several accounting topics. The cumulative effect of the retrospective application was a total reduction to retained earnings of $2 million, of which the individual components were immaterial. All prior period amounts impacted by guidance that required retrospective application have been revised. See Note 155 and Note 14 for related disclosure.disclosures.
NOTE 2. DISCONTINUED OPERATIONS
On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc. and related affiliates to BB&T Insurance Holdings, Inc. The transaction closed on July 2, 2018. The after-tax gain associated with the transaction was approximately $200 million and Common Equity Tier 1 capital generated was approximately $300 million. The after-tax gain will be reflected in the Company's third quarter consolidated statements of income as a component of discontinued operations. See Note 16 for related discussion.
In connection with the agreement, the results of the entities being sold are reported in the Company's consolidated statements of income separately as discontinued operations for all periods presented because the pending sale met all of the criteria for reporting as discontinued operations at June 30, 2018.
On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and related affiliates to Raymond James. The transaction closed on April 2, 2012. Regions Investment Management, Inc. (formerly known as Morgan Asset Management, Inc.) and Regions Trust were not included in the sale. In connection with the closing of the sale, Regions agreed to indemnify Raymond James for all litigation matters related to pre-closing activities. See Note 13 for related disclosure.
Results of operations for the Morgan Keegan entities sold are presented separately as discontinued operations for all periods presented on the consolidated statements of income. This presentation is consistent with the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017.
The condensed balance sheets for the Regions Insurance Group, Inc. entities being sold are immaterial for disclosure as discontinued operations. The following table represents the condensed results of operations for the Regions Insurance Group, Inc. entities being sold as discontinued operations:

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 Three Months Ended
June 30		 Six Months Ended
June 30
 2018 2017 2018 2017
 (In millions)
Non-interest income:       
Insurance commissions and fees$35
 $35
 $69
 $71
Other—
 1
 —
 1
Total non-interest income35
 36
 69
 72
Non-interest expense:       
Salaries and employee benefits25
 25
 49
 49
Net occupancy expense2
 1
 3
 3
Furniture and equipment expense1
 1
 2
 2
Other8
 8
 15
 15
Total non-interest expense36
 35
 69
 69
Income (loss) from discontinued operations before income taxes(1) 1
 —
 3
Income tax expense (benefit)—
 —
 —
 1
Income (loss) from discontinued operations, net of tax$(1) $1
 $—
 $2

The following table represents the condensed results of operations for both the Regions Insurance Group, Inc. entities being sold and Morgan Keegan and Company, Inc. and related affiliates as discontinued operations:
 Three Months Ended
June 30		 Six Months Ended
June 30
 2018 2017 2018 2017
 (In millions, except per share data)
Income (loss) from discontinued operations before income taxes$(3) $—
 $(3) $13
Income tax expense (benefit)—
 —
 —
 5
Income (loss) from discontinued operations, net of tax$(3) $—
 $(3) $8
Earnings (loss) per common share from discontinued operations:       
Basic$(0.00) $0.00
 $(0.00) $0.01
Diluted$(0.00) $0.00
 $(0.00) $0.01

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NOTE 3. SECURITIES
DEBT SECURITIES
The amortized cost, gross unrealized gains and losses, and estimated fair value of debt securities held to maturity and debt securities available for sale are as follows:
June 30, 2018March 31, 2019
  
Recognized in OCI (1)
   Not Recognized in OCI    
Recognized in OCI (1)
   Not Recognized in OCI  
Amortized
Cost
 Gross Unrealized Gains Gross Unrealized Losses Carrying Value 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
Amortized
Cost
 Gross Unrealized Gains Gross Unrealized Losses Carrying Value 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
(In millions)(In millions)
Debt securities held to maturity:                          
Mortgage-backed securities:                          
Residential agency$967
 $—
 $(37) $930
 $—
 $(18) $912
$853
 $—
 $(31) $822
 $7
 $(3) $826
Commercial agency641
 —
 (3) 638
 —
 (20) 618
632
 —
 (3) 629
 4
 (5) 628
$1,608
 $—
 $(40) $1,568
 $—
 $(38) $1,530
$1,485
 $—
 $(34) $1,451
 $11
 $(8) $1,454
                          
Debt securities available for sale:                          
U.S. Treasury securities$313
 $—
 $(6) $307
     $307
$175
 $1
 $(2) $174
     $174
Federal agency securities48
 —
 —
 48
     48
45
 —
 —
 45
     45
Mortgage-backed securities:                          
Residential agency17,424
 18
 (587) 16,855
     16,855
17,639
 59
 (257) 17,441
     17,441
Residential non-agency2
 —
 —
 2
     2
2
 —
 —
 2
     2
Commercial agency3,835
 1
 (99) 3,737
     3,737
4,188
 17
 (28) 4,177
     4,177
Commercial non-agency803
 2
 (13) 792
     792
731
 3
 (4) 730
     730
Corporate and other debt securities1,216
 2
 (24) 1,194
     1,194
1,211
 12
 (6) 1,217
     1,217
$23,641
 $23
 $(729) $22,935
     $22,935
$23,991
 $92
 $(297) $23,786
     $23,786

 December 31, 2017
   
Recognized in OCI (1)
   Not Recognized in OCI  
 Amortized
Cost		 Gross Unrealized Gains Gross Unrealized Losses Carrying Value Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value
 (In millions)
Debt securities held to maturity:             
Mortgage-backed securities:             
Residential agency$1,051
 $—
 $(40) $1,011
 $12
 $(4) $1,019
Commercial agency651
 —
 (4) 647
 5
 (4) 648
 $1,702
 $—
 $(44) $1,658
 $17
 $(8) $1,667
              
Debt securities available for sale:             
U.S. Treasury securities$333
 $—
 $(2) $331
     $331
Federal agency securities28
 —
 —
 28
     28
Mortgage-backed securities:             
Residential agency17,622
 53
 (244) 17,431
     17,431
Residential non-agency3
 —
 —
 3
     3
Commercial agency3,739
 5
 (30) 3,714
     3,714
Commercial non-agency787
 4
 (3) 788
     788
Corporate and other debt securities1,093
 20
 (5) 1,108
     1,108
 $23,605
 $82
 $(284) $23,403
     $23,403
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 December 31, 2018
   
Recognized in OCI (1)
   Not Recognized in OCI  
 Amortized
Cost		 Gross Unrealized Gains Gross Unrealized Losses Carrying Value Gross
Unrealized
Gains		 Gross
Unrealized
Losses		 Estimated
Fair
Value
 (In millions)
Debt securities held to maturity:             
Mortgage-backed securities:             
Residential agency$883
 $—
 $(32) $851
 $1
 $(10) $842
Commercial agency634
 —
 (3) 631
 —
 (13) 618
 $1,517
 $—
 $(35) $1,482
 $1
 $(23) $1,460
              
Debt securities available for sale:             
U.S. Treasury securities$284
 $—
 $(4) $280
     $280
Federal agency securities43
 —
 —
 43
     43
Mortgage-backed securities:             
Residential agency17,064
 26
 (466) 16,624
     16,624
Residential non-agency2
 —
 —
 2
     2
Commercial agency3,891
 8
 (64) 3,835
     3,835
Commercial non-agency768
 2
 (10) 760
     760
Corporate and other debt securities1,206
 2
 (23) 1,185
     1,185
 $23,258
 $38
 $(567) $22,729
     $22,729
_________
(1) The gross unrealized losses recognized in OCI on securities held to maturity resulted from a transfer of securities available for sale to held to maturity in the second quarter of 2013.

15

Table of Contents



Debt securities with carrying values of $8.0$8.3 billion and $8.1$7.9 billion at June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively, were pledged to secure public funds, trust deposits and certain borrowing arrangements. Included within total pledged securities is approximately $49 million and $50$24 million of encumbered U.S. Treasury securities at June 30, 2018both March 31, 2019 and December 31, 2017, respectively.2018.
The amortized cost and estimated fair value of debt securities held to maturity and debt securities available for sale at June 30, 2018,March 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized
Cost
 
Estimated
Fair Value
Amortized
Cost
 
Estimated
Fair Value
(In millions)(In millions)
Debt securities held to maturity:      
Mortgage-backed securities:      
Residential agency$967
 $912
$853
 $826
Commercial agency641
 618
632
 628
$1,608
 $1,530
$1,485
 $1,454
Debt securities available for sale:      
Due in one year or less$41
 $41
$71
 $71
Due after one year through five years1,040
 1,022
956
 958
Due after five years through ten years368
 358
350
 352
Due after ten years128
 128
54
 55
Mortgage-backed securities:      
Residential agency17,424
 16,855
17,639
 17,441
Residential non-agency2
 2
2
 2
Commercial agency3,835
 3,737
4,188
 4,177
Commercial non-agency803
 792
731
 730
$23,641
 $22,935
$23,991
 $23,786
The following tables present gross unrealized losses and the related estimated fair value of debt securities held to maturity and debt securities available for sale at June 30, 2018March 31, 2019 and December 31, 2017.2018. For debt securities transferred to held to maturity

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from available for sale, the analysis in the tables below is comparing the securities' original amortized cost to its current estimated fair value. These securities are segregated between investments that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more.
 June 30, 2018
 Less Than Twelve Months Twelve Months or More Total
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 (In millions)
Debt securities held to maturity:           
Mortgage-backed securities:           
Residential agency$—
 $—
 $912
 $(55) $912
 $(55)
Commercial agency480
 (13) 138
 (10) 618
 (23)
 $480
 $(13) $1,050
 $(65) $1,530
 $(78)
            
Debt securities available for sale:           
U.S. Treasury securities$218
 $(3) $83
 $(3) $301
 $(6)
Mortgage-backed securities:           
Residential agency7,569
 (196) 7,451
 (391) 15,020
 (587)
Commercial agency2,688
 (64) 839
 (35) 3,527
 (99)
Commercial non-agency590
 (11) 58
 (2) 648
 (13)
Corporate and other debt securities920
 (20) 64
 (4) 984
 (24)
 $11,985
 $(294) $8,495
 $(435) $20,480
 $(729)

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 March 31, 2019
 Less Than Twelve Months Twelve Months or More Total
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 (In millions)
Debt securities held to maturity:           
Mortgage-backed securities:           
Residential agency$—
 $—
 $826
 $(27) $826
 $(27)
Commercial agency—
 —
 160
 (8) 160
 (8)
 $—
 $—
 $986
 $(35) $986
 $(35)
            
Debt securities available for sale:           
U.S. Treasury securities$—
 $—
 $149
 $(2) $149
 $(2)
Mortgage-backed securities:           
Residential agency1,366
 (10) 11,801
 (247) 13,167
 (257)
Commercial agency—
 —
 2,937
 (28) 2,937
 (28)
Commercial non-agency—
 —
 444
 (4) 444
 (4)
Corporate and other debt securities57
 (1) 380
 (5) 437
 (6)
 $1,423
 $(11) $15,711
 $(286) $17,134
 $(297)

December 31, 2017December 31, 2018
Less Than Twelve Months Twelve Months or More TotalLess Than Twelve Months Twelve Months or More Total
Estimated
Fair
Value		 Gross
Unrealized
Losses		 Estimated
Fair
Value		 Gross
Unrealized
Losses		 Estimated
Fair
Value		 Gross
Unrealized
Losses		Estimated
Fair
Value		 Gross
Unrealized
Losses		 Estimated
Fair
Value		 Gross
Unrealized
Losses		 Estimated
Fair
Value		 Gross
Unrealized
Losses
(In millions)(In millions)
Debt securities held to maturity:                      
Mortgage-backed securities:                      
Residential agency$—
 $—
 $1,019
 $(32) $1,019
 $(32)$—
 $—
 $842
 $(42) $842
 $(42)
Commercial agency—
 —
 150
 (7) 150
 (7)486
 (7) 132
 (9) 618
 (16)
$—
 $—
 $1,169
 $(39) $1,169
 $(39)$486
 $(7) $974
 $(51) $1,460
 $(58)
                      
Debt securities available for sale:                      
U.S. Treasury securities$221
 $(1) $84
 $(1) $305
 $(2)$—
 $—
 $261
 $(4) $261
 $(4)
Mortgage-backed securities:                      
Residential agency5,157
 (40) 8,195
 (204) 13,352
 (244)2,830
 (37) 11,010
 (429) 13,840
 (466)
Commercial agency1,666
 (10) 904
 (20) 2,570
 (30)1,073
 (13) 2,254
 (51) 3,327
 (64)
Commercial non-agency393
 (2) 61
 (1) 454
 (3)229
 (1) 404
 (9) 633
 (10)
Corporate and other debt securities306
 (2) 105
 (3) 411
 (5)659
 (11) 310
 (12) 969
 (23)
$7,743
 $(55) $9,349
 $(229) $17,092
 $(284)$4,791
 $(62) $14,239
 $(505) $19,030
 $(567)
The number of individual debt positions in an unrealized loss position in the tables above increaseddecreased from 1,0591,379 at December 31, 20172018 to 1,4481,172 at June 30, 2018.March 31, 2019. The increasedecrease in the number of securities and the total amount of unrealized losses from year-end 20172018 was primarily due to changes in market interest rates. In instances where an unrealized loss existed, there was no indication of an adverse change in credit on the underlying positions in the tables above. As it relates to these positions, management believes no individual unrealized loss, other than those discussed below, represented an OTTI as of those dates. The Company does not intend to sell, and it is not more likely than not that the Company will be required to sell, the positions before the recovery of their amortized cost basis, which may be at maturity.
As part of the Company's normal process for evaluating OTTI, management did identify a limited number of positions where an OTTI was believed to exist as of June 30, 2018.March 31, 2019.

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Gross realized gains and gross realized losses on sales of debt securities available for sale are shown in the table below. The cost of securities sold is based on the specific identification method.
Three Months Ended June 30 Six Months Ended June 30Three Months Ended March 31
2018 2017 2018 20172019 2018
(In millions)(In millions)
Gross realized gains$3
 $3
 $3
 $4
$—
 $—
Gross realized losses—
 (2) —
 (3)(6) —
OTTI(2) —
 (2) —
(1) —
Debt securities available for sale gains (losses), net$1
 $1
 $1

$1
$(7) $—

EQUITY INVESTMENTS
Effective January 1, 2018, Regions adopted new accounting guidance that requires equity investments to be recorded at fair value with changes in fair value reported in net income. Regions elected a measurement alternative to fair value for certain equity investments without a readily determinable fair value. See Note 15 for related disclosure.
Marketable equity securities carried at fair value, which primarily consist of assets held for certain employee benefits and money market funds, are reported in other earning assets in the consolidated balance sheets. Total marketable equity securities were $423 million and $414 million at June 30, 2018 and December 31, 2017, respectively. Unrealized holding gains and losses for marketable equity securities were immaterial at June 30, 2018.

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Equity investments without a readily determinable fair value primarily consist of investments in strategic partners and certain CRA projects. The carrying amount of equity investments measured under the measurement alternative, downward and upward adjustments for impairments and price changes from observable transactions are as follows:
 Three Months Ended Six Months Ended
 June 30, 2018
 (In millions)
Carrying value, beginning of period$38
 $31
Net additions—
 —
Downward adjustments for price changes and impairment—
 —
Upward adjustments for price changes1
 8
Carrying value, end of period$39
 $39
Total cumulative downward adjustments for equity investments without a determinable fair value for impairments and observable price changes were $4 million. Total cumulative upward adjustments for price changes from observable transactions were $8 million as of June 30, 2018.
NOTE 4.3. LOANS AND THE ALLOWANCE FOR CREDIT LOSSES
LOANS
The following table presents the distribution of Regions' loan portfolio by segment and class, net of unearned income:
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions, net of unearned income)(In millions, net of unearned income)
Commercial and industrial$37,079
 $36,115
$40,985
 $39,282
Commercial real estate mortgage—owner-occupied6,006
 6,193
5,522
 5,549
Commercial real estate construction—owner-occupied304
 332
434
 384
Total commercial43,389
 42,640
46,941
 45,215
Commercial investor real estate mortgage3,882
 4,062
4,715
 4,650
Commercial investor real estate construction1,879
 1,772
1,871
 1,786
Total investor real estate5,761
 5,834
6,586
 6,436
Residential first mortgage14,111
 14,061
14,113
 14,276
Home equity9,679
 10,164
9,014
 9,257
Indirect—vehicles3,219
 3,326
2,759
 3,053
Indirect—other consumer1,889
 1,467
2,547
 2,349
Consumer credit card1,264
 1,290
1,274
 1,345
Other consumer1,166
 1,165
1,196
 1,221
Total consumer31,328
 31,473
30,903
 31,501
$80,478
 $79,947
$84,430
 $83,152
During the three months ended June 30,March 31, 2019 and 2018, and 2017, Regions purchased approximately $144$171 million and $143$70 million in indirect-other consumer loans from third parties, respectively.
During the sixthree months ended June 30, 2018March 31, 2019, Regions sold $167 million of affordable housing residential mortgage loans.
In January 2019, Regions decided to discontinue its indirect auto lending business due to competition-based margin compression impacting overall returns on the portfolio. Regions ceased originating new indirect auto loans in the first quarter of 2019 and 2017,intends to complete any in-process indirect auto loan closings by the comparable loan purchase amounts were approximately $215 million and $147 million, respectively.end of the second quarter of 2019. The Company will remain in the direct auto lending business.
At June 30, 2018, $21.8March 31, 2019, $21.9 billion in securities and net eligible loans held by Regions were pledged to secure current and potential borrowings from the FHLB. At June 30, 2018,March 31, 2019, an additional $22.9$25.9 billion in net eligible loans held by Regions were pledged to the FRB for potential borrowings.

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ALLOWANCE FOR CREDIT LOSSES
Regions determines the appropriate level of the allowance on a quarterly basis. Refer to Note 1 “Summary of Significant Accounting Policies” to the consolidated financial statements to the Annual Report on Form 10-K for the year ended December 31, 2017,2018, for a description of the methodology.
ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES
The following tables present analyses of the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2018March 31, 2019 and 2017.2018. The total allowance for loan losses and the related loan portfolio ending balances are disaggregated to detail the amounts derived through individual evaluation and collective evaluation for impairment. The allowance for loan losses related to individually evaluated loans is attributable to reserves for non-accrual commercial and investor real estate loans and all TDRs. The allowance for loan losses and the loan portfolio ending balances related to collectively evaluated loans is attributable to the remainder of the portfolio.
 Three Months Ended June 30, 2018
 Commercial 
Investor Real
Estate
 Consumer Total
 (In millions)
Allowance for loan losses, April 1, 2018$547
 $54
 $239
 $840
Provision (credit) for loan losses24
 (8) 44
 60
Loan losses:       
Charge-offs(34) —
 (61) (95)
Recoveries14
 2
 17
 33
Net loan (losses) recoveries(20) 2
 (44) (62)
Allowance for loan losses, June 30, 2018551
 48
 239
 838
Reserve for unfunded credit commitments, April 1, 201845
 4
 —
 49
Provision (credit) for unfunded credit losses(1) —
 —
 (1)
Reserve for unfunded credit commitments, June 30, 201844
 4
 —
 48
Allowance for credit losses, June 30, 2018$595
 $52
 $239
 $886
 Three Months Ended June 30, 2017
 Commercial 
Investor Real
Estate
 Consumer Total
 (In millions)
Allowance for loan losses, April 1, 2017$727
 $87
 $247
 $1,061
Provision (credit) for loan losses7
 (9) 50
 48
Loan losses:       
Charge-offs(38) (1) (60) (99)
Recoveries11
 5
 15
 31
Net loan (losses) recoveries(27) 4
 (45) (68)
Allowance for loan losses, June 30, 2017707
 82
 252
 1,041
Reserve for unfunded credit commitments, April 1, 201766
 4
 —
 70
Provision (credit) for unfunded credit losses(3) —
 —
 (3)
Reserve for unfunded credit commitments, June 30, 201763
 4
 —
 67
Allowance for credit losses, June 30, 2017$770
 $86
 $252
 $1,108
 Three Months Ended March 31, 2019
 Commercial 
Investor Real
Estate
 Consumer Total
 (In millions)
Allowance for loan losses, January 1, 2019$520
 $58
 $262
 $840
Provision (credit) for loan losses38
 (5) 58
 91
Loan losses:       
Charge-offs(30) —
 (72) (102)
Recoveries9
 1
 14
 24
Net loan (losses) recoveries(21) 1
 (58) (78)
Allowance for loan losses, March 31, 2019537
 54
 262
 853
Reserve for unfunded credit commitments, January 1, 201947
 4
 —
 51
Provision (credit) for unfunded credit losses(1) —
 —
 (1)
Reserve for unfunded credit commitments, March 31, 201946
 4
 —
 50
Allowance for credit losses, March 31, 2019$583
 $58
 $262
 $903
Portion of ending allowance for loan losses:       
Individually evaluated for impairment$119
 $3
 $29
 $151
Collectively evaluated for impairment418
 51
 233
 702
Total allowance for loan losses$537
 $54
 $262
 $853
Portion of loan portfolio ending balance:       
Individually evaluated for impairment$523
 $22
 $411
 $956
Collectively evaluated for impairment46,418
 6,564
 30,492
 83,474
Total loans evaluated for impairment$46,941
 $6,586
 $30,903
 $84,430

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 Six Months Ended June 30, 2018
 Commercial 
Investor Real
Estate
 Consumer Total
 (In millions)
Allowance for loan losses, January 1, 2018$591
 $64
 $279
 $934
Provision (credit) for loan losses—
 (12) 62
 50
Loan losses:       
Charge-offs(64) (8) (135) (207)
Recoveries24
 4
 33
 61
Net loan (losses) recoveries(40) (4) (102) (146)
Allowance for loan losses, June 30, 2018551
 48
 239
 838
Reserve for unfunded credit commitments, January 1, 201849
 4
 —
 53
Provision (credit) for unfunded credit losses(5) —
 —
 (5)
Reserve for unfunded credit commitments, June 30, 201844
 4
 —
 48
Allowance for credit losses, June 30, 2018$595
 $52
 $239
 $886
Portion of ending allowance for loan losses:       
Individually evaluated for impairment$156
 $5
 $27
 $188
Collectively evaluated for impairment395
 43
 212
 650
Total allowance for loan losses$551
 $48
 $239
 $838
Portion of loan portfolio ending balance:       
Individually evaluated for impairment$643
 $43
 $450
 $1,136
Collectively evaluated for impairment42,746
 5,718
 30,878
 79,342
Total loans evaluated for impairment$43,389
 $5,761
 $31,328
 $80,478
Six Months Ended June 30, 2017Three Months Ended March 31, 2018
Commercial 
Investor Real
Estate
 Consumer TotalCommercial 
Investor Real
Estate
 Consumer Total
(In millions)(In millions)
Allowance for loan losses, January 1, 2017$753
 $85
 $253
 $1,091
Allowance for loan losses, January 1, 2018$591
 $64
 $279
 $934
Provision (credit) for loan losses33
 (8) 93
 118
(24) (4) 18
 (10)
Loan losses:              
Charge-offs(96) (2) (125) (223)(30) (8) (74) (112)
Recoveries17
 7
 31
 55
10
 2
 16
 28
Net loan (losses) recoveries(79) 5
 (94) (168)(20) (6) (58) (84)
Allowance for loan losses, June 30, 2017707
 82
 252
 1,041
Reserve for unfunded credit commitments, January 1, 201764
 5
 —
 69
Allowance for loan losses, March 31, 2018547
 54
 239
 840
Reserve for unfunded credit commitments, January 1, 201849
 4
 —
 53
Provision (credit) for unfunded credit losses(1) (1) —
 (2)(4) —
 —
 (4)
Reserve for unfunded credit commitments, June 30, 201763
 4
 —
 67
Allowance for credit losses, June 30, 2017$770
 $86
 $252
 $1,108
Reserve for unfunded credit commitments, March 31, 201845
 4
 —
 49
Allowance for credit losses, March 31, 2018$592
 $58
 $239
 $889
Portion of ending allowance for loan losses:              
Individually evaluated for impairment$228
 $17
 $57
 $302
$150
 $10
 $29
 $189
Collectively evaluated for impairment479
 65
 195
 739
397
 44
 210
 651
Total allowance for loan losses$707
 $82
 $252
 $1,041
$547
 $54
 $239
 $840
Portion of loan portfolio ending balance:              
Individually evaluated for impairment$1,052
 $120
 $747
 $1,919
$700
 $96
 $476
 $1,272
Collectively evaluated for impairment41,437
 6,169
 30,602
 78,208
42,437
 5,491
 30,622
 78,550
Total loans evaluated for impairment$42,489
 $6,289
 $31,349
 $80,127
$43,137
 $5,587
 $31,098
 $79,822

PORTFOLIO SEGMENT RISK FACTORS
The following describe the risk characteristics relevant to each of the portfolio segments.
Commercial—The commercial portfolio segment includes commercial and industrial loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases or other expansion projects. Commercial also includes owner-occupied commercial real estate mortgage loans to operating businesses, which are loans for long-term financing of land and buildings, and are repaid by cash flow generated by business operations. Owner-occupied construction loans

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are made to commercial businesses for the development of land or construction of a building where the repayment is derived from revenues generated from the business of the borrower. Collection risk in this portfolio is driven by the creditworthiness of underlying borrowers, particularly cash flow from customers’ business operations, and the sensitivity to market fluctuations in commodity prices.
Investor Real Estate—Loans for real estate development are repaid through cash flow related to the operation, sale or refinance of the property. This portfolio segment includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of real estate or income generated from the real estate collateral. A portion of Regions’ investor real estate portfolio segment consists of loans secured by residential product types (land, single-family and condominium loans) within Regions’ markets. Additionally, these loans are made to finance income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers. Loans in this portfolio segment are particularly sensitive to the valuation of real estate.
Consumer—The consumer portfolio segment includes residential first mortgage, home equity, indirect-vehicles, indirect-other consumer, consumer credit card, and other consumer loans. Residential first mortgage loans represent loans to consumers to finance a residence. These loans are typically financed over a 15 to 30 year term and, in most cases, are extended to borrowers to finance their primary residence. Home equity lending includes both home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower’s residence, allows customers to borrow against the equity in their home. Real estate market values as of the time the loan or line is secured directly affect the amount of credit extended and, in addition, changes in these values impact the depth of potential losses. Indirect-vehicles lending, which is lending initiated through third-party business partners, largely consists of loans made through automotive dealerships. Indirect-other consumer lending represents other point of sale lending through third parties. Consumer credit card lending includes Regions branded consumer credit card accounts. Other consumer loans include other revolving consumer accounts, direct consumer loans, and overdrafts. Loans in this portfolio segment are sensitive to unemployment and other key consumer economic measures.

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CREDIT QUALITY INDICATORS
The following tables present credit quality indicators for portfolio segments and classes, excluding loans held for sale, as of June 30, 2018,March 31, 2019, and December 31, 2017.2018. Commercial and investor real estate portfolio segments are detailed by categories related to underlying credit quality and probability of default. Regions assigns these categories at loan origination and reviews the relationship utilizing a risk-based approach on, at minimum, an annual basis or at any time management becomes aware of information affecting the borrowers' ability to fulfill their obligations. Both quantitative and qualitative factors are considered in this review process. These categories are utilized to develop the associated allowance for credit losses.
Pass—includes obligations where the probability of default is considered low;
Special Mention—includes obligations that have potential weakness that may, if not reversed or corrected, weaken the credit or inadequately protect the Company’s position at some future date. Obligations in this category may also be subject to economic or market conditions that may, in the future, have an adverse effect on debt service ability;
Substandard Accrual—includes obligations that exhibit a well-defined weakness that presently jeopardizes debt repayment, even though they are currently performing. These obligations are characterized by the distinct possibility that the Company may incur a loss in the future if these weaknesses are not corrected;
Non-accrual—includes obligations where management has determined that full payment of principal and interest is in doubt.
Substandard accrual and non-accrual loans are often collectively referred to as “classified.” Special mention, substandard accrual, and non-accrual loans are often collectively referred to as “criticized and classified.” Classes in the consumer portfolio segment are disaggregated by accrual status.
 March 31, 2019
 Pass Special  Mention 
Substandard
Accrual
 Non-accrual Total
 (In millions)
Commercial and industrial$39,534
 $668
 $447
 $336
 $40,985
Commercial real estate mortgage—owner-occupied5,159
 197
 99
 67
 5,522
Commercial real estate construction—owner-occupied403
 12
 5
 14
 434
Total commercial$45,096
 $877
 $551
 $417
 $46,941
Commercial investor real estate mortgage$4,464
 $168
 $75
 $8
 $4,715
Commercial investor real estate construction1,848
 18
 5
 —
 1,871
Total investor real estate$6,312
 $186
 $80
 $8
 $6,586
          
     Accrual Non-accrual Total
     (In millions)
Residential first mortgage    $14,079
 $34
 $14,113
Home equity    8,950
 64
 9,014
Indirect—vehicles    2,759
 —
 2,759
Indirect—other consumer    2,547
 —
 2,547
Consumer credit card    1,274
 —
 1,274
Other consumer    1,196
 —
 1,196
Total consumer    $30,805
 $98
 $30,903
         $84,430

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 June 30, 2018
 Pass Special  Mention 
Substandard
Accrual
 Non-accrual Total
 (In millions)
Commercial and industrial$35,823
 $514
 $358
 $384
 $37,079
Commercial real estate mortgage—owner-occupied5,550
 231
 127
 98
 6,006
Commercial real estate construction—owner-occupied282
 7
 10
 5
 304
Total commercial$41,655
 $752
 $495
 $487
 $43,389
Commercial investor real estate mortgage$3,728
 $91
 $59
 $4
 $3,882
Commercial investor real estate construction1,859
 14
 6
 —
 1,879
Total investor real estate$5,587
 $105
 $65
 $4
 $5,761
          
     Accrual Non-accrual Total
     (In millions)
Residential first mortgage    $14,073
 $38
 $14,111
Home equity    9,613
 66
 9,679
Indirect—vehicles    3,219
 —
 3,219
Indirect—other consumer    1,889
 —
 1,889
Consumer credit card    1,264
 —
 1,264
Other consumer    1,166
 —
 1,166
Total consumer    $31,224
 $104
 $31,328
         $80,478
 December 31, 2017
 Pass 
Special
Mention
 
Substandard
Accrual
 Non-accrual Total
 (In millions)
Commercial and industrial$34,420
 $686
 $605
 $404
 $36,115
Commercial real estate mortgage—owner-occupied5,674
 236
 165
 118
 6,193
Commercial real estate construction—owner-occupied313
 3
 10
 6
 332
Total commercial$40,407
 $925
 $780
 $528
 $42,640
Commercial investor real estate mortgage$3,905
 $63
 $89
 $5
 $4,062
Commercial investor real estate construction1,706
 19
 46
 1
 1,772
Total investor real estate$5,611
 $82
 $135
 $6
 $5,834
          
     Accrual Non-accrual Total
     (In millions)
Residential first mortgage    $14,014
 $47
 $14,061
Home equity    10,095
 69
 10,164
Indirect—vehicles    3,326
 —
 3,326
Indirect—other consumer    1,467
 —
 1,467
Consumer credit card    1,290
 —
 1,290
Other consumer    1,165
 —
 1,165
Total consumer    $31,357
 $116
 $31,473
         $79,947


22

Table of Contents

 December 31, 2018
 Pass 
Special
Mention
 
Substandard
Accrual
 Non-accrual Total
 (In millions)
Commercial and industrial$37,963
 $666
 $346
 $307
 $39,282
Commercial real estate mortgage—owner-occupied5,193
 208
 81
 67
 5,549
Commercial real estate construction—owner-occupied356
 7
 13
 8
 384
Total commercial$43,512
 $881
 $440
 $382
 $45,215
Commercial investor real estate mortgage$4,444
 $52
 $143
 $11
 $4,650
Commercial investor real estate construction1,773
 6
 7
 —
 1,786
Total investor real estate$6,217
 $58
 $150
 $11
 $6,436
          
     Accrual Non-accrual Total
     (In millions)
Residential first mortgage    $14,236
 $40
 $14,276
Home equity    9,194
 63
 9,257
Indirect—vehicles    3,053
 —
 3,053
Indirect—other consumer    2,349
 —
 2,349
Consumer credit card    1,345
 —
 1,345
Other consumer    1,221
 —
 1,221
Total consumer    $31,398
 $103
 $31,501
         $83,152

AGING ANALYSIS
The following tables include an aging analysis of DPD for each portfolio segment and class as of June 30, 2018March 31, 2019 and December 31, 2017:2018:
June 30, 2018March 31, 2019
Accrual Loans      Accrual Loans      
30-59 DPD 60-89 DPD 90+ DPD 
Total
30+ DPD
 
Total
Accrual
 Non-accrual Total30-59 DPD 60-89 DPD 90+ DPD 
Total
30+ DPD
 
Total
Accrual
 Non-accrual Total
(In millions)(In millions)
Commercial and industrial$14
 $4
 $4
 $22
 $36,695
 $384
 $37,079
$24
 $11
 $11
 $46
 $40,649
 $336
 $40,985
Commercial real estate mortgage—owner-occupied11
 5
 1
 17
 5,908
 98
 6,006
10
 2
 1
 13
 5,455
 67
 5,522
Commercial real estate construction—owner-occupied3
 —
 —
 3
 299
 5
 304
—
 —
 —
 —
 420
 14
 434
Total commercial28
 9
 5
 42
 42,902
 487
 43,389
34
 13
 12
 59
 46,524
 417
 46,941
Commercial investor real estate mortgage6
 —
 —
 6
 3,878
 4
 3,882
1
 —
 —
 1
 4,707
 8
 4,715
Commercial investor real estate construction—
 —
 —
 —
 1,879
 —
 1,879
—
 1
 —
 1
 1,871
 —
 1,871
Total investor real estate6
 —
 —
 6
 5,757
 4
 5,761
1
 1
 —
 2
 6,578
 8
 6,586
Residential first mortgage64
 46
 168
 278
 14,073
 38
 14,111
77
 43
 142
 262
 14,079
 34
 14,113
Home equity56
 21
 31
 108
 9,613
 66
 9,679
44
 24
 37
 105
 8,950
 64
 9,014
Indirect—vehicles39
 10
 8
 57
 3,219
 —
 3,219
34
 9
 7
 50
 2,759
 —
 2,759
Indirect—other consumer7
 4
 —
 11
 1,889
 —
 1,889
13
 7
 1
 21
 2,547
 —
 2,547
Consumer credit card10
 6
 17
 33
 1,264
 —
 1,264
11
 8
 20
 39
 1,274
 —
 1,274
Other consumer12
 4
 5
 21
 1,166
 —
 1,166
15
 5
 4
 24
 1,196
 —
 1,196
Total consumer188
 91
 229
 508
 31,224
 104
 31,328
194
 96
 211
 501
 30,805
 98
 30,903
$222
 $100
 $234
 $556
 $79,883
 $595
 $80,478
$229
 $110
 $223
 $562
 $83,907
 $523
 $84,430
 
 December 31, 2017
 Accrual Loans      
 30-59 DPD 60-89 DPD 90+ DPD 
Total
30+ DPD
 
Total
Accrual
 Non-accrual Total
 (In millions)
Commercial and industrial$28
 $7
 $4
 $39
 $35,711
 $404
 $36,115
Commercial real estate mortgage—owner-occupied18
 8
 1
 27
 6,075
 118
 6,193
Commercial real estate construction—owner-occupied—
 —
 —
 —
 326
 6
 332
Total commercial46
 15
 5
 66
 42,112
 528
 42,640
Commercial investor real estate mortgage1
 1
 1
 3
 4,057
 5
 4,062
Commercial investor real estate construction—
 —
 —
 —
 1,771
 1
 1,772
Total investor real estate1
 1
 1
 3
 5,828
 6
 5,834
Residential first mortgage95
 85
 216
 396
 14,014
 47
 14,061
Home equity53
 27
 37
 117
 10,095
 69
 10,164
Indirect—vehicles48
 13
 9
 70
 3,326
 —
 3,326
Indirect—other consumer9
 5
 —
 14
 1,467
 —
 1,467
Consumer credit card11
 7
 19
 37
 1,290
 —
 1,290
Other consumer13
 4
 4
 21
 1,165
 —
 1,165
Total consumer229
 141
 285
 655
 31,357
 116
 31,473
 $276
 $157
 $291
 $724
 $79,297
 $650
 $79,947


2320

Table of Contents


 December 31, 2018
 Accrual Loans      
 30-59 DPD 60-89 DPD 90+ DPD 
Total
30+ DPD
 
Total
Accrual
 Non-accrual Total
 (In millions)
Commercial and industrial$80
 $22
 $8
 $110
 $38,975
 $307
 $39,282
Commercial real estate mortgage—owner-occupied12
 7
 —
 19
 5,482
 67
 5,549
Commercial real estate construction—owner-occupied—
 —
 —
 —
 376
 8
 384
Total commercial92
 29
 8
 129
 44,833
 382
 45,215
Commercial investor real estate mortgage6
 —
 —
 6
 4,639
 11
 4,650
Commercial investor real estate construction—
 —
 —
 —
 1,786
 —
 1,786
Total investor real estate6
 —
 —
 6
 6,425
 11
 6,436
Residential first mortgage85
 53
 150
 288
 14,236
 40
 14,276
Home equity47
 26
 34
 107
 9,194
 63
 9,257
Indirect—vehicles40
 11
 9
 60
 3,053
 —
 3,053
Indirect—other consumer13
 7
 1
 21
 2,349
 —
 2,349
Consumer credit card12
 9
 20
 41
 1,345
 —
 1,345
Other consumer15
 5
 5
 25
 1,221
 —
 1,221
Total consumer212
 111
 219
 542
 31,398
 103
 31,501
 $310
 $140
 $227
 $677
 $82,656
 $496
 $83,152

IMPAIRED LOANS
The following tables present details related to the Company’s impaired loans as of June 30, 2018March 31, 2019 and December 31, 2017.2018. Loans deemed to be impaired include all TDRs and all non-accrual commercial and investor real estate loans, excluding leases. Loans that have been fully charged-off do not appear in the tables below.
Non-accrual Impaired Loans As of June 30, 2018Non-accrual Impaired Loans As of March 31, 2019
    
Book Value(3)
        
Book Value(3)
    
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans on
Non-accrual
Status
 
Impaired
Loans on
Non-accrual
Status with
No Related
Allowance
 
Impaired
Loans on
Non-accrual
Status with
Related
Allowance
 
Related
Allowance
for Loan
Losses
 
Coverage %(4)
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans on
Non-accrual
Status
 
Impaired
Loans on
Non-accrual
Status with
No Related
Allowance
 
Impaired
Loans on
Non-accrual
Status with
Related
Allowance
 
Related
Allowance
for Loan
Losses
 
Coverage %(4)
(Dollars in millions)(Dollars in millions)
Commercial and industrial$469
 $89
 $380
 $108
 $272
 $98
 39.9%$426
 $90
 $336
 $111
 $225
 $77
 39.2%
Commercial real estate mortgage—owner-occupied109
 11
 98
 13
 85
 34
 41.3
75
 8
 67
 8
 59
 25
 44.0
Commercial real estate construction—owner-occupied6
 1
 5
 —
 5
 2
 50.0
16
 2
 14
 1
 13
 3
 31.3
Total commercial584
 101
 483
 121
 362
 134
 40.2
517
 100
 417
 120
 297
 105
 39.7
Commercial investor real estate mortgage4
 —
 4
 1
 3
 1
 25.0
8
 —
 8
 —
 8
 2
 25.0
Total investor real estate4
 —
 4
 1
 3
 1
 25.0
8
 —
 8
 —
 8
 2
 25.0
Residential first mortgage33
 10
 23
 —
 23
 2
 36.4
27
 7
 20
 —
 20
 2
 33.3
Home equity11
 1
 10
 —
 10
 —
 9.1
11
 1
 10
 —
 10
 —
 9.1
Total consumer44
 11
 33
 —
 33
 2
 29.5
38
 8
 30
 —
 30
 2
 26.3
$632
 $112
 $520
 $122
 $398
 $137
 39.4%$563
 $108
 $455
 $120
 $335
 $109
 38.5%
 
 Accruing Impaired Loans As of June 30, 2018
 
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Book Value(3)
 
Related
Allowance for
Loan Losses
 
Coverage %(4)
 (Dollars in millions)
Commercial and industrial$127
 $—
 $127
 $19
 15.0%
Commercial real estate mortgage—owner-occupied35
 2
 33
 3
 14.3
Total commercial162
 2
 160
 22
 14.8
Commercial investor real estate mortgage41
 2
 39
 4
 14.6
Total investor real estate41
 2
 39
 4
 14.6
Residential first mortgage193
 7
 186
 18
 13.0
Home equity224
 1
 223
 7
 3.6
Consumer credit card1
 —
 1
 —
 —
Other consumer7
 —
 7
 —
 —
Total consumer425
 8
 417
 25
 7.8
 $628
 $12
 $616
 $51
 10.0%


2421

Table of Contents


Total Impaired Loans As of June 30, 2018
    
Book Value(3)
    Accruing Impaired Loans As of March 31, 2019
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans
 
Impaired
Loans with No
Related
Allowance
 
Impaired
Loans with
Related
Allowance
 
Related
Allowance
for Loan
Losses
 
Coverage %(4)
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Book Value(3)
 
Related
Allowance for
Loan Losses
 
Coverage %(4)
(Dollars in millions)(Dollars in millions)
Commercial and industrial$596
 $89
 $507
 $108
 $399
 $117
 34.6%$84
 $—
 $84
 $12
 14.3%
Commercial real estate mortgage—owner-occupied144
 13
 131
 13
 118
 37
 34.7
24
 2
 22
 2
 16.7
Commercial real estate construction—owner-occupied6
 1
 5
 —
 5
 2
 50.0
Total commercial746
 103
 643
 121
 522
 156
 34.7
108
 2
 106
 14
 14.8
Commercial investor real estate mortgage45
 2
 43
 1
 42
 5
 15.6
14
 1
 13
 1
 14.3
Commercial investor real estate construction1
 —
 1
 —
 —
Total investor real estate45
 2
 43
 1
 42
 5
 15.6
15
 1
 14
 1
 13.3
Residential first mortgage226
 17
 209
 —
 209
 20
 16.4
199
 9
 190
 20
 14.6
Home equity235
 2
 233
 —
 233
 7
 3.8
186
 1
 185
 7
 4.3
Consumer credit card1
 —
 1
 —
 1
 —
 —
1
 —
 1
 —
 —
Other consumer7
 —
 7
 —
 7
 —
 —
5
 —
 5
 —
 —
Total consumer469
 19
 450
 —
 450
 27
 9.8
391
 10
 381
 27
 9.5
$1,260
 $124
 $1,136
 $122
 $1,014
 $188
 24.8%$514
 $13
 $501
 $42
 10.7%

 Total Impaired Loans As of March 31, 2019
     
Book Value(3)
    
 
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans
 
Impaired
Loans with No
Related
Allowance
 
Impaired
Loans with
Related
Allowance
 
Related
Allowance
for Loan
Losses
 
Coverage %(4)
 (Dollars in millions)
Commercial and industrial$510
 $90
 $420
 $111
 $309
 $89
 35.1%
Commercial real estate mortgage—owner-occupied99
 10
 89
 8
 81
 27
 37.4
Commercial real estate construction—owner-occupied16
 2
 14
 1
 13
 3
 31.3
Total commercial625
 102
 523
 120
 403
 119
 35.4
Commercial investor real estate mortgage22
 1
 21
 —
 21
 3
 18.2
Commercial investor real estate construction1
 —
 1
 —
 1
 —
 —
Total investor real estate23
 1
 22
 —
 22
 3
 17.4
Residential first mortgage226
 16
 210
 —
 210
 22
 16.8
Home equity197
 2
 195
 —
 195
 7
 4.6
Consumer credit card1
 —
 1
 —
 1
 —
 —
Other consumer5
 —
 5
 —
 5
 —
 —
Total consumer429
 18
 411
 —
 411
 29
 11.0
 $1,077
 $121
 $956
 $120
 $836
 $151
 25.3%


22

Table of Contents



Non-accrual Impaired Loans As of December 31, 2017Non-accrual Impaired Loans As of December 31, 2018
    
Book Value(3)
        
Book Value(3)
    
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans on
Non-accrual
Status
 
Impaired
Loans on
Non-accrual
Status with
No Related
Allowance
 
Impaired
Loans on
Non-accrual
Status with
Related
Allowance
 
Related
Allowance
for Loan
Losses
 
Coverage %(4)
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans on
Non-accrual
Status
 
Impaired
Loans on
Non-accrual
Status with
No Related
Allowance
 
Impaired
Loans on
Non-accrual
Status with
Related
Allowance
 
Related
Allowance
for Loan
Losses
 
Coverage %(4)
(Dollars in millions)(Dollars in millions)
Commercial and industrial$480
 $80
 $400
 $29
 $371
 $103
 38.1%$384
 $77
 $307
 $113
 $194
 $62
 36.2%
Commercial real estate mortgage—owner-occupied133
 15
 118
 20
 98
 38
 39.8
76
 9
 67
 13
 54
 23
 42.1
Commercial real estate construction—owner-occupied7
 1
 6
 —
 6
 3
 57.1
9
 1
 8
 —
 8
 3
 44.4
Total commercial620
 96
 524
 49
 475
 144
 38.7
469
 87
 382
 126
 256
 88
 37.3
Commercial investor real estate mortgage6
 1
 5
 —
 5
 2
 50.0
11
 —
 11
 4
 7
 1
 9.1
Commercial investor real estate construction1
 —
 1
 —
 1
 —
 —
Total investor real estate7
 1
 6
 —
 6
 2
 42.9
11
 —
 11
 4
 7
 1
 9.1
Residential first mortgage42
 11
 31
 —
 31
 3
 33.3
31
 8
 23
 —
 23
 2
 32.3
Home equity10
 1
 9
 —
 9
 —
 10.0
11
 2
 9
 —
 9
 —
 18.2
Total consumer52
 12
 40
 —
 40
 3
 28.8
42
 10
 32
 —
 32
 2
 28.6
$679
 $109
 $570
 $49
 $521
 $149
 38.0%$522
 $97
 $425
 $130
 $295
 $91
 36.0%
 
 Accruing Impaired Loans As of December 31, 2018
 
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Book Value(3)
 
Related
Allowance for
Loan Losses
 
Coverage %(4)
 (Dollars in millions)
Commercial and industrial$84
 $—
 $84
 $14
 16.7%
Commercial real estate mortgage—owner-occupied26
 2
 24
 2
 15.4
Total commercial110
 2
 108
 16
 16.4
Commercial investor real estate mortgage15
 1
 14
 1
 13.3
Total investor real estate15
 1
 14
 1
 13.3
Residential first mortgage194
 9
 185
 18
 13.9
Home equity195
 —
 195
 6
 3.1
Consumer credit card1
 —
 1
 —
 —
Other consumer6
 —
 6
 —
 —
Total consumer396
 9
 387
 24
 8.3
 $521
 $12
 $509
 $41
 10.2%


2523

Table of Contents


 Accruing Impaired Loans As of December 31, 2017
     
Book Value(3)
    
 
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 Total Impaired Loans on Accrual Status Impaired Loans on Accrual Status with No Related Allowance Impaired Loans on Accrual Status with Related Allowance 
Related
Allowance for
Loan Losses
 
Coverage %(4)
 (Dollars in millions)
Commercial and industrial$154
 $8
 $146
 $1
 $145
 $19
 17.5%
Commercial real estate mortgage—owner-occupied90
 5
 85
 —
 85
 8
 14.4
Commercial real estate construction—owner-occupied1
 —
 1
 —
 1
 —
 —
Total commercial245
 13
 232
 1
 231
 27
 16.3
Commercial investor real estate mortgage63
 2
 61
 —
 61
 3
 7.9
Commercial investor real estate construction29
 —
 29
 —
 29
 3
 10.3
Total investor real estate92
 2
 90
 —
 90
 6
 8.7
Residential first mortgage419
 13
 406
 —
 406
 39
 12.4
Home equity251
 1
 250
 —
 250
 5
 2.4
Consumer credit card1
 —
 1
 —
 1
 —
 —
Other consumer9
 —
 9
 —
 9
 —
 —
Total consumer680
 14
 666
 —
 666
 44
 8.5
 $1,017
 $29
 $988
 $1
 $987
 $77
 10.4%

Total Impaired Loans As of December 31, 2017Total Impaired Loans As of December 31, 2018
    
Book Value(3)
        
Book Value(3)
    
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans
 
Impaired
Loans with No
Related
Allowance
 
Impaired
Loans with
Related
Allowance
 
Related
Allowance for
Loan Losses
 
Coverage %(4)
Unpaid
Principal
Balance(1)
 
Charge-offs
and Payments
Applied(2)
 
Total
Impaired
Loans
 
Impaired
Loans with No
Related
Allowance
 
Impaired
Loans with
Related
Allowance
 
Related
Allowance for
Loan Losses
 
Coverage %(4)
(Dollars in millions)(Dollars in millions)
Commercial and industrial$634
 $88
 $546
 $30
 $516
 $122
 33.1%$468
 $77
 $391
 $113
 $278
 $76
 32.7%
Commercial real estate mortgage—owner-occupied223
 20
 203
 20
 183
 46
 29.6
102
 11
 91
 13
 78
 25
 35.3
Commercial real estate construction—owner-occupied8
 1
 7
 —
 7
 3
 50.0
9
 1
 8
 —
 8
 3
 44.4
Total commercial865
 109
 756
 50
 706
 171
 32.4
579
 89
 490
 126
 364
 104
 33.3
Commercial investor real estate mortgage69
 3
 66
 —
 66
 5
 11.6
26
 1
 25
 4
 21
 2
 11.5
Commercial investor real estate construction30
 —
 30
 —
 30
 3
 10.0
Total investor real estate99
 3
 96
 —
 96
 8
 11.1
26
 1
 25
 4
 21
 2
 11.5
Residential first mortgage461
 24
 437
 —
 437
 42
 14.3
225
 17
 208
 —
 208
 20
 16.4
Home equity261
 2
 259
 —
 259
 5
 2.7
206
 2
 204
 —
 204
 6
 3.9
Consumer credit card1
 —
 1
 —
 1
 —
 —
1
 —
 1
 —
 1
 —
 —
Other consumer9
 —
 9
 —
 9
 —
 —
6
 —
 6
 —
 6
 —
 —
Total consumer732
 26
 706
 —
 706
 47
 10.0
438
 19
 419
 —
 419
 26
 10.3
$1,696
 $138
 $1,558
 $50
 $1,508
 $226
 21.5%$1,043
 $109
 $934
 $130
 $804
 $132
 23.1%
________
(1)Unpaid principal balance represents the contractual obligation due from the customer and includes the net book value plus charge-offs and payments applied.
(2)Charge-offs and payments applied represents cumulative partial charge-offs taken, as well as interest payments received that have been applied against the outstanding principal balance.
(3)Book value represents the unpaid principal balance less charge-offs and payments applied; it is shown before any allowance for loan losses.
(4)Coverage % represents charge-offs and payments applied plus the related allowance as a percent of the unpaid principal balance.


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The following table presents the average balances of total impaired loans and interest income for the three and six months ended June 30, 2018March 31, 2019 and 2017.2018. Interest income recognized represents interest on accruing loans modified in a TDR.
Three Months Ended June 30 Six Months Ended June 30Three Months Ended March 31
2018 2017 2018 20172019 2018
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
Average
Balance
 
Interest
Income
Recognized
 
Average
Balance
 
Interest
Income
Recognized
(In millions)(In millions)
Commercial and industrial$518
 $2
 $846
 $4
 $526
 $5
 $833
 $6
$411
 $1
 $533
 $3
Commercial real estate mortgage—owner-occupied138
 2
 229
 1
 152
 5
 246
 2
93
 1
 166
 3
Commercial real estate construction—owner-occupied5
 —
 4
 —
 6
 —
 5
 —
13
 —
 6
 —
Total commercial661
 4
 1,079
 5
 684
 10
 1,084
 8
517
 2
 705
 6
Commercial investor real estate mortgage75
 1
 76
 1
 75
 2
 84
 2
21
 —
 76
 1
Commercial investor real estate construction—
 —
 53
 1
 15
 —
 43
 1
—
 —
 30
 —
Total investor real estate75
 1
 129
 2
 90
 2
 127
 3
21
 —
 106
 1
Residential first mortgage214
 2
 460
 4
 251
 4
 457
 8
209
 1
 288
 2
Home equity238
 4
 286
 3
 245
 7
 290
 7
198
 3
 252
 3
Consumer credit card1
 —
 2
 —
 1
 —
 2
 —
1
 —
 1
 —
Other consumer7
 —
 9
 —
 7
 —
 10
 —
6
 —
 8
 —
Total consumer460
 6
 757
 7
 504
 11
 759
 15
414
 4
 549
 5
Total impaired loans$1,196
 $11
 $1,965
 $14
 $1,278
 $23
 $1,970
 $26
$952
 $6
 $1,360
 $12

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TROUBLED DEBT RESTRUCTURINGS
Regions regularly modifies commercial and investor real estate loans in order to facilitate a workout strategy. Similarly, Regions works to meet the individual needs of consumer borrowers to stem foreclosure through its CAP. Refer to Note 6 "Allowance For Credit Losses" in the 20172018 Annual Report on Form 10-K for additional information regarding the Company's TDRs.
Further discussion related to TDRs, including their impact on the allowance for loan losses and designation of TDRs in periods subsequent to the modification is included in Note 1 "Summary of Significant Accounting Policies" in the 20172018 Annual Report on Form 10-K.
The following tables present the end of period balance for loans modified in a TDR during the periods presented by portfolio segment and class, and the financial impact of those modifications. The tables include modifications made to new TDRs, as well as renewals of existing TDRs. Loans first reported as TDRs during the sixthree months ended June 30,March 31, 2019 and 2018 and 2017 totaled approximately $219$85 million and $328$171 million, respectively.
 Three Months Ended June 30, 2018
     
Financial Impact
of Modifications
Considered TDRs
 
Number of
Obligors
 
Recorded
Investment
 
Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial26
 $50
 $1
Commercial real estate mortgage—owner-occupied20
 10
 —
Total commercial46
 60
 1
Commercial investor real estate mortgage5
 30
 1
Total investor real estate5
 30
 1
Residential first mortgage45
 6
 1
Home equity30
 2
 —
Consumer credit card11
 —
 —
Indirect—vehicles and other consumer20
 —
 —
Total consumer106
 8
 1
 157
 $98
 $3

 Three Months Ended March 31, 2019
     Financial Impact
of Modifications
Considered TDRs
 Number of
Obligors		 Recorded
Investment		 Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial26
 $78
 $1
Commercial real estate mortgage—owner-occupied17
 12
 —
Commercial real estate construction—owner-occupied1
 2
 —
Total commercial44
 92
 1
Commercial investor real estate mortgage3
 11
 —
Commercial investor real estate construction2
 —
 —
Total investor real estate5
 11
 —
Residential first mortgage34
 10
 1
Home equity34
 3
 —
Consumer credit card18
 —
 —
Indirect—vehicles and other consumer30
 —
 —
Total consumer116
 13
 1
 165
 $116
 $2
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 Three Months Ended March 31, 2018
     Financial Impact
of Modifications
Considered TDRs
 Number of
Obligors		 Recorded
Investment		 Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial29
 $164
 $2
Commercial real estate mortgage—owner-occupied18
 14
 —
Total commercial47
 178
 2
Commercial investor real estate mortgage10
 19
 1
Total investor real estate10
 19
 1
Residential first mortgage53
 8
 1
Home equity17
 1
 —
Consumer credit card14
 —
 —
Indirect—vehicles and other consumer13
 —
 —
Total consumer97
 9
 1
 154
 $206
 $4

 Three Months Ended June 30, 2017
     
Financial Impact
of Modifications
Considered TDRs
 
Number of
Obligors
 
Recorded
Investment
 
Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial38
 $193
 $4
Commercial real estate mortgage—owner-occupied30
 37
 1
Commercial real estate construction—owner-occupied1
 1
 —
Total commercial69
 231
 5
Commercial investor real estate mortgage13
 29
 1
Commercial investor real estate construction2
 44
 1
Total investor real estate15
 73
 2
Residential first mortgage52
 17
 2
Home equity33
 2
 —
Consumer credit card24
 —
 —
Indirect—vehicles and other consumer40
 —
 —
Total consumer149
 19
 2
 233
 $323
 $9
 Six Months Ended June 30, 2018
     Financial Impact
of Modifications
Considered TDRs
 Number of
Obligors		 Recorded
Investment		 Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial55
 $214
 $3
Commercial real estate mortgage—owner-occupied38
 24
 —
Total commercial93
 238
 3
Commercial investor real estate mortgage15
 49
 2
Total investor real estate15
 49
 2
Residential first mortgage98
 14
 2
Home equity47
 3
 —
Consumer credit card25
 —
 —
Indirect—vehicles and other consumer33
 —
 —
Total consumer203
 17
 2
 311
 $304
 $7

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 Six Months Ended June 30, 2017
     Financial Impact
of Modifications
Considered TDRs
 Number of
Obligors		 Recorded
Investment		 Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial69
 $292
 $7
Commercial real estate mortgage—owner-occupied61
 65
 2
Commercial real estate construction—owner-occupied3
 2
 —
Total commercial133
 359
 9
Commercial investor real estate mortgage25
 48
 1
Commercial investor real estate construction5
 70
 2
Total investor real estate30
 118
 3
Residential first mortgage101
 25
 3
Home equity91
 7
 —
Consumer credit card43
 —
 —
Indirect—vehicles and other consumer87
 1
 —
Total consumer322
 33
 3
 485
 $510
 $15
Defaulted TDRs
The following table presents, by portfolio segment and class, TDRs that defaulted during the three and six months ended June 30,March 31, 2019 and 2018, and 2017, and that were modified in the previous twelve months (i.e., the twelve months prior to the default). For purposes of this disclosure, default is defined as placement on non-accrual status for the commercial and investor real estate portfolio segments, and 90 days past due and still accruing for the consumer portfolio segment. Consideration of defaults in the calculation of the allowance for loan losses is described in detail in the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December were immaterial. At March 31, 2017.
        
 Three Months Ended June 30 Six Months Ended June 30
 2018 2017 2018 2017
 (In millions)
Defaulted During the Period, Where Modified in a TDR Twelve Months Prior to Default       
Commercial and industrial$19
 $6
 $21
 $8
Commercial real estate mortgage—owner-occupied—
 —
 1
 —
Total commercial19
 6
 22
 8
Residential first mortgage2
 2
 4
 5
Home equity—
 1
 —
 1
Total consumer2
 3
 4
 6
 $21
 $9
 $26
 $14
Commercial and investor real estate loans that were on non-accrual status at the time of the latest modification are not included in the default table above, as they are already considered to be in default at the time of the restructuring. At June 30, 2018,2019, approximately $6$18 million of commercial and investor real estate loans modified in a TDRas TDRs during the three months ended June 30, 2018March 31, 2019 were on non-accrual status.
At June 30, 2018,March 31, 2019, Regions had restructured binding unfunded commitments totaling $13$7 million where a concession was granted and the borrower was in financial difficulty.
NOTE 5.4. SERVICING OF FINANCIAL ASSETS
RESIDENTIAL MORTGAGE BANKING ACTIVITIES
The fair value of residential MSRs is calculated using various assumptions including future cash flows, market discount rates, expected prepayment rates, servicing costs and other factors. A significant change in prepayments of mortgages in the

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servicing portfolio could result in significant changes in the valuation adjustments, thus creating potential volatility in the carrying amount of residential MSRs. The Company compares fair value estimates and assumptions to observable market data where available, and also considers recent market activity and actual portfolio experience.
The table below presents an analysis of residential MSRs under the fair value measurement method:
Three Months Ended June 30 Six Months Ended June 30Three Months Ended March 31
2018 2017 2018 20172019 2018
(In millions)(In millions)
Carrying value, beginning of period$356
 $326
 $336
 $324
$418
 $336
Additions9
 39
 17
 47
7
 8
Increase (decrease) in fair value:          
Due to change in valuation inputs or assumptions10
 (8) 32
 (3)(28) 22
Economic amortization associated with borrower repayments (1)
(13) (11) (23) (22)(11) (10)
Carrying value, end of period$362
 $346
 $362
 $346
$386
 $356
________
(1) "Economic amortization associated with borrower repayments" includes both total loan payoffs as well as partial paydowns.

On April 28, 2017,March 27, 2019, the Company purchasedsold $167 million of affordable housing residential mortgage loans and as part of the transaction kept the rights to service the loans, which resulted in a retained residential MSR of approximately $2.7 billion in residential mortgage loans for approximately $30 million.

On July 31, 2018, the Company purchased the rights to service approximately $3.4 billion in residential mortgage loans for approximately $42$2 million.

Data and assumptions used in the fair value calculation, as well as the valuation’s sensitivity to rate fluctuations, related to residential MSRs (excluding related derivative instruments) are as follows:
June 30March 31
2018 20172019 2018
(Dollars in millions)(Dollars in millions)
Unpaid principal balance$31,140
 $33,055
$36,050
 $31,641
Weighted-average CPR (%)8.6% 7.9%10.4% 9.0%
Estimated impact on fair value of a 10% increase$(22) $(19)$(21) $(24)
Estimated impact on fair value of a 20% increase$(41) $(35)$(38) $(43)
Option-adjusted spread (basis points)825
 1,052
759
 842
Estimated impact on fair value of a 10% increase$(12) $(14)$(12) $(12)
Estimated impact on fair value of a 20% increase$(24) $(28)$(23) $(24)
Weighted-average coupon interest rate4.2% 4.2%4.2% 4.1%
Weighted-average remaining maturity (months)280
 281
279
 280
Weighted-average servicing fee (basis points)27.5
 27.4
27.1
 27.3
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, the effect of an adverse variation in a particular assumption on the fair value of the residential MSRs is calculated without changing any other assumption, while in reality changes in one

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factor may result in changes in another, which may either magnify or counteract the effect of the change. The derivative instruments utilized by Regions would serve to reduce the estimated impacts to fair value included in the table above.

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The following table presents servicing related fees, which includesinclude contractually specified servicing fees, late fees and other ancillary income resulting from the servicing of residential mortgage loans:
 Three Months Ended June 30 Six Months Ended June 30
 2018 2017 2018 2017
 (In millions)
Servicing related fees and other ancillary income$23
 $24
 $46
 $47
 Three Months Ended March 31
 2019 2018
 (In millions)
Servicing related fees and other ancillary income$26
 $23
Residential mortgage loans are sold in the secondary market with standard representations and warranties regarding certain characteristics such as the quality of the loan, the absence of fraud, the eligibility of the loan for sale and the future servicing associated with the loan. Regions may be required to repurchase these loans at par, or make-whole or indemnify the purchasers for losses incurred when representations and warranties are breached.
Regions maintains an immaterial repurchase liability related to residential mortgage loans sold with representations and warranty provisions. This repurchase liability is reported in other liabilities on the consolidated balance sheets and reflects management’s estimate of losses based on historical repurchase and loss trends, as well as other factors that may result in anticipated losses different from historical loss trends. Adjustments to this reserve are recorded in other non-interest expense on the consolidated statements of income.
COMMERCIAL MORTGAGE BANKING ACTIVITIES
Regions is an approved DUS lender. The DUS program provides liquidity to the multi-family housing market. In connection with the DUS program, Regions services commercial mortgage loans, retains commercial MSRs and intangible assets associated with the DUS license, and assumes a loss share guarantee associated with the loans. See Note 1 "Summary of Significant Accounting Policies" in the 20172018 Annual Report on Form 10-K for additional information. Also see Note 13 herein12 for additional information related to the guarantee.
As of June 30, 2018March 31, 2019 and December 31, 2017,2018, the DUS servicing portfolio was approximately $3.0 billion and $2.9 billion, respectively.$3.6 billion. The related commercial MSRs were valued at approximately $50$55 million and $48$56 million at June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively. The estimated fair value of the loss share guarantee was valued at approximately $4 million at both June 30, 2018March 31, 2019 and December 31, 2017.2018.

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NOTE 6. GOODWILL5. LEASES
Goodwill allocatedLESSEE
Regions' lease portfolio is primarily composed of property leases that are classified as either operating or finance leases with the majority classified as operating leases. Property leases, which primarily include office locations and retail branches, typically have original lease terms ranging from 1 year to each reportable segment (each20 years, some of which may also include an option to extend the lease beyond the original lease term. In some circumstances, Regions may also have an option to terminate the lease early with advance notice. Regions includes renewal and termination options within the lease term if deemed reasonably certain of exercise. As most leases do not state an implicit rate, Regions utilizes the incremental borrowing rate based on information available at the lease commencement date to determine the present value of lease payments. Leases with a reporting unit)term of 12 months or less are not recorded on the balance sheet, and Regions continues to recognize lease payments as an expense over the lease term as appropriate. The remainder of the lease portfolio is presented as follows:comprised of equipment leases that have remaining lease terms of 1 year to 3 years.
As of March 31, 2019, assets and liabilities recorded under operating leases for properties is $430 million and $511 million, respectively. The difference between the asset and liability balance is largely the result of lease liabilities that existed prior to the January 1, 2019 adoption of the new accounting guidance for leases. The asset is recorded within other assets and the lease liability is recorded within other liabilities on the consolidated balance sheet.
Lease expense is comprised of the following:
 June 30, 2018 December 31, 2017
 (In millions)
Corporate Bank$2,474
 $2,474
Consumer Bank1,978
 1,978
Wealth Management452
 452
 $4,904
 $4,904
 Three Months Ended March 31, 2019
 (In millions)
Operating lease cost$21
Other information related to operating leases is as follows:
Three Months Ended March 31, 2019
Weighted-average remaining lease term (years)9.2
Weighted-average discount rate (%)3.3%
Future, undiscounted minimum lease payments on operating leases are as follows:
 March 31, 2019
 (In millions)
2019$70
202090
202180
202271
202363
Thereafter248
Total lease payments$622
Less: Computed interest111
Total present value of lease liabilities$511
LESSOR
Regions evaluates each reporting unit’s goodwillengages in both direct financing and sales-type leasing. Regions also has portfolios of leveraged and operating leases. These arrangements provide equipment financing for impairmentleased assets, such as vehicles and aircraft. At the commencement date, Regions (lessor) enters into an agreement with the customer (lessee) to lease the underlying equipment for a specified lease term. The lease agreements may provide customers the option to terminate the lease by buying the equipment at fair market value at the time of termination or at the end of the lease term. Regions' equipment finance asset management group performs due diligence procedures on the lease residual and overall equipment values as part of the origination process. Regions performs lease residual value reviews on an annual basisongoing basis.. In order to manage the residual value risk inherent in the fourth quarter, or more often if events or circumstances change that would more likely than not reduce the fairsome of its direct financing leases, Regions purchases residual value of a reporting unit below its carrying value. A detailed description of the Company’s methodologyinsurance from an independent third party. The sales-type, direct financing and valuation approaches used to determine the estimated fair value of each reporting unit is included inleveraged leases are recorded within loans on the consolidated financial statementsbalance sheet and operating leases are recorded within other earning assets on the consolidated balance sheet.
The following table presents a summary of the Annual Report on Form 10-K for the year ended December 31, 2017. Adverse changes in the economic environment, declining operations, or other factors could result in a decline in the implied fair value of goodwill.Regions' sales-type, direct financing, operating, and leveraged leases:

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During
 As of and For the Three Months Ended March 31, 2019
 Sales-Type and Direct Financing Operating Leveraged Total
 (In millions)
Net interest income and other financing income$8
 $3
 $3
 $14
        
Lease receivable1,046
 152
 185
 1,383
Unearned income(245) (39) (125) (409)
Guaranteed residual42
 —
 —
 42
Unguaranteed residual136
 236
 159
 531
Total net investment$979
 $349
 $219
 $1,547

The following table presents the second quarter of 2018, Regions assessed eventsminimum future payments due from customers for sales-type, direct financing, and circumstances for all three reporting units as of June 30, 2018, and through the date of the filing of this Quarterly Report on Form 10-Q that could potentially indicate goodwill impairment. The indicators assessed included:operating leases:
Recent operating performance,
Changes in market capitalization,
Regulatory actions and assessments,
Changes in the business climate (including legislation, legal factors, and competition),
Company-specific factors (including changes in key personnel, asset impairments, and business dispositions), and
Trends in the banking industry.
After assessing the indicators noted above, Regions determined that it was not more likely than not that the fair value of each of its reporting units had declined below their carrying value as of June 30, 2018. Therefore, Regions determined that a test of goodwill impairment was not required for each of Regions’ reporting units for the June 30, 2018 interim period.
 March 31, 2019
 Sales-Type and Direct Financing Operating Total
 (In millions)
2019$142
 $40
 $182
2020149
 43
 192
2021115
 30
 145
202294
 17
 111
202376
 8
 84
Thereafter470
 14
 484
 $1,046
 $152
 $1,198
NOTE 7.6. STOCKHOLDERS’ EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
PREFERRED STOCK
The following table presents a summary of the non-cumulative perpetual preferred stock:    
     June 30, 2018 December 31, 2017     March 31, 2019 December 31, 2018
Issuance Date Earliest Redemption Date Dividend Rate Liquidation Amount Carrying Amount Carrying AmountIssuance Date Earliest Redemption Date Dividend Rate Liquidation Amount Carrying Amount Carrying Amount
(Dollars in millions)(Dollars in millions)
Series A11/1/2012 12/15/2017 6.375% $500
 $387
 $387
11/1/2012 12/15/2017 6.375% $500
 $387
 $387
Series B4/29/2014 9/15/2024 6.375%
(1) 
 500
 433
 433
4/29/2014 9/15/2024 6.375%
(1) 
 500
 433
 433
   $1,000
 $820
 $820
   $1,000
 $820
 $820
_________
(1) Dividends, if declared, will be paid quarterly at an annual rate equal to (i) for each period beginning prior to September 15, 2024, 6.375%, and (ii) for each period beginning on or after September 15, 2024, three-month LIBOR plus 3.536%.
For each preferred stock issuance listed above, Regions issued depositary shares, each representing a 1/40th ownership interest in a share of the Company's preferred stock, with a liquidation preference of $1,000.00 per share of preferred stock (equivalent to $25.00 per depositary share). Dividends on the preferred stock, if declared, accrue and are payable quarterly in arrears. The preferred stock has no stated maturity and redemption is solely at Regions' option, subject to regulatory approval, in whole, or in part, after the earliest redemption date or in whole, but not in part, within 90 days following a regulatory capital treatment event for the Series A preferred stock or at any time following a regulatory capital treatment event for the Series B preferred stock.
The Board of Directors declared $16$8 million in cash dividends on both Series A and Series B Preferred Stock during the first sixthree months of 20182019 and 2017.2018.
In the event Series A and Series B preferred shares are redeemed at the liquidation amounts, $113 million and $67 million excess of the redemption amount over the carrying amount will be recognized, respectively. Approximately $100 million of Series

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A preferred dividends that were recorded as a reduction of preferred stock, including related surplus, will be recorded as a reduction to retained earnings, and approximately $13 million of related issuance costs that were recorded as a reduction of preferred stock, including related surplus, will be recorded as a reduction to net income available to common shareholders. Approximately $52 million of Series B preferred dividends that were recorded as a reduction of preferred stock, including related surplus, will be recorded as a reduction to retained earnings, and approximately $15 million of related issuance costs that were recorded as a reduction of preferred stock, including related surplus, will be recorded as a reduction to net income available to common shareholders.

32

TableOn April 30, 2019, Regions completed the issuance of Contents


$500 million in depositary shares each representing a 1/40th ownership interest in a share of the Company's 5.7% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share ("Series C Preferred Stock"), with a liquidation preference of $1,000.00 per share of Series C Preferred Stock (equivalent to $25.00 per depositary share). Dividends will be paid quarterly at an annual rate equal to (i) for each period beginning prior to August 15, 2029, 5.7%, and (ii) for each period beginning on or after August 15, 2029, three-month LIBOR plus 3.148%.
COMMON STOCK
On June 28, 2018, Regions received no objection from the Federal Reserve to its 2018 capital plan that was submitted as part of the CCAR process, which included the repurchase of common shares and a common stock dividend increase. As part of the Company's capital plan, the Board authorized a new $2.031 billion common stock repurchase plan, permitting repurchases from the beginning of the third quarter of 2018 through the second quarter of 2019. This plan is inclusive of the capital generated from the sale of Regions Insurance Group, Inc. and related affiliates during the third quarter of 2018 (see Note 2)3 "Discontinued Operations" of the Annual Report on Form 10-K for the year ended December 31, 2018 for more information). The capital plan also included a proposed increase of the quarterly common stock dividend to $0.14 per common share beginningthat began in the third quarter of 2018.
Regions declared a $0.14 per share cash dividend on the common stock for the first quarter of 2019 as compared to $0.09 per common share for the first quarter of 2018.
As of March 31, 2019, Regions has repurchased 102.6 million shares of common stock under the 2018 subject to quarterly Board approval.capital plan at a total cost of approximately $1.8 billion. The Company began to repurchase sharesalso continued open market share repurchases under thisits capital plan in the thirdsecond quarter of 2018, and as2019. As of AugustMay 7, 2018,2019, Regions had repurchased approximately 16.44.8 million shares of common stock at a total cost of approximately $308.8$74.5 million. All of these shares were immediately retired upon repurchase and, therefore, will not be included in treasury stock.
Prior to the new common stock repurchase plan, Regions had authorization to repurchase $1.47 billion in common shares. As of June 30, 2018, Regions had repurchased approximately 90.6 million shares of common stock at a total cost of approximately $1.47 billion under this plan and concluded the plan during the second quarter of 2018.
Regions’ Board declared a cash dividend for both the first and second quarter of 2018 of $0.09 per share, totaling $0.18 per common share for the first six months of 2018. The Board declared $0.07 per common share for the second quarter of 2017 as compared to $0.065 per common share for the first quarter of 2017, totaling $0.135 per common share for the first six months of 2017.
On July 25, 2018, Regions' Board approved an increase of the quarterly common stock dividend to $0.14 per share.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Activity within the balances in accumulated other comprehensive income (loss), net is shown in the following tables:
 Three Months Ended June 30, 2018
 Unrealized losses on securities transferred to held to maturity Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivative instruments designated as cash flow hedges 
Defined benefit
pension plans and other post
employment
benefits
 
Accumulated
other
comprehensive
income (loss),
net of tax
 (In millions)
Beginning of period$(31) $(463) $(151) $(506) $(1,151)
Net change1
 (67) (46) 8
 (104)
End of period$(30) $(530) $(197) $(498) $(1,255)
 Three Months Ended June 30, 2017
 Unrealized losses on securities transferred to held to maturity Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivative instruments designated as cash flow hedges Defined benefit pension plans and other post employment benefits Accumulated other comprehensive
income (loss), net of tax
 (In millions)
Beginning of period$(31) $(105) $(12) $(417) $(565)
Net change1
 50
 23
 12
 86
End of period$(30) $(55) $11
 $(405) $(479)
 Three Months Ended March 31, 2019
 Unrealized losses on securities transferred to held to maturity Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivative instruments designated as cash flow hedges Defined benefit pension plans and other post employment benefits Accumulated other comprehensive
income (loss), net of tax
 (In millions)
Beginning of period$(27) $(397) $(63) $(477) $(964)
Net change1
 245
 113
 7
 366
End of period$(26) $(152) $50
 $(470) $(598)
 Three Months Ended March 31, 2018
 Unrealized losses on securities transferred to held to maturity Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivative instruments designated as cash flow hedges Defined benefit pension plans and other post employment benefits Accumulated other comprehensive
income (loss), net of tax
 (In millions)
Beginning of period$(33) $(153) $(51) $(512) $(749)
Net change2
 (310) (100) 6
 (402)
End of period$(31) $(463) $(151) $(506) $(1,151)
 Six Months Ended June 30, 2018
 Unrealized losses on securities transferred to held to maturity Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivative instruments designated as cash flow hedges Defined benefit pension plans and other post employment benefits Accumulated other comprehensive
income (loss), net of tax
 (In millions)
Beginning of period$(33) $(153) $(51) $(512) $(749)
Net change3
 (377) (146) 14
 (506)
End of period$(30) $(530) $(197) $(498) $(1,255)


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 Six Months Ended June 30, 2017
 Unrealized losses on securities transferred to held to maturity Unrealized gains (losses) on securities available for sale Unrealized gains (losses) on derivative instruments designated as cash flow hedges Defined benefit pension plans and other post employment benefits Accumulated other comprehensive
income (loss), net of tax
 (In millions)
Beginning of period$(33) $(106) $11
 $(422) $(550)
Net change3
 51
 —
 17
 71
End of period$(30) $(55) $11
 $(405) $(479)

The following table presents amounts reclassified out of accumulated other comprehensive income (loss) for the three and six months ended June 30,March 31, 2018 and 2017:2019:
 Three Months Ended June 30, 2018 Three Months Ended June 30, 2017  
Details about Accumulated Other Comprehensive Income (Loss) Components
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(1)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(1)
 Affected Line Item in the Consolidated Statements of Income
 (In millions)  
Unrealized losses on securities transferred to held to maturity:     
 $(1) $(2) Net interest income and other financing income
 —
 1
 Tax (expense) or benefit
 $(1) $(1) Net of tax
Unrealized gains and (losses) on available for sale securities:     
 $1
 $1
 Securities gains (losses), net
 —
 —
 Tax (expense) or benefit
 $1
 $1
 Net of tax
      
Gains and (losses) on cash flow hedges:     
Interest rate contracts$5
 $22
 Net interest income and other financing income
 (1) (8) Tax (expense) or benefit
 $4
 $14
 Net of tax
      
Amortization of defined benefit pension plans and other post employment benefits:     
Actuarial gains (losses) and settlements$(10) $(19) 
(2) 
 (10) (19) Total before tax
 2
 7
 Tax (expense) or benefit
 $(8) $(12) Net of tax
      
Total reclassifications for the period$(4) $2
 Net of tax

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Six Months Ended June 30, 2018 
Six Months Ended
June 30, 2017
 Three Months Ended March 31, 2019 
Three Months Ended
March 31, 2018
 
Details about Accumulated Other Comprehensive Income (Loss) Components
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(1)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(1)
 Affected Line Item in the Consolidated Statements of Income
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(1)
 
Amount Reclassified from Accumulated Other Comprehensive Income (Loss)(1)
 Affected Line Item in the Consolidated Statements of Income
(In millions) (In millions) 
Unrealized losses on securities transferred to held to maturity:        
$(4) $(5) Net interest income and other financing income$(1) $(3) Net interest income and other financing income
1
 2
 Tax (expense) or benefit—
 1
 Tax (expense) or benefit
$(3) $(3) Net of tax$(1) $(2) Net of tax
Unrealized gains and (losses) on available for sale securities:        
$1
 $1
 Securities gains (losses), net$(7) $—
 Securities gains (losses), net
—
 —
 Tax (expense) or benefit2
 —
 Tax (expense) or benefit
$1
 $1
 Net of tax$(5) $—
 Net of tax
        
Gains and (losses) on cash flow hedges:        
Interest rate contracts$16
 $53
 Net interest income and other financing income$(8) $11
 Net interest income and other financing income
(4) (20) Tax (expense) or benefit2
 (3) Tax (expense) or benefit
$12
 $33
 Net of tax$(6) $8
 Net of tax
        
Amortization of defined benefit pension plans and other post employment benefits:        
Actuarial gains (losses) and settlements$(19) $(28) 
(2) 
(19) (28) Total before tax
Actuarial gains (losses)(2)
$(9) $(9) Total before tax
4
 10
 Tax (expense) or benefit2
 2
 Tax (expense) or benefit
$(15) $(18) Net of tax$(7) $(7) Net of tax
        
Total reclassifications for the period$(5) $13
 Net of tax$(19) $(1) Net of tax
________
(1) Amounts in parentheses indicate reductions to net income.
(2) ThisThese accumulated other comprehensive income (loss) component iscomponents are included in the computation of net periodic pension cost and isare included in other non-interest expense on the consolidated statements of income (see(See Note 98 for additional details).

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NOTE 8.7. EARNINGS (LOSS) PER COMMON SHARE
The following table sets forth the computation of basic earnings (loss) per common share and diluted earnings (loss) per common share:
 Three Months Ended March 31
 2019 2018
 (In millions, except per share amounts)
Numerator:   
Income from continuing operations$394
 $414
Preferred stock dividends(16) (16)
Income from continuing operations available to common shareholders378
 398
Income from discontinued operations, net of tax—
 —
Net income available to common shareholders$378
 $398
Denominator:   
Weighted-average common shares outstanding—basic1,019
 1,127
Potential common shares9
 14
Weighted-average common shares outstanding—diluted1,028
 1,141
Earnings per common share from continuing operations available to common shareholders(1):
   
Basic$0.37
 $0.35
Diluted0.37
 0.35
Earnings per common share from discontinued operations(1)(2)(3):
   
Basic$0.00
 $0.00
Diluted0.00
 0.00
Earnings per common share(1):
   
Basic$0.37
 $0.35
Diluted0.37
 0.35
 Three Months Ended June 30 Six Months Ended June 30
 2018 2017 2018 2017
 (In millions, except per share amounts)
Numerator:       
Income from continuing operations$378
 $316
 $792
 $609
Preferred stock dividends(16) (16) (32) (32)
Income from continuing operations available to common shareholders362
 300
 760
 577
Income (loss) from discontinued operations, net of tax(3) —
 (3) 8
Net income available to common shareholders$359
 $300
 $757
 $585
Denominator:       
Weighted-average common shares outstanding—basic1,119
 1,202
 1,123
 1,205
Potential common shares9
 10
 12
 13
Weighted-average common shares outstanding—diluted1,128
 1,212
 1,135
 1,218
Earnings per common share from continuing operations available to common shareholders(1):
       
Basic$0.32
 $0.25
 $0.68
 $0.48
Diluted0.32
 0.25
 0.67
 0.47
Earnings (loss) per common share from discontinued operations(1):
       
Basic$(0.00) $0.00
 $(0.00) $0.01
Diluted(0.00) 0.00
 (0.00) 0.01
Earnings per common share(1):
       
Basic$0.32
 $0.25
 $0.67
 $0.49
Diluted0.32
 0.25
 0.67
 0.48
_________________
(1)Certain per share amounts may not appear to reconcile due to rounding.
(2)On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc to BB&T Insurance Holdings, Inc. The transaction closed on July 2, 2018. The transaction generated an after-tax gain of $196 million. On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and Company and related affiliates to Raymond James Financial Inc. The sale closed on April 2, 2012.
(3)In a period where there is a loss from discontinued operations, basic weighted-average common shares outstanding are used to determine both basic and diluted earnings per share.

The effecteffects from the assumed exercise of 5 million and 6 million stock options, restricted stock units and awards and performance stock units for both the three and six months ended June 30,March 31, 2019 and 2018, was not included in the above computations of diluted earnings per common share because such amounts would have had an antidilutive effect on earnings per common share. The effect from the assumed exercise of 15 million stock options, restricted stock units and awards and performance stock units for both the three and six months ended June 30, 2017 wasrespectively, were not included in the above computations of diluted earnings per common share because such amounts would have had an antidilutive effect on earnings per common share.

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NOTE 9.8. PENSION AND OTHER POSTRETIREMENT BENEFITS
Regions' defined benefit pension plans cover certain employees as the pension plans are closed to new entrants. The Company also sponsors a SERP, which is a non-qualified pension plan that provides certain senior executive officers defined benefits in relation to their compensation.
Net periodic pension cost (credit) includes the following components:
 Qualified Plans Non-qualified Plans Total
 Three Months Ended June 30
 2018 2017 2018 2017 2018 2017
 (In millions)
Service cost$10
 $9
 $1
 $1
 $11
 $10
Interest cost17
 18
 1
 1
 18
 19
Expected return on plan assets(40) (36) —
 —
 (40) (36)
Amortization of actuarial loss8
 8
 2
 1
 10
 9
Settlement charge—
 —
 —
 10
 —
 10
Net periodic pension cost (credit)$(5) $(1) $4
 $13
 $(1) $12
Qualified Plans Non-qualified Plans Total Qualified Plans Non-qualified Plans Total
Six Months Ended June 30 Three Months Ended March 31
2018 2017 2018 2017 2018 2017 2019 2018 2019 2018 2019 2018
(In millions) (In millions)
Service costService cost$19
 $17
 $2
 $2
 $21
 $19
Service cost$8
 $9
 $1
 $1
 $9
 $10
Interest costInterest cost35
 36
 2
 2
 37
 38
Interest cost19
 18
 1
 1
 20
 19
Expected return on plan assetsExpected return on plan assets(77) (71) —
 —
 (77) (71)Expected return on plan assets(34) (37) —
 —
 (34) (37)
Amortization of actuarial lossAmortization of actuarial loss16
 16
 3
 2
 19
 18
Amortization of actuarial loss8
 8
 1
 1
 9
 9
Settlement charge—
 —
 —
 10
 —
 10
Net periodic pension cost (credit)Net periodic pension cost (credit)$(7) $(2) $7
 $16
 $—
 $14
Net periodic pension cost (credit)$1
 $(2) $3
 $3
 $4
 $1
The service cost component of net periodic pension cost (credit) is recorded in salaries and employee benefits on the consolidated statements of income. Components other than service cost are recorded in other non-interest expense on the consolidated statements of income.
Regions' funding policy for the qualified plans is to contribute annually at least the amount required by IRS minimum funding standards. Regions made a contribution of $100 million for the 2017 plan yearno contributions during the first quarter of 2018 and made no contributions to the plan during the first sixthree months of 2017.2019.
Regions also provides other postretirement benefits, such as defined benefit health care plans and life insurance plans, that cover certain retired employees. There was no material impact from other postretirement benefits on the consolidated financial statements for the sixthree months ended June 30, 2018March 31, 2019 or 2017.2018.

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NOTE 10.9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The following tables present the notional amount and estimated fair value of derivative instruments on a gross basis as of June 30, 2018March 31, 2019 and December 31, 2017. Beginning in the first quarter of 2018, variation margin payments made for derivatives cleared through LCH Limited are legally characterized as settlements of the derivatives. Exchange traded derivatives cleared through LCH Limited were not offset prior to January 2018.
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
Notional
Amount
 Estimated Fair Value 
Notional
Amount
 Estimated Fair Value
Notional
Amount
 Estimated Fair Value 
Notional
Amount
 Estimated Fair Value
Gain(1)
 
Loss(1)
 
Gain(1)
 
Loss(1)
Gain(1)
 
Loss(1)
 
Gain(1)
 
Loss(1)
(In millions)(In millions)
Derivatives in fair value hedging relationships:                      
Interest rate swaps$3,501
     $3,060
 $1
 $43
$3,731
     $3,231
    
Derivatives in cash flow hedging relationships:                      
Interest rate swaps8,825
     6,825
 5
 188
9,750
     8,750
    
Interest rate floors (2)
4,750
 $106
   3,250
 $72
  
Total derivatives designated as hedging instruments$12,326
     $9,885
 $6
 $231
$18,231
 $106
   $15,231
 $72
  
Derivatives not designated as hedging instruments:                      
Interest rate swaps$44,023
 $134
 $315
 $40,841
 $308
 $342
$52,521
 $261
 $200
 $49,737
 $193
 $237
Interest rate options5,950
 41
 26
 4,598
 23
 15
7,370
 25
 13
 7,178
 29
 20
Interest rate futures and forward commitments31,187
 8
 11
 20,404
 6
 5
4,182
 4
 8
 7,961
 4
 9
Other contracts6,783
 77
 71
 5,721
 51
 48
7,027
 31
 36
 7,287
 72
 74
Total derivatives not designated as hedging instruments$87,943
 $260
 $423
 $71,564
 $388
 $410
$71,100
 $321
 $257
 $72,163
 $298
 $340
Total derivatives$100,269
 $260
 $423
 $81,449
 $394
 $641
$89,331
 $427
 $257
 $87,394
 $370
 $340
                      
Total gross derivative instruments, before netting  $260
 $423
   $394
 $641
  $427
 $257
   $370
 $340
Less: Legally enforceable master netting agreements  108
 108
   107
 107
  90
 90
   108
 108
Less: Cash collateral received/posted  30
 112
   34
 131
  131
 79
   135
 71
Total gross derivative instruments, after netting (2)
  $122
 $203
   $253
 $403
Total gross derivative instruments, after netting (3)
  $206
 $88
   $127
 $161
_________
(1)Derivatives in a gain position are recorded as other assets and derivatives in a loss position are recorded as other liabilities on the consolidated balance sheets. There is no fair value presented for contracts that are characterized as settled daily.
(2)Estimated fair value includes premium and change in fair value of the interest rate floors.
(3)As of June 30,both March 31, 2019 and December 31, 2018, financial instruments posted of $49 million were not offset in the consolidated balance sheets. As of December 31, 2017, cash collateral posted of $257 million and financial instruments posted of $50$24 million were not offset in the consolidated balance sheets.
HEDGING DERIVATIVES
Derivatives entered into to manage interest rate risk and facilitate asset/liability management strategies are designated as hedging derivatives. Derivative financial instruments that qualify in a hedging relationship are classified, based on the exposure being hedged, as either fair value hedges or cash flow hedges. See Note 1 "Summary of Significant Accounting Policies" of the Annual Report on Form 10-K for the year ended December 31, 2017,2018, for additional information regarding accounting policies for derivatives.
FAIR VALUE HEDGES
Fair value hedge relationships mitigate exposure to the change in fair value of an asset, liability or firm commitment.
Regions enters into interest rate swap agreements to manage interest rate exposure on the Company’s fixed-rate borrowings. These agreements involve the receipt of fixed-rate amounts in exchange for floating-rate interest payments over the life of the agreements. Regions enters into interest rate swap agreements to manage interest rate exposure on certain of the Company's fixed-rate available for sale debt securities. These agreements involve the payment of fixed-rate amounts in exchange for floating-rate interest receipts.
CASH FLOW HEDGES
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions.
Regions enters into interest rate swap and floor agreements to manage overall cash flow changes related to interest rate risk exposure on LIBOR-based loans. The agreements effectively modify the Company’s exposure to interest rate risk by utilizing receive fixed/pay LIBOR interest rate swaps.swaps and interest rate floors.
Regions recognized an unrealized after-tax gain of $12547 million and $140$136 million in accumulated other comprehensive income (loss) at June 30,March 31, 2019 and 2018, and 2017, respectively, related to terminateddiscontinued cash flow hedges of loan instruments, which will be

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amortized into earnings in conjunction with the recognition of interest payments through 2025. Regions recognized pre-tax income

34

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of $5 million and $18$15 million during the three months ended June 30,March 31, 2019 and 2018, and 2017, respectively, and pre-tax income of $29 million and $37 million during the six months ended June 30, 2018 and 2017, respectively related to the amortization of discontinued cash flow hedges of loan instruments.
Regions expects to reclassify out of accumulated other comprehensive income (loss) and into earnings approximately $16$31 million in pre-tax expense due to the receipt or payment of interest payments on all cash flow hedges within the next twelve months. Included in this amount is $46$9 million in pre-tax net incomegains related to the amortization of discontinued cash flow hedges. The maximum length of time over which Regions is hedging its exposure to the variability in future cash flows for forecasted transactions is approximately seven years as of June 30, 2018,March 31, 2019, and a portion of these hedges are forward starting.
The following tables present the effect of hedging derivative instruments on the consolidated statements of income:income and the total amounts for the respective line items effected:

Three Months Ended March 31, 2019
Three Months Ended June 30, 2018Interest Income Interest Expense Non-interest expense
Interest Income Interest Expense Non-interest expenseDebt securities-taxable Loans, including fees Deposits Long-term borrowings Other
Debt securities-taxable Loans, including fees Deposits Long-term borrowings Other(In millions)
Total amounts presented in the consolidated statements of income$156
 $881
 $57
 $73
 $235
$165
 $981
 $108
 $102
 $224
                  
Gains/(losses) on fair value hedging relationships:                  
Interest rate contracts:                  
Amounts related to interest settlements on derivatives$(1) $—
 $—
 $(4) $—
$—
 $—
 $—
 $(6) $—
Recognized on derivatives2
 —
 —
 (9) —
(1) —
 —
 33
 —
Recognized on hedged items(2) —
 —
 8
 —
1
 —
 —
 (33) —
Net income (expense) recognized on fair value hedges$(1) $—
 $—
 $(5) $—
$—
 $—
 $—
 $(6) $—
                  
Gains/(losses) on cash flow hedging relationships: (1)
                  
Interest rate contracts:                  
Realized gains (losses) reclassified from AOCI into net income (2)
$—
 $5
 $—
 $—
 $—
$—
 $(8) $—
 $—
 $—
Net income (expense) recognized on cash flow hedges$—
 $5
 $—
 $—
 $—
$—
 $(8) $—
 $—
 $—

 Three Months Ended June 30, 2017
 Interest Income Interest Expense Non-interest expense
 Securities-taxable Loans, including fees Deposits Long-term borrowings Other
Total amounts presented in the consolidated statements of income$150
 $801
 $37
 $50
 $236
          
Gains/(losses) on fair value hedging relationships:         
Interest rate contracts:         
Amounts related to interest settlements on derivatives$(1) $—
 $—
 $—
 $—
Recognized on derivatives—
 —
 —
 —
 3
Recognized on hedged items—
 —
 —
 —
 (2)
Net income (expense) recognized on fair value hedges$(1) $—
 $—
 $—
 $1
          
Gains/(losses) on cash flow hedging relationships: (1)
         
Interest rate contracts:         
Realized gains (losses) reclassified from AOCI into net income (2)
$—
 $22
 $—
 $—
 $—
Net income (expense) recognized on cash flow hedges$—
 $22
 $—
 $—
 $—


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 Three Months Ended March 31, 2018
 Interest Income Interest Expense Non-interest expense
 Securities-taxable Loans, including fees Deposits Long-term borrowings Other
 (In millions)
Total amounts presented in the consolidated statements of income$154
 $851
 $49
 $72
 $225
          
Gains/(losses) on fair value hedging relationships:         
Interest rate contracts:         
Amounts related to interest settlements on derivatives$—
 $—
 $—
 $(1) $—
Recognized on derivatives3
 —
 —
 (32) —
Recognized on hedged items(3) —
 —
 32
 —
Net income (expense) recognized on fair value hedges$—
 $—
 $—
 $(1) $—
          
Gains/(losses) on cash flow hedging relationships: (1)
         
Interest rate contracts:         
Realized gains (losses) reclassified from AOCI into net income (2)
$—
 $11
 $—
 $—
 $—
Net income (expense) recognized on cash flow hedges$—
 $11
 $—
 $—
 $—
 Six Months Ended June 30, 2018
 Interest Income Interest Expense Non-interest expense
 Debt securities-taxable Loans, including fees Deposits Long-term borrowings Other
Total amounts presented in the consolidated statements of income$310
 $1,732
 $106
 $145
 $460
          
Gains/(losses) on fair value hedging relationships:         
Interest rate contracts:         
   Amounts related to interest settlements on derivatives$(1) $—
 $—
 $(5) $—
   Recognized on derivatives5
 —
 —
 (41) —
   Recognized on hedged items(5) —
 —
 40
 —
Net income (expense) recognized on fair value hedges$(1) $—
 $—
 $(6) $—
          
Gains/(losses) on cash flow hedging relationships: (1)
         
Interest rate contracts:         
Realized gains (losses) reclassified from AOCI into net income (2)
$—
 $16
 $—
 $—
 $—
Net income (expense) recognized on cash flow hedges$—
 $16
 $—
 $—
 $—

 Six Months Ended June 30, 2017
 Interest Income Interest Expense Non-interest expense
 Securities-taxable Loans, including fees Deposits Long-term borrowings Other
Total amounts presented in the consolidated statements of income$297
 $1,574
 $72
 $100
 $456
          
Gains/(losses) on fair value hedging relationships:         
Interest rate contracts:         
Amounts related to interest settlements on derivatives$(2) $—
 $—
 $1
 $—
Recognized on derivatives—
 —
 —
 —
 3
Recognized on hedged items—
 —
 —
 —
 (3)
Net income (expense) recognized on fair value hedges$(2) $—
 $—
 $1
 $—
          
Gains/(losses) on cash flow hedging relationships: (1)
         
Interest rate contracts:         
Realized gains (losses) reclassified from AOCI into net income (2)
$—
 $53
 $—
 $—
 $—
Net income (expense) recognized on cash flow hedges$—
 $53
 $—
 $—
 $—
_____
(1)See Note 76 for gain or (loss) recognized for cash flow hedges in AOCI.
(2)Pre-tax


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The following table presents the carrying amount and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.
June 30, 2018March 31, 2019
Hedged Items Currently Designated Hedged Items No Longer DesignatedHedged Items Currently Designated Hedged Items No Longer Designated
Carrying Amount of Assets/(Liabilities) Hedge Accounting Basis Adjustment Carrying Amount of Assets/(Liabilities) Hedge Accounting Basis AdjustmentCarrying Amount of Assets/(Liabilities) Hedge Accounting Basis Adjustment Carrying Amount of Assets/(Liabilities) Hedge Accounting Basis Adjustment
(In millions)(In millions)
Debt securities available for sale$109
 $(3) $621
 $4
$86
 $1
 $653
 $4
Long-term borrowings(3,313) 89
 —
 —
(3,652) 16
 —
 —

 December 31, 2018
 Hedged Items Currently Designated Hedged Items No Longer Designated
 Carrying Amount of Assets/(Liabilities) Hedge Accounting Basis Adjustment Carrying Amount of Assets/(Liabilities) Hedge Accounting Basis Adjustment
 (In millions)
Debt securities available for sale$85
 $—
 $604
 $4
Long-term borrowings(3,103) 50
 —
 —

DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company holds a portfolio of interest rate swaps, option contracts, and futures and forward commitments that result from transactions with its commercial customers in which they manage their risks by entering into a derivative with Regions. The Company monitors and manages the net risk in this customer portfolio and enters into separate derivative contracts in order to

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reduce the overall exposure to pre-defined limits. For both derivatives with its end customers and derivatives Regions enters into to mitigate the risk in this portfolio, the Company is subject to market risk and the risk that the counterparty will default. The contracts in this portfolio are not designated as accounting hedges and are marked-to market through earnings (in capital markets fee income and other) and included in other assets and other liabilities, as appropriate.
Regions enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. At June 30, 2018March 31, 2019 and December 31, 2017,2018, Regions had $338$320 million and $197$191 million, respectively, in total notional amount of interest rate lock commitments. Regions manages market risk on interest rate lock commitments and mortgage loans held for sale with corresponding forward sale commitments. Residential mortgage loans held for sale are recorded at fair value with changes in fair value recorded in mortgage income. Commercial mortgage loans held for sale are recorded at either the lower of cost or market or at fair value based on management's election. At June 30, 2018March 31, 2019 and December 31, 2017,2018, Regions had $692$539 million and $481$429 million, respectively, in total notional amounts related to these forward sale commitments. Changes in mark-to-market from both interest rate lock commitments and corresponding forward sale commitments related to residential mortgage loans are included in mortgage income. Changes in mark-to-market from both interest rate lock commitments and corresponding forward sale commitments related to commercial mortgage loans are included in capital markets fee income and other.
Regions has elected to account for residential MSRs at fair value with any changes to fair value being recorded within mortgage income. Concurrent with the election to use the fair value measurement method, Regions began using various derivative instruments, in the form of forward rate commitments, futures contracts, swaps and swaptions to mitigate the effect of changes in the fair value of its residential MSRs in its consolidated statements of income. As of June 30, 2018March 31, 2019 and December 31, 2017,2018, the total notional amount related to these contracts was $5.3$4.0 billion and $4.8$5.7 billion, respectively.
The following table presents the location and amount of gain or (loss) recognized in income on derivatives not designated as hedging instruments in the consolidated statements of income for the three and six months ended June 30, 2018March 31, 2019 and 2017:2018:

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Three Months Ended June 30 Six Months Ended June 30Three Months Ended March 31
Derivatives Not Designated as Hedging Instruments2018 2017 2018 20172019 2018
(In millions)(In millions)
Capital markets income:          
Interest rate swaps$5
 $4
 $12
 $6
$1
 $7
Interest rate options6
 8
 13
 10
2
 7
Interest rate futures and forward commitments1
 3
 2
 5
2
 1
Other contracts2
 (7) 4
 (15)—
 2
Total capital markets income14
 8
 31
 6
5
 17
Mortgage income:          
Interest rate swaps(6) 8
 (24) 6
20
 (18)
Interest rate options—
 (3) 3
 (1)3
 3
Interest rate futures and forward commitments(1) 1
 (4) (7)2
 (3)
Total mortgage income(7) 6
 (25) (2)25
 (18)
$7
 $14
 $6
 $4
$30
 $(1)
Credit risk, defined as all positive exposures not collateralized with cash or other assets or reserved for, at June 30, 2018March 31, 2019 and December 31, 2017,2018, totaled approximately $111$178 million and $251$130 million, respectively. These amounts represent the net credit risk on all trading and other derivative positions held by Regions.
CREDIT DERIVATIVES
Regions has both bought and sold credit protection in the form of participations on interest rate swaps (swap participations). These swap participations, which meet the definition of credit derivatives, were entered into in the ordinary course of business to serve the credit needs of customers. Swap participations, whereby Regions has purchased credit protection, entitle Regions to receive a payment from the counterparty if the customer fails to make payment on any amounts due to Regions upon early termination of the swap transaction and have maturities between 20182019 and 2026. Swap participations, whereby Regions has sold credit protection have maturities between 20182019 and 2038. For contracts where Regions sold credit protection, Regions would be required to make payment to the counterparty if the customer fails to make payment on any amounts due to the counterparty upon early termination of the swap transaction. Regions bases the current status of the prepayment/performance risk on bought and sold credit derivatives on recently issued internal risk ratings consistent with the risk management practices of unfunded commitments.
Regions’ maximum potential amount of future payments under these contracts as of June 30, 2018March 31, 2019 was approximately $2.7 billion.$563 million. This scenario would only occur if variable interest rates were at zero percent and all counterparties defaulted with zero recovery. The fair value of sold protection at June 30,March 31, 2019 and 2018 and 2017 was immaterial. In transactions where Regions has sold credit protection, recourse to collateral associated with the original swap transaction is available to offset some or all of Regions’ obligation.

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Regions has bought credit protection in the form of credit default indices. These indices, which meet the definition of credit derivatives, were entered into in the ordinary course of business to economically hedge credit spread risk in commercial mortgage loans held for sale whereby the fair value option has been elected. Credit derivatives, whereby Regions has purchased credit protection, entitle Regions to receive a payment from the counterparty if losses on the underlying index exceed a certain threshold, dependent upon the tranche rating of the capital structure.
CONTINGENT FEATURES
Certain of Regions’ derivative instrument contracts with broker-dealers contain credit-related termination provisions and/or credit-related provisions regarding the posting of collateral, allowing those broker-dealers to terminate the contracts in the event that Regions’ and/or Regions Bank’s credit ratings falls below specified ratings from certain major credit rating agencies. The aggregate fair values of all derivative instruments with any credit-risk-related contingent features that were in a liability position on June 30, 2018March 31, 2019 and December 31, 2017,2018, were $71$50 million and $91$45 million, respectively, for which Regions had posted collateral of $71$49 million and $90$43 million, respectively, in the normal course of business.

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NOTE 11.10. FAIR VALUE MEASUREMENTS
See Note 1 “Summary of Significant Accounting Policies” to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 20172018 for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis. Assets and liabilities measured at fair value rarely transfer between Level 1 and Level 2 measurements. There were no such transfers during the six month periods ended June 30, 2018 and 2017. Marketable equity securities and debt securities available for sale may be periodically transferred to or from Level 3 valuation based on management’s conclusion regarding the observability of inputs used in valuing the securities. Such transfers are accounted for as if they occur at the beginning of a reporting period.
The following table presents assets and liabilities measured at estimated fair value on a recurring basis and non-recurring basis as of June 30, 2018March 31, 2019 and December 31, 2017:2018:
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
Level 1 Level 2 
Level 3(1)
 
Total
Estimated Fair Value
  Level 1 Level 2 
Level 3(1)
 
Total
Estimated Fair Value
Level 1 Level 2 
Level 3(1)
 
Total
Estimated Fair Value
  Level 1 Level 2 
Level 3(1)
 
Total
Estimated Fair Value
(In millions)(In millions)
Recurring fair value measurements                                
Debt securities available for sale:                                
U.S. Treasury securities$307
 $—
 $—
 $307
  $331
 $—
 $—
 $331
$174
 $—
 $—
 $174
  $280
 $—
 $—
 $280
Federal agency securities—
 48
 —
 48
  —
 28
 —
 28
—
 45
 —
 45
  —
 43
 —
 43
Mortgage-backed securities (MBS):                                
Residential agency—
 16,855
 —
 16,855
  —
 17,431
 —
 17,431
—
 17,441
 —
 17,441
  —
 16,624
 —
 16,624
Residential non-agency—
 —
 2
 2
  —
 —
 3
 3
—
 —
 2
 2
  —
 —
 2
 2
Commercial agency—
 3,737
 —
 3,737
  —
 3,714
 —
 3,714
—
 4,177
 —
 4,177
  —
 3,835
 —
 3,835
Commercial non-agency—
 792
 —
 792
  —
 788
 —
 788
—
 730
 —
 730
  —
 760
 —
 760
Corporate and other debt securities—
 1,191
 3
 1,194
  —
 1,105
 3
 1,108
—
 1,211
 6
 1,217
  —
 1,182
 3
 1,185
Total debt securities available for sale$307
 $22,623
 $5
 $22,935
  $331
 $23,066
 $6
 $23,403
$174
 $23,604
 $8
 $23,786
  $280
 $22,444
 $5
 $22,729
Loans held for sale$—
 $319
 $24
 $343
  $—
 $325
 $—
 $325
$—
 $284
 $—
 $284
  $—
 $251
 $—
 $251
Marketable equity securities(2)
$423
 $—
 $—
 $423
  $414
 $—
 $—
 $414
$348
 $—
 $—
 $348
  $429
 $—
 $—
 $429
Residential mortgage servicing rights$—
 $—
 $362
 $362
  $—
 $—
 $336
 $336
$—
 $—
 $386
 $386
  $—
 $—
 $418
 $418
Derivative assets:                                
Interest rate swaps$—
 $134
 $—
 $134
  $—
 $314
 $—
 $314
$—
 $261
 $—
 $261
  $—
 $193
 $—
 $193
Interest rate options—
 31
 10
 41
  —
 18
 5
 23
—
 123
 8
 131
  —
 96
 5
 101
Interest rate futures and forward commitments—
 8
 —
 8
  —
 6
 —
 6
—
 4
 —
 4
  —
 4
 —
 4
Other contracts1
 76
 —
 77
  2
 49
 —
 51
1
 30
 —
 31
  2
 70
 —
 72
Total derivative assets$1
 $249
 $10
 $260
  $2
 $387
 $5
 $394
$1
 $418
 $8
 $427
  $2
 $363
 $5
 $370
Derivative liabilities:                                
Interest rate swaps$—
 $315
 $—
 $315
  $—
 $573
 $—
 $573
$—
 $200
 $—
 $200
  $—
 $237
 $—
 $237
Interest rate options—
 26
 —
 26
  —
 15
 —
 15
—
 13
 —
 13
  —
 20
 —
 20
Interest rate futures and forward commitments—
 11
 —
 11
  —
 5
 —
 5
—
 8
 —
 8
  —
 9
 —
 9
Other contracts1
 68
 2
 71
  2
 46
 —
 48
1
 31
 4
 36
  2
 69
 3
 74
Total derivative liabilities$1
 $420
 $2
 $423
  $2
 $639
 $—
 $641
$1
 $252
 $4
 $257
  $2
 $335
 $3
 $340
Non-recurring fair value measurements                                
Loans held for sale$—
 $—
 $10
 $10
  $—
 $—
 $20
 $20
$—
 $—
 $14
 $14
  $—
 $—
 $10
 $10
Equity investments without a readily determinable fair value(3)
—
 —
 14
 14
  —
 —
 —
 —
Foreclosed property and other real estate—
 21
 9
 30
  —
 24
 9
 33
—
 19
 7
 26
  —
 16
 3
 19
_________
(1)All following disclosures related to Level 3 recurring and non-recurring assets do not include those deemed to be immaterial.
(2)Marketable equity securities were reclassified from trading account securities and securities available for sale to other earning assets, beginning in the first quarter of 2018, with the adoption of new accounting guidance. Prior periods have been reclassified to conform to current period presentation.

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(3)With the adoption of new accounting guidance, effective January 1, 2018, equity investments without a readily determinable fair value are required to be adjusted prospectively to estimated fair value when an observable price transaction for a same or similar investment with the same issuer occurs.
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, derivatives included in Levels 2 and 3 are used by ALCO in a holistic approach to managing price fluctuation risks.

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The following tables illustrate rollforwards for all material assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30,March 31, 2019 and 2018, and 2017, respectively. The net changes in realized gains (losses) included in earnings related to Level 3 assets and liabilities held at June 30,March 31, 2019 and 2018 and 2017 are not material.
 Three Months Ended June 30, 2018
                  
 Opening
Balance April 1, 2018		 
Total Realized /
Unrealized
Gains or Losses
 Purchases Sales Issuances Settlements Transfers
into
Level 3		 Transfers
out of
Level 3		 Closing
Balance June 30, 2018
  
Included
in
Earnings
 
Included
in Other
Compre-
hensive
Income
(Loss)
 
 (In millions)
Level 3 Instruments Only                   
Residential mortgage servicing rights$356
 (3)
(1)  
—
 9
 —
 —
 —
 —
 —
 $362
 Three Months Ended June 30, 2017
                  
 Opening
Balance April 1, 2017		 Total Realized /
Unrealized
Gains or Losses		 Purchases Sales Issuances Settlements Transfers
into
Level 3		 Transfers
out of
Level 3		 Closing
Balance June 30, 2017
  Included
in Earnings		 Included
in Other
Compre-
hensive
Income
(Loss)		 
 (In millions)
Level 3 Instruments Only                   
Residential mortgage servicing rights$326
 (19)
(1)  
—
 39
 —
 —
 —
 —
 —
 $346

Six Months Ended June 30, 2018Three Months Ended March 31, 2019
Opening
Balance
January 1,
2018		 
Total Realized /
Unrealized
Gains or Losses
 Purchases Sales Issuances Settlements Transfers
into
Level 3		 Transfers
out of
Level 3		 Closing
Balance June 30, 2018		Opening
Balance
January 1,
2019		 
Total Realized /
Unrealized
Gains or Losses
 Purchases Sales Issuances Settlements Transfers
into
Level 3		 Transfers
out of
Level 3		 Closing
Balance March 31, 2019
 
Included
in
Earnings
 
Included
in Other
Compre-
hensive
Income
(Loss)
  
Included
in
Earnings
 
Included
in Other
Compre-
hensive
Income
(Loss)
 
(In millions)(In millions)
Level 3 Instruments Only                                      
Residential mortgage servicing rights$336
 9
(1)  
—
 17
 —
 —
 —
 —
 —
 $362
$418
 (39)
(1)  
7
 —
 —
 —
 —
 —
 —
 $386
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Six Months Months Ended June 30, 2017Three Months Ended March 31, 2018
Opening
Balance
January 1,
2017		 Total Realized /
Unrealized
Gains or Losses		 Purchases Sales Issuances Settlements Transfers
into
Level 3		 Transfers
out of
Level 3		 Closing
Balance June 30, 2017		Opening
Balance
January 1,
2018		 Total Realized /
Unrealized
Gains or Losses		 Purchases Sales Issuances Settlements Transfers
into
Level 3		 Transfers
out of
Level 3		 Closing
Balance March 31, 2018
 Included
in Earnings		 Included
in Other
Compre-
hensive
Income
(Loss)		  Included
in Earnings		 Included
in Other
Compre-
hensive
Income
(Loss)		 
(In millions)(In millions)
Level 3 Instruments Only                                      
Residential mortgage servicing rights$324
 (25)
(1)  
—
 47
 —
 —
 —
 —
 —
 $346
$336
 12
(1)  
—
 8
 —
 —
 —
 —
 —
 $356
_________
(1) Included in mortgage income.

The following table presents the fair value adjustments related to non-recurring fair value measurements:
Three Months Ended June 30 Six Months Ended June 30Three Months Ended March 31
2018 2017 2018 20172019 2018
(In millions)(In millions)
Loans held for sale$(3) $(3) $(6) $(7)$(2) $(3)
Foreclosed property and other real estate(5) (11) (10) (15)(8) (5)
Equity investments without a readily determinable fair value1
 —
 8
 —
The following tables present detailed information regarding material assets and liabilities measured at fair value using significant unobservable inputs (Level 3) as of June 30, 2018,March 31, 2019, and December 31, 2017.2018. The tables include the valuation techniques and the significant unobservable inputs utilized. The range of each significant unobservable input as well as the weighted-average within the range utilized at June 30, 2018,March 31, 2019, and December 31, 2017,2018, are included. Following the tables are descriptions of the valuation techniques and the sensitivity of the techniques to changes in the significant unobservable inputs.
 June 30,March 31, 2019
Level 3
Estimated Fair Value at
March 31, 2019
Valuation
Technique
Unobservable
Input(s)
Quantitative Range of
Unobservable Inputs and
(Weighted-Average)
(Dollars in millions)
Recurring fair value measurements:
Residential mortgage servicing rights(1)
$386Discounted cash flowWeighted-average CPR (%)4.6% - 45.5% (10.4%)
OAS (%)5.7% - 15.0% (7.6%)

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_________
(1) See Note 4 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.

December 31, 2018
 Level 3
Estimated Fair Value at
June 30,December 31, 2018		 
Valuation
Technique
 
Unobservable
Input(s)
 
Quantitative Range of
Unobservable Inputs and
(Weighted-Average)
 (Dollars in millions)
Recurring fair value measurements:       
Residential mortgage servicing rights(1)
$362418 Discounted cash flow Weighted-average CPR (%) 3.5%4.4% - 28.0% (8.6%42.6% (9.0%)
     OAS (%) 7.5%5.7% - 15.0% (8.3%)
_________
(1) See Note 5 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.

December 31, 2017
Level 3
Estimated Fair Value at
December 31, 2017
Valuation
Technique
Unobservable
Input(s)
Quantitative Range of
Unobservable Inputs and
(Weighted-Average)
(Dollars in millions)
Recurring fair value measurements:
Residential mortgage servicing rights(1)
$336Discounted cash flowWeighted-average CPR (%)7.9% - 28.1% (9.9%)
OAS (%)8.1% - 15.0% (8.6%(7.6%)
_________
(1) See Note 7 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 20172018 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.


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RECURRING FAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS
Residential mortgage servicing rights
The significant unobservable inputs used in the fair value measurement of residential MSRs are OAS and CPR. This valuation requires generating cash flow projections over multiple interest rate scenarios and discounting those cash flows at a risk-adjusted rate. Additionally, the impact of prepayments and changes in the OAS are based on a variety of underlying inputs including servicing costs. Increases or decreases to the underlying cash flow inputs will have a corresponding impact on the value of the MSR asset. The net change in unrealized gains (losses) included in earnings related to MSRs held at period end are disclosed as the changes in valuation inputs or assumptions included in the MSR rollforward table in Note 5.4. See Note 54 for these amounts and additional disclosures related to assumptions used in the fair value calculation for MSRs.
FAIR VALUE OPTION
Regions has elected the fair value option for all FNMA and FHLMC eligible residential mortgage loans and certain commercial mortgage loans originated with the intent to sell. These elections allow for a more effective offset of the changes in fair values of the loans and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting. Regions has not elected the fair value option for other loans held for sale primarily because they are not economically hedged using derivative instruments. Fair values of residential mortgage loans held for sale are based on traded market prices of similar assets where available and/or discounted cash flows at market interest rates, adjusted for securitization activities that include servicing values and market conditions, and are recorded in loans held for sale in the consolidated balance sheets. Fair values of commercial mortgage loans held for sale are based on traded market prices for comparable commercial mortgage-backed securitizations, into which the loans will be placed, adjusted for movements of interest rates and credit spreads.
The Company also elected to measure certain commercial and industrial loans held for sale at fair value, as these loans are actively traded in the secondary market. The Company is able to obtain fair value estimates for substantially all of these loans through a third party valuation service that is broadly used by market participants. While most of the loans are traded in the market, the volume and level of trading activity is subject to variability and the loans are not exchange-traded. Therefore, these loans have been classified as Level 2.
The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for mortgage loans held for sale measured at fair value:
 June 30, 2018 December 31, 2017
 
Aggregate
Fair Value
 
Aggregate
Unpaid
Principal
 
Aggregate Fair
Value Less
Aggregate
Unpaid
Principal
 
Aggregate
Fair Value
 
Aggregate
Unpaid
Principal
 
Aggregate Fair
Value Less
Aggregate
Unpaid
Principal
 (In millions)
Mortgage loans held for sale, at fair value$340
 $329
 $11
 $325
 $314
 $11
Commercial and industrial loans held for sale, at fair value3
 3
 —
 —
 —
 —
 March 31, 2019 December 31, 2018
 
Aggregate
Fair Value
 
Aggregate
Unpaid
Principal
 
Aggregate Fair
Value Less
Aggregate
Unpaid
Principal
 
Aggregate
Fair Value
 
Aggregate
Unpaid
Principal
 
Aggregate Fair
Value Less
Aggregate
Unpaid
Principal
 (In millions)
Mortgage loans held for sale, at fair value$284
 $274
 $10
 $251
 $242
 $9
Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest income on loans held for sale in the consolidated statements of income. The following table details net gains and losses resulting from changes in fair value of these loans, which were recorded in mortgage income in the consolidated statements of income during the three and six months ended June 30, 2018March 31, 2019 and 2017.2018. These changes in fair value are mostly offset by economic hedging activities. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.
 Net gains (losses) resulting from changes in fair value
 Three Months Ended June 30 Six Months Ended June 30
 2018 2017 2018 2017
 (In millions)
Mortgage loans held for sale, at fair value$3
 $2
 $—
 $8
Commercial and industrial loans held for sale, at fair value—
 —
 —
 —

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 Net gains (losses) resulting from changes in fair value
 Three Months Ended March 31
 2019 2018
 (In millions)
Mortgage loans held for sale, at fair value$—
 $(3)
The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial instruments as of June 30, 2018March 31, 2019 are as follows:
June 30, 2018March 31, 2019
Carrying
Amount
 
Estimated
Fair
Value(1)
 Level 1 Level 2 Level 3
Carrying
Amount
 
Estimated
Fair
Value(1)
 Level 1 Level 2 Level 3
(In millions)(In millions)
Financial assets:                  
Cash and cash equivalents$4,286
 $4,286
 $4,286
 $—
 $—
$3,807
 $3,807
 $3,807
 $—
 $—
Debt securities held to maturity1,568
 1,530
 —
 1,530
 —
1,451
 1,454
 —
 1,454
 —
Debt securities available for sale22,935
 22,935
 307
 22,623
 5
23,786
 23,786
 174
 23,604
 8
Loans held for sale490
 490
 —
 451
 39
318
 318
 —
 302
 16
Loans (excluding leases), net of unearned income and allowance for loan losses(2)(3)
78,586
 77,338
 —
 —
 77,338
82,379
 81,608
 —
 —
 81,608
Other earning assets(4)
1,252
 1,252
 423
 829
 —
1,268
 1,268
 348
 920
 —
Derivative assets260
 260
 1
 249
 10
427
 427
 1
 418
 8
Financial liabilities:                  
Derivative liabilities423
 423
 1
 420
 2
257
 257
 1
 252
 4
Deposits95,283
 95,299
 —
 95,299
 —
95,720
 95,772
 —
 95,772
 —
Short-term borrowings1,400
 1,400
 —
 1,400
 —
1,600
 1,600
 —
 1,600
 —
Long-term borrowings9,890
 10,158
 —
 9,838
 320
12,957
 13,328
 —
 12,400
 928
Loan commitments and letters of credit75
 405
 —
 —
 405
73
 488
 —
 —
 488
_________
(1)Estimated fair values are consistent with an exit price concept. The assumptions used to estimate the fair values are intended to approximate those that a market participant would use in a hypothetical orderly transaction. In estimating fair value, the Company maintains a corporate governance program to makemakes adjustments for estimated changes in interest rates, market liquidity and credit spreads in the periods they are deemed to have occurred.
(2)The estimated fair value of portfolio loans assumes sale of the loans to a third-party financial investor. Accordingly, the value to the Company if the loans were held to maturity is not reflected in the fair value estimate. In the current whole loan market, financial investors are generally requiring a higher rate of return than the return inherent in loans if held to maturity. The fair value discount on the loan portfolio's net carrying amount at June 30, 2018March 31, 2019 was $1.3 billion$771 million or 1.60.9 percent.
(3)Excluded from this table is the capital lease carrying amount of $1.1$1.2 billion at June 30, 2018.March 31, 2019.
(4)Excluded from this table is the operating lease carrying amount of $420$349 million at June 30, 2018.March 31, 2019.


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The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company's financial instruments as of December 31, 20172018 are as follows:
December 31, 2017December 31, 2018
Carrying
Amount
 
Estimated
Fair
Value(1)
 Level 1 Level 2 Level 3
Carrying
Amount
 
Estimated
Fair
Value(1)
 Level 1 Level 2 Level 3
(In millions)(In millions)
Financial assets:                  
Cash and cash equivalents$3,981
 $3,981
 $3,981
 $—
 $—
$3,538
 $3,538
 $3,538
 $—
 $—
Debt securities held to maturity1,658
 1,667
 —
 1,667
 —
1,482
 1,460
 —
 1,460
 —
Debt securities available for sale23,403
 23,403
 331
 23,066
 6
22,729
 22,729
 280
 22,444
 5
Loans held for sale348
 348
 —
 328
 20
304
 304
 —
 287
 17
Loans (excluding leases), net of unearned income and allowance for loan losses(2)(3)
77,942
 76,871
 —
 —
 76,871
81,054
 79,386
 —
 —
 79,386
Other earning assets(4)
1,402
 1,402
 414
 988
 —
1,350
 1,350
 429
 921
 —
Derivative assets394
 394
 2
 387
 5
370
 370
 2
 363
 5
Financial liabilities:                  
Derivative liabilities641
 641
 2
 639
 —
340
 340
 2
 335
 3
Deposits96,889
 96,927
 —
 96,927
 —
94,491
 94,531
 —
 94,531
 —
Short-term borrowings500
 500
 —
 500
 —
1,600
 1,600
 —
 1,600
 —
Long-term borrowings8,132
 8,517
 —
 7,757
 760
12,424
 12,610
 —
 12,408
 202
Loan commitments and letters of credit79
 540
 —
 —
 540
79
 435
 —
 —
 435
_________
(1)Estimated fair values are consistent with an exit price concept. The assumptions used to estimate the fair values are intended to approximate those that a market participant would use in a hypothetical orderly transaction. In estimating fair value, the Company maintains a corporate governance program to makemakes adjustments for estimated changes in interest rates, market liquidity and credit spreads in the periods they are deemed to have occurred.
(2)The estimated fair value of portfolio loans assumes sale of the loans to a third-party financial investor. Accordingly, the value to the Company if the loans were held to maturity is not reflected in the fair value estimate. In the current whole loan market, financial investors are generally requiring a higher rate of return than the return inherent in loans if held to maturity. The fair value discount on the loan portfolio's net carrying amount at December 31, 20172018 was $1.1$1.7 billion or 1.42.1 percent.
(3)Excluded from this table is the capital lease carrying amount of $1.1 billion at December 31, 2017.2018.
(4)
Excluded from this table is the operating lease carrying amount of $489369 million at December 31, 2017.2018.

NOTE 12.11. BUSINESS SEGMENT INFORMATION
Each of Regions’ reportable segments is a strategic business unit that serves specific needs of Regions’ customers based on the products and services provided. The segments are based on the manner in which management views the financial performance of the business. The Company has three reportable segments: Corporate Bank, Consumer Bank, and Wealth Management, with the remainder split between Discontinued Operations and Other. Additional information about the Company's reportable segments is included in Regions' Annual Report on Form 10-K for the year ended December 31, 2017.2018.
The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable segment may be periodically revised.
Discontinued operations includes all brokerage and investment activities associated with the sale of Morgan Keegan which closed on April 2, 2012, as well as the pending sale of Regions Insurance Group, Inc. and related affiliates, which closed on July 2, 2018. See Note 23 "Discontinued Operations" to the consolidated financial statements in the Annual Report on Form 10-K for relatedthe year ended December 31, 2018 for further discussion.
The following tables present financial information for each reportable segment for the period indicated.

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 Three Months Ended June 30, 2018
 Corporate Bank 
Consumer
Bank
 
Wealth
Management
 Other 
Continuing
Operations
 
Discontinued
Operations
 Consolidated
 (In millions)
Net interest income and other financing income (loss)$340
 $565
 $49
 $(28) $926
 $—
 $926
Provision (credit) for loan losses53
 75
 4
 (72) 60
 —
 60
Non-interest income136
 289
 80
 7
 512
 35
 547
Non-interest expense234
 523
 86
 68
 911
 38
 949
Income (loss) before income taxes189
 256
 39
 (17) 467
 (3) 464
Income tax expense (benefit)47
 64
 9
 (31) 89
 —
 89
Net income (loss)$142
 $192
 $30
 $14
 $378
 $(3) $375
Average assets$51,076
 $34,862
 $2,317
 $34,547
 $122,802
 $158
 $122,960
 Three Months Ended June 30, 2017
 Corporate Bank Consumer Bank 
Wealth
Management
 Other 
Continuing
Operations
 
Discontinued
Operations
 Consolidated
 (In millions)
Net interest income and other financing income (loss)$360
 $532
 $47
 $(57) $882
 $—
 $882
Provision (credit) for loan losses66
 71
 5
 (94) 48
 —
 48
Non-interest income126
 287
 74
 3
 490
 36
 526
Non-interest expense219
 516
 82
 58
 875
 36
 911
Income (loss) before income taxes201
 232
 34
 (18) 449
 —
 449
Income tax expense (benefit)76
 88
 14
 (45) 133
 —
 133
Net income (loss)$125
 $144
 $20
 $27
 $316
 $—
 $316
Average assets$52,056
 $34,849
 $2,483
 $34,295
 $123,683
 $160
 $123,843
 Six Months Ended June 30, 2018
 Corporate Bank Consumer Bank 
Wealth
Management
 Other 
Continuing
Operations
 
Discontinued
Operations
 Consolidated
 (In millions)
Net interest income and other financing income (loss)$680
 $1,107
 $98
 $(50) $1,835
 $—
 $1,835
Provision (credit) for loan losses108
 151
 9
 (218) 50
 —
 50
Non-interest income280
 565
 156
 18
 1,019
 69
 1,088
Non-interest expense466
 1,046
 177
 106
 1,795
 72
 1,867
Income (loss) before income taxes386
 475
 68
 80
 1,009
 (3) 1,006
Income tax expense (benefit)96
 119
 17
 (15) 217
 —
 217
Net income (loss)$290
 $356
 $51
 $95
 $792
 $(3) $789
Average assets$51,056
 $34,906
 $2,338
 $34,761
 $123,061
 $165
 $123,226

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Six Months Ended June 30, 2017Three Months Ended March 31, 2019
Corporate Bank Consumer Bank 
Wealth
Management
 Other 
Continuing
Operations
 
Discontinued
Operations
 ConsolidatedCorporate Bank Consumer Bank 
Wealth
Management
 Other 
Continuing
Operations
 
Discontinued
Operations
 Consolidated
(In millions)(In millions)
Net interest income and other financing income (loss)$700
 $1,051
 $93
 $(103) $1,741
 $—
 $1,741
$358
 $576
 $47
 $(33) $948
 $—
 $948
Provision (credit) for loan losses134
 145
 11
 (172) 118
 —
 118
43
 83
 4
 (39) 91
 —
 91
Non-interest income249
 562
 148
 5
 964
 73
 1,037
131
 281
 78
 12
 502
 —
 502
Non-interest expense432
 1,031
 166
 89
 1,718
 60
 1,778
232
 514
 88
 26
 860
 —
 860
Income (loss) before income taxes383
 437
 64
 (15) 869
 13
 882
214
 260
 33
 (8) 499
 —
 499
Income tax expense (benefit)146
 166
 27
 (79) 260
 5
 265
53
 65
 8
 (21) 105
 —
 105
Net income (loss)$237
 $271
 $37
 $64
 $609
 $8
 $617
$161
 $195
 $25
 $13
 $394
 $—
 $394
Average assets$52,197
 $34,918
 $2,500
 $34,550
 $124,165
 $159
 $124,324
$53,851
 $35,401
 $2,203
 $34,088
 $125,543
 $—
 $125,543
 Three Months Ended March 31, 2018
 Corporate Bank Consumer Bank 
Wealth
Management
 Other 
Continuing
Operations
 
Discontinued
Operations
 Consolidated
 (In millions)
Net interest income and other financing income (loss)$337
 $531
 $49
 $(8) $909
 $—
 $909
Provision (credit) for loan losses46
 77
 4
 (137) (10) —
 (10)
Non-interest income144
 277
 77
 9
 507
 34
 541
Non-interest expense229
 517
 90
 48
 884
 34
 918
Income (loss) before income taxes206
 214
 32
 90
 542
 —
 542
Income tax expense (benefit)52
 54
 8
 14
 128
 —
 128
Net income (loss)$154
 $160
 $24
 $76
 $414
 $—
 $414
Average assets$51,037
 $34,951
 $2,359
 $34,977
 $123,324
 $170
 $123,494
NOTE 13.12. COMMITMENTS, CONTINGENCIES AND GUARANTEES
COMMERCIAL COMMITMENTS
Regions issues off-balance sheet financial instruments in connection with lending activities. The credit risk associated with these instruments is essentially the same as that involved in extending loans to customers and is subject to Regions’ normal credit approval policies and procedures. Regions measures inherent risk associated with these instruments by recording a reserve for unfunded commitments based on an assessment of the likelihood that the guarantee will be funded and the creditworthiness of the customer or counterparty. Collateral is obtained based on management’s assessment of the creditworthiness of the customer.
Credit risk associated with these instruments is represented by the contractual amounts indicated in the following table:
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions)(In millions)
Unused commitments to extend credit$49,214
 $45,705
$51,608
 $51,406
Standby letters of credit1,366
 1,348
1,396
 1,428
Commercial letters of credit59
 76
124
 44
Liabilities associated with standby letters of credit27
 26
24
 28
Assets associated with standby letters of credit28
 28
25
 29
Reserve for unfunded credit commitments48
 53
50
 51
Unused commitments to extend credit—To accommodate the financial needs of its customers, Regions makes commitments under various terms to lend funds to consumers, businesses and other entities. These commitments include (among others) credit

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card and other revolving credit agreements, term loan commitments and short-term borrowing agreements. Many of these loan commitments have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being funded, the total commitment amounts do not necessarily represent future liquidity requirements.
Standby letters of credit—Standby letters of credit are also issued to customers, which commit Regions to make payments on behalf of customers if certain specified future events occur. Regions has recourse against the customer for any amount required to be paid to a third party under a standby letter of credit. Historically, a large percentage of standby letters of credit expire without being funded. The contractual amount of standby letters of credit represents the maximum potential amount of future payments Regions could be required to make and represents Regions’ maximum credit risk.
Commercial letters of credit—Commercial letters of credit are issued to facilitate foreign or domestic trade transactions for customers. As a general rule, drafts will be drawn when the goods underlying the transaction are in transit.
LEGAL CONTINGENCIES
Regions and its subsidiaries are subject to loss contingencies related to litigation, claims, investigations and legal and administrative cases and proceedings arising in the ordinary course of business. Regions evaluates these contingencies based on information currently available, including advice of counsel. Regions establishes accruals for those matters when a loss contingency is considered probable and the related amount is reasonably estimable. Any accruals are periodically reviewed and may be adjusted

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as circumstances change. Some of Regions' exposure with respect to loss contingencies may be offset by applicable insurance coverage. In determining the amounts of any accruals or estimates of possible loss contingencies however, Regions does not take into account the availability of insurance coverage. To the extent that Regions has an insurance recovery, the proceeds are recorded in the period the recovery is received.
In addition, Regions has agreed to indemnify Raymond James for all legal matters resulting from pre-closing activities in conjunction with the sale of Morgan Keegan and recorded an indemnification obligation at fair value in the second quarter of 2012.
When it is practicable, Regions estimates possible loss contingencies, whether or not there is an accrued probable loss. When Regions is able to estimate such possible losses, and when it is reasonably possible Regions could incur losses in excess of amounts accrued, Regions discloses the aggregate estimation of such possible losses. Regions currently estimates that it is reasonably possible that it may experience losses in excess of what Regions has accrued in an aggregate amount of up to approximately $20 million as of June 30, 2018,March 31, 2019, with it also being reasonably possible that Regions could incur no losses in excess of amounts accrued. However, as available information changes, the matters for which Regions is able to estimate, as well as the estimates themselves will be adjusted accordingly. The reasonably possible estimate includes legal contingencies that are subject to the indemnification agreement with Raymond James.
Assessments of litigation and claims exposure are difficult because they involve inherently unpredictable factors including, but not limited to, the following: whether the proceeding is in the early stages; whether damages are unspecified, unsupported, or uncertain; whether there is a potential for punitive or other pecuniary damages; whether the matter involves legal uncertainties, including novel issues of law; whether the matter involves multiple parties and/or jurisdictions; whether discovery has begun or is not complete; whether meaningful settlement discussions have commenced; and whether the lawsuit involves class allegations. Assessments of class action litigation, which is generally more complex than other types of litigation, are particularly difficult, especially in the early stages of the proceeding when it is not known whether a class will be certified or how a potential class, if certified, will be defined. As a result, Regions may be unable to estimate reasonably possible losses with respect to some of the matters disclosed below, and the aggregated estimated amount discussed above may not include an estimate for every matter disclosed below.
In July 2006, Morgan Keegan and a former Morgan Keegan analyst were named as defendants in a lawsuit filed by a Canadian insurance and financial services company and its American subsidiary in the Circuit Court of Morris County, New Jersey. Plaintiffs alleged civil claims under the RICO Act and claims for commercial disparagement, tortious interference with contractual relationships, tortious interference with prospective economic advantage and common law conspiracy. Plaintiffs allege that defendants engaged in a multi-year conspiracy to publish and disseminate false and defamatory information about plaintiffs to improperly drive down plaintiffs’ stock price, so that others could profit from short positions. Plaintiffs allege that defendants’ actions damaged their reputations and harmed their business relationships. Plaintiffs seek monetary damages for a number of categories of alleged damages, including lost insurance business, lost financings and increased financing costs, increased audit fees and directors and officers insurance premiums and lost acquisitions. In September 2012, the trial court dismissed the case with prejudice. Plaintiffs filed an appeal, and in April 2017, the appellate court affirmed the dismissal of the plaintiffs’ claims under the RICO Act. The appellate court reversed the trial court’s dismissal of the commercial disparagement and tortious interference claims and remanded those claims but limited the plaintiffs’ damages. Plaintiffs filed an appeal with the Supreme Court of New Jersey in May 2017, and in October 2017, that court denied the plaintiffs' petition and remanded the case to the trial court. The trial date previously set for early June 2018 has been continued to September 2018. This matter is subject to the indemnification agreement with Raymond James.
Regions is involved in formal and informal information-gathering requests, investigations, reviews, examinations and proceedings by various governmental regulatory agencies, law enforcement authorities and self-regulatory bodies regarding Regions’ business, Regions' business practices and policies, and the conduct of persons with whom Regions does business. Additional inquiries will arise from time to time. In connection with those inquiries, Regions receives document requests, subpoenas and other requests for information. The inquiries, including thosethe one described below, could develop into administrative, civil or criminal proceedings or enforcement actions that could result in consequences that have a material effect on Regions' consolidated financial position, results of operations or cash flows as a whole. Such consequences could include adverse judgments, findings, settlements, penalties, fines, orders, injunctions, restitution, or alterations in our business practices, and could result in additional expenses and collateral costs, including reputational damage.    
Regions is cooperating with an investigation by the United States Attorney’s Office for the Eastern District of New York pertaining to Regions' banking relationship with a former customer and accounts maintained by related entities and individuals affiliated with the customer who may be involved in criminal activity, as well as related aspects of Regions' Anti-Money Laundering and Bank Secrecy Act compliance program.
While the final outcome of litigation and claims exposures or of any inquiries is inherently unpredictable, management is currently of the opinion that the outcome of pending and threatened litigation and inquiries will not have a material effect on

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Regions’ business, consolidated financial position, results of operations or cash flows as a whole. However, in the event of unexpected future developments, it is reasonably possible that an adverse outcome in any of the matters discussed above could be

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material to Regions’ business, consolidated financial position, results of operations or cash flows for any particular reporting period of occurrence.
GUARANTEES
INDEMNIFICATION OBLIGATION
As discussed in Note 2,3 in the Annual Report on Form 10-K for the year ended December 31, 2018, on April 2, 2012 (“Closing Date”), Regions closed the sale of Morgan Keegan and related affiliates to Raymond James. In connection with the sale, Regions agreed to indemnify Raymond James for all legal matters related to pre-closing activities, including matters filed subsequent to the Closing Date that relate to actions that occurred prior to closing. Losses under the indemnification include legal and other expenses, such as costs for judgments, settlements and awards associated with the defense and resolution of the indemnified matters. The maximum potential amount of future payments that Regions could be required to make under the indemnification is indeterminable due to the indefinite term of some of the obligations. As of June 30, 2018,March 31, 2019, the carrying value and fair value of the indemnification obligation were immaterial.
FANNIE MAE DUS LOSS SHARE GUARANTEE
Regions is a DUS lender. The DUS program provides liquidity to the multi-family housing market. Regions services loans sold to Fannie Mae and is required to provide a loss share guarantee equal to one-third of the majority of its DUS servicing portfolio. At June 30, 2018both March 31, 2019 and December 31, 2017,2018, the Company's DUS servicing portfolio totaled approximately $3.0 billion and $2.9 billion, respectively.$3.6 billion. Regions' maximum quantifiable contingent liability related to its loss share guarantee was approximately $967 million and $923 million$1.2 billion at June 30, 2018both March 31, 2019 and December 31, 2017, respectively.2018. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. Therefore, the maximum quantifiable contingent liability is not representative of the actual loss the Company would be expected to incur. The estimated fair value of the associated loss share guarantee recorded as a liability on the Company's consolidated balance sheets was approximately $4 million at both June 30, 2018March 31, 2019 and December 31, 2017.2018. Refer to Note 1 "Summary of Significant Accounting Policies" to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2017,2018, for additional information.

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NOTE 14.13. REVENUE RECOGNITION
The Company records revenue when control of the promised products or services is transferred to the customer, in an amount that reflects the consideration Regions expects to be entitled to receive in exchange for those products or services. Refer to Note 1 “Summary of Significant Accounting Policies” to the consolidated financial statements to the Annual Report on Form 10-K for the year ended December 31, 2017,2018, for descriptions of the accounting and reporting policies related to revenue recognition.
The following tables present total non-interest income disaggregated by major product category for each reportable segment for the period indicated.
 Three Months Ended June 30, 2018
 Corporate Bank 
Consumer
Bank
 
Wealth
Management
 Other Segment Revenue 
Other(1)
 
Continuing
Operations
 
Discontinued
Operations
 (In millions)
Service charges on deposit accounts$36
 $135
 $1
 $—
 $3
 $175
 $—
Card and ATM fees14
 102
 —
 —
 (4) 112
 —
Investment management and trust fee income—
 —
 58
 —
 —
 58
 —
Capital markets income26
 —
 —
 —
 31
 57
 —
Mortgage income—
 —
 —
 —
 37
 37
 —
Bank-owned life insurance—
 —
 —
 —
 18
 18
 —
Commercial credit fee income—
 —
 —
 —
 17
 17
 —
Investment services fee income—
 —
 19
 —
 —
 19
 —
Securities gains, net—
 —
 —
 —
 1
 1
 —
Market value adjustments on employee benefit assets—
 —
 —
 —
 (2) (2) —
Insurance commissions and fees—
 —
 —
 1
 —
 1
 35
Other miscellaneous income4
 12
 1
 —
 2
 19
 —
 $80
 $249
 $79

$1
 $103
 $512
 $35
 
Three Months Ended June 30, 2017 (2)
 Corporate Bank 
Consumer
Bank
 
Wealth
Management
 Other Segment Revenue 
Other(1)
 
Continuing
Operations
 
Discontinued
Operations
 (In millions)
Service charges on deposit accounts$35
 $132
 $—
 $—
 $2
 $169
 $—
Card and ATM fees12
 97
 —
 —
 (5) 104
 —
Investment management and trust fee income—
 —
 57
 —
 —
 57
 —
Capital markets income11
 —
 —
 —
 27
 38
 —
Mortgage income—
 —
 —
 —
 40
 40
 —
Bank-owned life insurance—
 —
 —
 —
 22
 22
 —
Commercial credit fee income—
 —
 —
 —
 18
 18
 —
Investment services fee income—
 —
 15
 —
 —
 15
 —
Securities gains, net—
 —
 —
 —
 1
 1
 —
Market value adjustments on employee benefit assets—
 —
 —
 —
 2
 2
 —
Insurance commissions and fees—
 —
 —
 2
 —
 2
 35
Other miscellaneous income3
 11
 1
 —
 7
 22
 —
 $61
 $240
 $73
 $2
 $114
 $490
 $35
 Three Months Ended March 31, 2019
 Corporate Bank Consumer
Bank		 Wealth
Management		 Other Segment Revenue 
Other(1)
 Continuing
Operations		 Discontinued
Operations
 (In millions)
Service charges on deposit accounts$39
 $133
 $—
 $1
 $2
 $175
 $—
Card and ATM fees13
 99
 —
 1
 (4) 109
 —
Investment management and trust fee income—
 —
 57
 —
 —
 57
 —
Capital markets income21
 —
 —
 —
 21
 42
 —
Mortgage income—
 —
 —
 —
 27
 27
 —
Investment services fee income—
 —
 19
 —
 —
 19
 —
Commercial credit fee income—
 —
 —
 —
 18
 18
 —
Bank-owned life insurance—
 —
 —
 —
 23
 23
 —
Securities gains (losses), net—
 —
 —
 —
 (7) (7) —
Market value adjustments on employee benefit assets - defined benefit—
 —
 —
 —
 5
 5
 —
Market value adjustments on employee benefit assets - other—
 —
 —
 —
 (1) (1) —
Other miscellaneous income6
 20
 2
 (6) 13
 35
 —
 $79
 $252
 $78
 $(4) $97
 $502
 $—
 Three Months Ended March 31, 2018
 Corporate Bank Consumer
Bank		 Wealth
Management		 Other Segment Revenue 
Other(1)
 Continuing
Operations		 Discontinued
Operations
 (In millions)
Service charges on deposit accounts$37
 $131
 $1
 $1
 $1
 $171
 $—
Card and ATM fees12
 96
 —
 —
 (4) 104
 —
Investment management and trust fee income—
 —
 58
 —
 —
 58
 —
Capital markets income18
 —
 —
 —
 32
 50
 —
Mortgage income—
 —
 —
 —
 38
 38
 —
Investment services fee income—
 —
 17
 —
 —
 17
 —
Commercial credit fee income—
 —
 —
 —
 17
 17
 —
Bank-owned life insurance—
 —
 —
 —
 17
 17
 —
Securities gains (losses), net—
 —
 —
 —
 —
 —
 —
Market value adjustments on employee benefit assets - defined benefit—
 —
 —
 —
 (1) (1) —
Market value adjustments on employee benefit assets - other—
 —
 —
 —
 —
 —
 —
Insurance commissions and fees—
 —
 —
 —
 —
 —
 34
Other miscellaneous income5
 9
 1
 —
 21
 36
 —
 $72
 $236
 $77
 $1
 $121
 $507
 $34

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 Six Months Ended June 30, 2018
 Corporate Bank 
Consumer
Bank
 
Wealth
Management
 Other Segment Revenue 
Other(1)
 
Continuing
Operations
 
Discontinued
Operations
 (In millions)
Service charges on deposit accounts$73
 $266
 $2
 $1
 $4
 $346
 $—
Card and ATM fees26
 198
 —
 —
 (8) 216
 —
Investment management and trust fee income—
 —
 116
 —
 —
 116
 —
Capital markets income44
 —
 —
 —
 63
 107
 —
Mortgage income—
 —
 —
 —
 75
 75
 —
Bank-owned life insurance—
 —
 —
 —
 35
 35
 —
Commercial credit fee income—
 —
 —
 —
 34
 34
 —
Investment services fee income—
 —
 36
 —
 —
 36
 —
Securities gains, net—
 —
 —
 —
 1
 1
 —
Market value adjustments on employee benefit assets—
 —
 —
 —
 (3) (3) —
Insurance commissions and fees—
 —
 —
 1
 —
 1
 69
Other miscellaneous income9
 21
 2
 —
 23
 55
 —
 $152
 $485
 $156
 $2
 $224
 $1,019
 $69
 
Six Months Ended June 30, 2017 (2)
 Corporate Bank 
Consumer
Bank
 
Wealth
Management
 Other Segment Revenue 
Other(1)
 
Continuing
Operations
 
Discontinued
Operations
 (In millions)
Service charges on deposit accounts$71
 $259
 $1
 $2
 $4
 $337
 $—
Card and ATM fees24
 190
 —
 —
 (6) 208
 —
Investment management and trust fee income—
 —
 113
 —
 —
 113
 —
Capital markets income20
 —
 —
 —
 50
 70
 —
Mortgage income—
 —
 —
 —
 81
 81
 —
Bank-owned life insurance—
 —
 —
 —
 41
 41
 —
Commercial credit fee income—
 —
 —
 —
 36
 36
 —
Investment services fee income—
 —
 31
 —
 —
 31
 —
Securities gains, net—
 —
 —
 —
 1
 1
 —
Market value adjustments on employee benefit assets—
 —
 —
 —
 7
 7
 —
Insurance commissions and fees—
 —
 —
 2
 —
 2
 70
Other miscellaneous income6
 22
 2
 —
 7
 37
 —
 $121
 $471
 $147
 $4
 $221
 $964
 $70
________
(1)This revenue is not impacted by the new accounting guidance related to revenue from contracts with customers and continues to be recognized when earned in accordance with the Company's existing revenue recognition policy.
(2)Prior period amounts have not been adjusted under the modified retrospective method.
Regions elected the practical expedient related to contract costs and will continue to expense sales commissions and any related contract costs when incurred because the amortization period would have been one year or less.
Regions also elected the practical expedient related to remaining performance obligations and therefore did not disclose the value of unsatisfied performance obligations for 1) contracts with an original expected length of one year or less and 2) contracts for which revenue is recognized at the amount to which Regions has the right to invoice for services performed.

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NOTE 15.14. RECENT ACCOUNTING PRONOUNCEMENTS    
StandardDescriptionRequired Date of AdoptionEffect on Regions' financial statements or other significant matters
Standards Adopted (or partially adopted) in 2018
ASU 2014-09, Revenue from Contracts with Customers

ASU 2015-14, Deferral of the Effective Date

ASU 2016-08, Principal versus Agent Considerations

ASU 2016-10, Identifying Performance Obligations and Licensing

ASU 2016-12, Narrow-Scope Improvements and Practical Expedience

ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry topics of the Codification. The core principle of the ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU may be adopted either retrospectively or on a modified retrospective basis.

January 1, 2018

Regions adopted the new revenue recognition standard on January 1, 2018 using the modified retrospective method. The adoption of this guidance did not have a material impact. For the six months ended June 30, 2018, approximately $864 million of non-interest income is within the scope of the new revenue recognition standard and includes service charges on deposit accounts, card and ATM fees, investment management and trust fee income, capital markets fee income, investment services fee income and other components within non-interest income. Income streams that are out of scope of the new standard include interest income, mortgage income, securities gains (losses), bank-owned life insurance and certain other components within non-interest income. Regions also developed additional quantitative and qualitative disclosures required by the new revenue recognition standard. See Note 14.


ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities

ASU 2018-03, Technical Corrections and Improvements to Financial Instruments

ASU 2018-04, Debt Securities and Regulated Operations
This ASU amends ASC Topic 825, Financial Instruments-Overall, and addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Among other minor amendments applicable to Regions, the main provisions require investments in equity securities to be measured at fair value with changes in fair value recognized through net income unless they qualify for a practicability exception (excludes investments accounted for under the equity method of accounting or those that result in consolidation of the investee). Except for disclosure requirements that have been adopted prospectively, the ASU must be adopted on a modified retrospective basis.
January 1, 2018



The adoption of this guidance resulted in trading account assets and equity securities available for sale being reclassified to other earning assets. The adoption of this guidance did not have a material impact. See Note 3.


ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments
This ASU amends Topic 230, Statement of Cash Flows, and provides clarification with respect to classification within the statement of cash flows where current guidance is unclear or silent. The ASU must be adopted retrospectively.

January 1, 2018
The adoption of this guidance did not have a material impact.


ASU 2017-01, Clarifying the Definition of a Business

This ASU amends Topic 805, Business Combinations, and provides additional accounting guidance to better determine when a set of assets and activities is a business. The ASU must be adopted prospectively.
January 1, 2018

The adoption of this guidance did not have a material impact.


ASU 2017-05, Other Income- Gains and Losses from the Derecognition of Nonfinancial Assets



This ASU amends Subtopic 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets, to clarify the scope and to add guidance for partial sales of nonfinancial assets. The new standard adds a definition for in-substance nonfinancial assets and clarifies that nonfinancial assets within a legal entity are within the scope of ASC 606. This ASU may be adopted either retrospectively or on a modified retrospective basis.
January 1, 2018


Regions adopted the guidance using the modified retrospective method. The adoption of this guidance did not have a material impact.




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StandardDescriptionRequired Date of AdoptionEffect on Regions' financial statements or other significant matters
Standards Adopted (or partially adopted) in 2018 (continued)
ASU 2017-07, Compensation- Retirement Benefits

This ASU amends Topic 715, Retirement Benefits, and provides more prescriptive guidance around the presentation of net periodic pension and postretirement benefit cost in the income statement. The amendment requires that the service cost component be disaggregated from other components of net periodic benefit cost in the income statement. The ASU must be adopted retrospectively.January 1, 2018
Regions recorded the service cost component of net periodic pension and postretirement benefit cost in salaries and employee benefits in the income statement. The other components of net periodic pension and postretirement benefit cost were recorded in other non-interest expense. The second quarter and first six months of 2017 have been revised to conform to this presentation. The adoption of this guidance did not have a material impact. See Note 9.
ASU 2017-09, Stock Compensation: Scope of Modification Accounting

This ASU amends Topic 718, Compensation- Stock Compensation, and clarifies when modification accounting should be applied to changes in terms or conditions of share-based payment awards. The amendments narrow the scope of modification accounting by clarifying that modification accounting should be applied to awards if the change affects the fair value, vesting conditions, or classification of the award. The amendments do not impact current disclosure requirements for modifications, regardless of whether modification accounting is required under the new guidance. The ASU must be adopted prospectively to modifications that occur on or after the adoption date.
January 1, 2018


The adoption of this guidance did not have a material impact.


ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities

This ASU amends ASC 815, Derivatives and Hedging to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity’s risk management activities by better aligning the entity’s financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers. Except for disclosure requirements that have been adopted prospectively, the ASU must be adopted on a modified retrospective basis.
January 1, 2019.

Early adoption is permitted.

Regions elected to adopt this ASU for financial reporting as of January 1, 2018. The adoption of this guidance did not have a material impact. See Note 10.


ASU 2018-05, Income Taxes

This ASU amends SEC guidance in the Codification related to income taxes to reflect the guidance in SEC Staff Accounting Bulletin 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Cuts and Jobs Act in the period of enactment. The staff believes that to the extent a company can reasonably estimate the impact of the Tax Cuts and Job Act, such items should be reported in the first reporting period in which the Company is able to determine the reasonable estimate.


Adopted upon issuance.

Regions does not expect the adoption of this guidance to have a material impact.


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StandardDescriptionRequired Date of AdoptionEffect on Regions' financial statements or other significant matters
Standards Not Yet Adopted2019
ASU 2016-02, Leases


ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842

ASU 2018-10, Narrow Amendments to Topic 842

ASU 2018-11, Targeted Improvements to Topic 842

ASU 2018-20, Narrow-Scope Improvements for Lessors

ASU 2019-01, Codification Improvements
This ASU creates ASC Topic 842, Leases, and supersedes Topic 840,Leases. The new guidance requires lessees to record a right-of-use asset and a corresponding liability equal to the present value of future rental payments on their balance sheets for all leases with a term greater than one year. There are not significant changes to lessor accounting; however, there were certain improvements made to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. This guidance expands both quantitative and qualitative required disclosures.
January 1, 2019
Regions adopted the standard on January 1, 2019 using the optional transition method, which allowed for a modified retrospective method of adoption with an immaterial cumulative effect adjustment to retained earnings without restating comparable periods. Regions elected the relief package of practical expedients for which there is no requirement to reassess existence of leases, their classification, and initial direct costs. Regions also applied the exemption for short-term leases with a term of less than one year, whereby Regions does not recognize a lease liability or right-of-use asset on the balance sheet but instead recognizes lease payments as an expense over the lease term as appropriate. For property leases, Regions did not elect the practical expedient to combine lease and non-lease components.

The standard resulted in recognition of right-of-use assets and lease liabilities for operating leases, while accounting for finance leases remains largely unchanged. Adoption of the standard resulted in the recognition of additional right-of-use assets and lease liabilities for operating leases of approximately $451 million as of January 1, 2019.

Operating lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most leases do not state an implicit rate, Regions utilizes the incremental borrowing rate based on information available at the commencement date to determine the present value of the lease payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expenses are recognized on a straight-line basis over the lease term.
ASU 2017-08, Receivables- Nonrefundable Fees and Other CostsThis ASU amends Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, to shorten the amortization period for certain purchased callable debt securities held at a premium to the earliest call date. Current guidance generally requires entities to amortize a premium as a yield adjustment over the contractual life of the instrument. Shortening the amortization period is generally expected to more closely align the recognition of interest income with expectations incorporated into the pricing of the underlying securities. The amendments do not affect the accounting treatment of discounts. This ASU should be adopted on a modified retrospective basis.
January 1, 2019

Early adoption is permitted.

Regions has established a leasing standard implementation team comprised of the Corporate Controller’s group, Corporate Real Estate and other business and finance management to plan and execute theThe adoption of this guidance did not have a material impact.
ASU 2018-07,
Compensation - Stock Compensation
This ASU amends and expands the new leasing standard. 

The implementation team has substantially completed the identificationscope of Regions’ leases that will needTopic 718, Compensation-Stock Compensation, to be measuredinclude share-based payment transactions for acquiring goods and reported as a right-of-use asset and corresponding liabilityservices for future rental payments. The implementation team is currently working with a lease administration vendor to set up and testnon-employees. Under this guidance, the accounting for share-based payments to non-employees and employees will be substantially aligned. The measurement of equity-classified non-employee awards will now be fixed at the lease contractsgrant date.
January 1, 2019


The adoption of this guidance did not have a material impact.
ASU 2018-09, Codification Improvements
The FASB issued this ASU to clarify, improve, and correct errors in the Codification. The ASU covers nine amendments, which affect a wide variety of Topics including business combinations, debt, derivatives and hedging, and defined contribution pension plans. Some amendments do not require transition guidance and are effective upon issuance, while others will be applicable for Regions starting in 2019. However, all amendments are expected to have an immaterial impact to Regions.January 1, 2019

The adoption of this guidance did not have a material impact.
ASU 2018-16, Derivatives and Hedging
This ASU amends Topic 815, Derivatives and Hedging, to expand the list of U.S. benchmark interest rates permitted in applying hedge accounting. The amendments permit all entities that elect to apply hedge accounting to benchmark interest rate hedges under ASC 815, Derivatives and Hedging, to use the OIS rate based on the lease administration system. Based on preliminary estimates that are subject to change, Regions hasSOFR as a range of approximately $400-$600 million of future lease obligations that would be measured and recognized when the new guidance is adopted (refer to Note 24 to consolidated financial statements includedU.S. benchmark interest rate in the Annual Report on Form 10-K for the year ended December 31, 2017). While this amount represents a large majority of the leases that are within the scope of the new leasing standard, the implementation team will continue reviewing service contracts up through the effective date and may identify additional leases embedded in those arrangements that will be within the scope of the new standard.

Between now and January 1, 2019, Regions will likely have changesaddition to the lease portfolio as the Company continues to evaluate and execute branch and occupancy optimization initiatives. In addition to final determination of the lease portfolio at the effective date, the initial measurement of the right-of-use asset and the corresponding liability willfour eligible U.S. benchmark interest rates. The amendments should be affected by certain key assumptions such as expectations of renewalsapplied prospectively for qualifying new or extensions and the interest rate to be used to discount the future lease obligations.

Up throughredesignated hedging relationships entered into on or after the date of adoption, the evaluation of the impact of the standard will be adjusted based on new leases that are executed, leases that are terminated prior to the effective date, and any leases with changes to key assumptions or expectations such as renewals and extensions, and discount rates. While there will be some changes to income statement classification, the implementation team does not expect theadoption.
January 1, 2019The adoption of the standard tothis guidance did not have a material impact to pre-tax income. Regions does not anticipate early adoption of the new standard.impact.

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Table of Contents


StandardDescriptionRequired Date of AdoptionEffect on Regions' financial statements or other significant matters
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments

ASU 2018-19 Codification Improvements to Topic 326
This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and debt securities. Additional quantitative and qualitative disclosures are required upon adoption.

While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities, rather than reduce the amortized cost of the securities by direct write-offs.

The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.
January 1, 2020

Early adoption permitted beginning January 1, 2019.
Regions’ cross-functional implementation team, which is co-led by Finance and Risk Management, has developed a project plan that results in running a CECL parallel production during 2019 and the adoption of the standard in the first quarter of 2020. Key project implementation activities for 2018 focus2019 include finalization of models, the qualitative framework, and the production process; completion of documentation, policies and disclosures; development of supporting analytics; and process and control testing.

The project implementation plan also establishes a parallel processing timeline which began with a limited parallel run in the first quarter of 2019. The first quarter 2019 limited parallel run included running, validating and reconciling all models. However, the qualitative framework and certain internal controls have not been fully developed and therefore were not included in the first quarter parallel run. Parallel runs will be enhanced throughout the year to include the qualitative framework, supporting analytics, end-to-end governance, internal controls and disclosures.
Regions provides updates to senior management and to the Audit Committee and Risk Committee of the Board of Directors. These communications provide an update on model enhancements, execution andthe status of the implementation continued challenge of model outputs, processes and controls, policies, disclosures, and data resolution.as discussed above.

Adoption of the standard may result in an overall material increase in the allowance for credit losses given the change from accounting for losses inherent in the loan portfolio to accounting for losses over the remaining contractual life of the portfolio. However, the impact at adoption will be influenced by the portfolios’ composition and quality at the adoption date as well as economic conditions and forecasts at that time. Based on initial modeling, the consumer loan portfolios are expected to generate the majority of theexperience an increase includedue to longer-dated loans in products such as residential first mortgages and home equity lending products and indirect-other products. However,Additionally, there could be increases or decreases in the allowance in certain other loan portfolios at adoption.

Regions expects no material allowance on held to maturity securities since the majoritybecause most of this portfolio consists of agency-backed securities that inherently have an immaterial risk of loss. Additionally, Regions expects no material allowance impact to available for sale securities.

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Table of Contents


StandardDescriptionRequired Date of AdoptionEffect on Regions' financial statements or other significant matters
Standards Not Yet Adopted
ASU 2017-04, Simplifying the Test for Goodwill ImpairmentThis ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test.
January 1, 2020


Early adoption is permitted.
Regions believes the adoption of this guidance will not have a material impact. Regions does not plan to early adopt.
ASU 2017-08, Receivables- Nonrefundable2018-15, Customer’s Accounting for Fees and Other CostsPaid in a Cloud Computing Arrangement
This ASU amends Subtopic 310-20, Receivables-Nonrefundable FeesTopic 350-40, Intangibles-Goodwill and Other Costs, to shortenOther-Internal-Use Software, regarding a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by the amortization periodvendor, i.e. a service contract. Customers will apply the same criteria for certain purchased callable debt securities held atcapitalizing implementation costs as they would for an arrangement that has a premium tosoftware license. The amendments also prescribe the earliest call date. Current guidance generally requires entities to amortize a premium as a yield adjustment over the contractual lifebalance sheet, income statement, and cash flow classification of the instrument. Shortening thecapitalized implementation costs and related amortization period is generally expected to more closely align the recognition of interest income with expectations incorporated into the pricing of the underlying securities. The amendments do not affect the accounting treatment of discounts. This ASU should be adopted on a modified retrospective basis.expense, and require additional quantitative and qualitative disclosures.
January 1, 20192020


Early adoption permitted, including in an interim period.is permitted.
Regions is evaluatingbelieves the impact upon adoption; however, the impact isadoption of this guidance will not expectedhave a material impact. Regions does not plan to be material.early adopt.
ASU 2018-07,
Compensation - Stock Compensation
2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities
This ASU amends Topic 810, Consolidation, guidance on how all reporting entities evaluate indirect interests held through related parties in common control arrangements when determining whether fees paid to decision makers and expands the scope of Topic 718, Compensation- Stock Compensation, to include share-based payment transactions for acquiring goods and services for non-employees. Under this guidance, the accounting for share-based payments to non-employees and employees will be substantially aligned. The measurement of equity-classified non-employee awards will now be fixed at the grant date.service providers are variable interests.
January 1, 20192020

Early adoption is permitted.

Regions is evaluatingbelieves the impact upon adoption; however, the impact isadoption of this guidance will not expectedhave a material impact. Regions does not plan to be material.
early adopt.
NOTE 16. SUBSEQUENT EVENT
On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc. and related affiliates to BB&T Insurance Holdings, Inc. The transaction closed on July 2, 2018. The after-tax gain associated with the transaction was approximately $200 million and Common Equity Tier 1 capital generated was approximately $300 million. The after-tax gain will be reflected in Regions' third quarter consolidated statements of income as a component of discontinued operations.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
The following discussion and analysis is part of Regions Financial Corporation’s (“Regions” or the “Company”) Quarterly Report on Form 10-Q filed with the SEC and updates Regions’ Annual Report on Form 10-K for the year ended December 31, 2017,2018, which was previously filed with the SEC. This financial information is presented to aid in understanding Regions’ financial position and results of operations and should be read together with the financial information contained in the Form 10-K. Effective January 1, 2018, the Company adopted new accounting guidance and certain prior period amounts presented in this discussion and analysis have been reclassified to conform to current period classifications. See Note 1 "Basis of Presentation" and Note 1514 "Recent Accounting Pronouncements" to the consolidated financial statements for further detail. The emphasis of this discussion will be on the three months and six months ended June 30, 2018March 31, 2019 compared to the three and six months ended June 30, 2017March 31, 2018 for the consolidated statements of income. For the consolidated balance sheets, the emphasis of this discussion will be the balances as of June 30, 2018March 31, 2019 compared to December 31, 2017.2018.
This discussion and analysis contains statements that may be considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. See pages 5 through 7 for additional information regarding forward-looking statements.
CORPORATE PROFILE
Regions is a financial holding company headquartered in Birmingham, Alabama, that operates in the South, Midwest and Texas. Regions provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of asset management, wealth management, securities brokerage, trust services, merger and acquisition advisory services and other specialty financing.
Regions conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank that is a member of the Federal Reserve System. At June 30, 2018,March 31, 2019, Regions operated 1,4761,456 total branch outlets across the South, Midwestoutlets. Regions carries out its strategies and Texas. Regions operates underderives its profitability from three reportable business segments: Corporate Bank, Consumer Bank, and Wealth Management, with the remainder split between Discontinued Operations and Other. See Note 1211 “Business Segment Information” to the consolidated financial statements for more information regarding Regions’ segment reporting structure.
On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc. and related affiliates to BB&T Insurance Holdings, Inc. The saletransaction closed on July 2, 2018. The gain associated with the transaction amounted to $281 million gain ($196 million after tax). On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and related affiliates to Raymond James. The sale closed on April 2, 2012. Regions Investment Management, Inc. and Regions Trust were not included in the sale; they are included in the Wealth Management segment. See Note 23 “Discontinued Operations” to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2018 for further discussion.
Regions’ profitability, like that of many other financial institutions, is dependent on its ability to generate revenue from net interest income and other financing income as well as non-interest income sources. Net interest income and other financing income is primarily the difference between the interest income Regions receives on interest-earning assets, such as loans and securities, and the interest expense Regions pays on interest-bearing liabilities, principally deposits and borrowings. Regions’ net interest income and other financing income is impacted by the size and mix of its balance sheet components and the interest rate spread between interest earned on its assets and interest paid on its liabilities. Net interest income and other financing income also includes rental income and depreciation expense associated with operating leases for which Regions is the lessor. Non-interest income includes fees from service charges on deposit accounts, card and ATM fees, mortgage servicing and secondary marketing, investment management and trust activities, capital markets and other customer services which Regions provides. Results of operations are also affected by the provision for loan losses and non-interest expenses such as salaries and employee benefits, occupancy, professional, legal and regulatory expenses, FDIC insurance assessments, and other operating expenses, as well as income taxes.
Economic conditions, competition, new legislation and related rules impacting regulation of the financial services industry and the monetary and fiscal policies of the Federal government significantly affect most, if not all, financial institutions, including Regions. Lending and deposit activities and fee income generation are influenced by levels of business spending and investment, consumer income, consumer spending and savings, capital market activities, and competition among financial institutions, as well as customer preferences, interest rate conditions and prevailing market rates on competing products in Regions’ market areas.
Regions’ business strategy has been and continues to be focused on providing a competitive mix of products and services, delivering quality customer service and maintaining a branch distribution network with offices in convenient locations.
SECONDFIRST QUARTER OVERVIEW
Regions reported net income available to common shareholders of $359$378 million, or $0.32$0.37 per diluted share, in the secondfirst quarter of 20182019 compared to $300$398 million, or $0.25$0.35 per diluted share, in the secondfirst quarter of 2017. Net income available to common shareholders from continuing operations was $362 million, or $0.32 per diluted share, compared to $300 million, or $0.25 per diluted share, over these same periods.2018. The primary driversdriver of the increasesdecrease in resultsnet income from the prior year period were increasedwas the increase in the provision for loan losses partially offset by higher net interest income and other financing income and decreased income taxlower non-interest expense.

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For the secondfirst quarter of 2018,2019, net interest income and other financing income (taxable-equivalent basis) totaled $938$961 million million, up $34$39 million compared to the secondfirst quarter of 2017.2018. The net interest margin (taxable-equivalent basis) was 3.493.53 percent for the secondfirst quarter of 20182019 and 3.323.46 percent in the secondfirst quarter of 2017.2018. Net interest margin and net interest income and other financing income benefited primarily from higher interest rates partially offset by higher funding costs. Net interest income and other financing income and net interest margin (taxable-equivalent basis)also benefited from higher market interest rates and prudent deposit cost management.average loan balances.
The provision (credit) for loan losses totaled $60$91 million in the secondfirst quarter of 20182019 compared to $48$(10) million during the secondfirst quarter of 2017.2018. Refer to the "Allowance for Credit Losses" section of Management's Discussion and Analysis for further detail.
Net charge-offs totaled $62$78 million, or an annualized 0.320.38 percent of average loans, in the secondfirst quarter of 2018,2019, compared to $68$84 million, or an annualized 0.340.42 percent for the secondfirst quarter of 2017.2018. See Note 43 "Loans and the Allowance for Credit Losses" to the consolidated financial statements for additional information.
The allowance for loan losses at June 30,March 31, 2019 and December 31, 2018, was 1.041.01 percent of total loans, net of unearned income, compared to 1.17 percent at December 31, 2017.income. Total non-performing loans decreasedincreased to 0.740.62 percent of total loans, net of unearned income, at June 30, 2018,March 31, 2019, compared to 0.810.60 percent at December 31, 2017.2018.
Non-interest income from continuing operations was $512$502 million for the secondfirst quarter of 20182019 compared to $490$507 million for the secondfirst quarter of 2017.2018. The increasedecrease was primarily driven by growthdeclines in capital markets income.income and mortgage income, combined with net securities losses partially offset by increases in service charges on deposit accounts, card and ATM fees, and bank-owned life insurance. See Table 20 "Non-Interest Income from Continuing Operations" for more detail.
Total non-interest expense from continuing operations was $911$860 million in the secondfirst quarter of 2018,2019, a $36$24 million increasedecrease from the secondfirst quarter of 2017.2018. The increasedecrease was primarily driven by higherlower salaries and employee benefits which included severance costs.expense, FDIC insurance assessments and professional fees partially offset by an increase in other non-interest expense. See Table 21 "Non-Interest Expense from Continuing Operations" for more detail.
Income tax expense from continuing operations for the three months ended June 30, 2018March 31, 2019 was $89$105 million compared to income tax expense of $133$128 million for the same period in 2017.2018. See "Income Taxes" toward the end of the Management’s Discussion and Analysis section of this report for more detail.
On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc.Near-term and related affiliates to BB&T Insurance Holdings, Inc. The transaction closed on July 2, 2018. A discussion of activity within discontinued operations is included at the end of the Management’s Discussion and Analysis section of this report. See Note 2 "Discontinued Operations" to the consolidated financial statements for additional information.
2018Long-term Expectations
Management expectations for 2018 are noted below:
Full year adjusted average loan growth in the low single digits compared to 2017 adjusted average balances
Full year average deposit growth in the low single digits compared to 2017 average balances, excluding brokered and Wealth Institutional Services deposits
Adjusted net interest income and other financing income (non-taxable equivalent basis) growth of 4 to 6 percent; based on recent performance and market conditions, currently expect to be toward the upper end of the range
Adjusted non-interest income growth of 3 to 6 percent
Adjusted non-interest expenses relatively stable
Adjusted efficiency ratio less than 60 percent
Positive adjusted operating leverage of approximately 3 to 5 percent
Effective income tax rate in the 20 to 22 percent range
Full year net charge-offs of 35 to 50 basis points; based on recent trends and current market conditions, currently expect to be at the lower end of the range
2019 ExpectationsThree-Year Expectations (2019-2021)
CategoryExpectationCategoryExpectation
Full year adjusted average loan growthLow to mid-single digits2021 adjusted return on average tangible common equity18%-20%
Full year adjusted total revenue growth2%-4%2021 adjusted efficiency ratio<55%
Full year adjusted non-interest expenseRelatively stableAnnual net charge-offs / average loans40-65 basis points
Net charge-offs / average loans40-50 basis points
Effective tax rate20%-22%Expect to generate positive operating leverage each year.
The reconciliation with respect to these forward-looking non-GAAP measures is expected to be consistent with the actual non-GAAP reconciliations within Management's Discussion and Analysis of this Form 10-Q. For more information related to the Company's 2018near-term and long-term expectations, including additional guidance within the ranges disclosed above, refer to the related sub-sections discussed in more detail within Management's Discussion and Analysis of this Form 10-Q.
BALANCE SHEET ANALYSIS
The following sections provide expanded discussion of significant changes in certain line items in asset, liability, and equity categories.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents increased approximately $305$269 million from year-end 20172018 to June 30, 2018,March 31, 2019, due primarily to an increase in cash on deposit with the FRB, as the result of normal day-to-day operating variations.

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DEBT SECURITIES
The following table details the carrying values of debt securities, including both available for sale and held to maturity:
Table 1— Debt Securities
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions)(In millions)
U.S. Treasury securities$307
 $331
$174
 $280
Federal agency securities48
 28
45
 43
Mortgage-backed securities:      
Residential agency17,785
 18,442
18,263
 17,475
Residential non-agency2
 3
2
 2
Commercial agency4,375
 4,361
4,806
 4,466
Commercial non-agency792
 788
730
 760
Corporate and other debt securities1,194
 1,108
1,217
 1,185
$24,503
 $25,061
$25,237
 $24,211
Regions maintains a highly rated securities portfolio consisting primarily of agency mortgage-backed securities. See Note 3 "Securities"2 "Debt Securities" to the consolidated financial statements for additional information.
Debt securities available for sale, which constitute the majority of the securities portfolio, are an important tool used to manage interest rate sensitivity and provide a primary source of liquidity for the Company. See the "Market Risk-Interest Rate Risk" and "Liquidity Risk" sections for more information.
LOANS HELD FOR SALE
Loans held for sale totaled $490$318 million at June 30, 2018,March 31, 2019, consisting of $320$288 million of residential real estate mortgage loans, $160$17 million of commercial mortgage and other loans, and $10$13 million of non-performing loans. At December 31, 2017,2018, loans held for sale totaled $348$304 million, consisting of $325$256 million of residential real estate mortgage loans, $6$38 million of commercial mortgage and other loans, and $17$10 million of non-performing loans. The levels of residential real estate and commercial mortgage loans held for sale that are part of the Company's mortgage originations to be sold fluctuate depending on the timing of origination and sale to third parties.
LOANS
Loans, net of unearned income, represented approximately 74 percent of Regions’ interest-earning assets at June 30, 2018.March 31, 2019. The following table presents the distribution of Regions’ loan portfolio by portfolio segment and class, net of unearned income:
Table 2—Loan Portfolio
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions, net of unearned income)(In millions, net of unearned income)
Commercial and industrial$37,079
 $36,115
$40,985
 $39,282
Commercial real estate mortgage—owner-occupied6,006
 6,193
5,522
 5,549
Commercial real estate construction—owner-occupied304
 332
434
 384
Total commercial43,389
 42,640
46,941
 45,215
Commercial investor real estate mortgage3,882
 4,062
4,715
 4,650
Commercial investor real estate construction1,879
 1,772
1,871
 1,786
Total investor real estate5,761
 5,834
6,586
 6,436
Residential first mortgage14,111
 14,061
14,113
 14,276
Home equity9,679
 10,164
9,014
 9,257
Indirect—vehicles3,219
 3,326
2,759
 3,053
Indirect—other consumer1,889
 1,467
2,547
 2,349
Consumer credit card1,264
 1,290
1,274
 1,345
Other consumer1,166
 1,165
1,196
 1,221
Total consumer31,328
 31,473
30,903
 31,501
$80,478
 $79,947
$84,430
 $83,152

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PORTFOLIO CHARACTERISTICS
The following sections describe the composition of the portfolio segments and classes disclosed in Table 2, explain changes in balances from 20172018 year-end, and highlight the related risk characteristics. Regions believes that its loan portfolio is well diversified by product, client, and geography throughout its footprint. However, the loan portfolio may be exposed to certain concentrations of credit risk which exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries, certain loan products, or certain regions of the country. See Note 43 “Loans and the Allowance for Credit Losses” to the consolidated financial statements for additional discussion.
Commercial
The commercial portfolio segment includes commercial and industrial loans to commercial customers for use in normal business operations to finance working capital needs, equipment purchases and other expansion projects. Commercial and industrial loans increased $964 million$1.7 billion since year-end 20172018 driven primarily by new relationships andan increase in line utilization, the expansion of existing customer relationships withinand addition of new relationships. The Company experienced increases in the Company'scorporate, middle market and real estate portfolios aided by growth within specialized lending groups, which offset the impact of large corporate customers utilizing the fixed income market to pay downdiversified lending groups and pay off bank debt.real estate investment trust portfolios. Commercial also includes owner-occupied commercial real estate mortgage loans to operating businesses, which are loans for long-term financing of land and buildings, and are repaid by cash flows generated by business operations. These loans declined $187$27 million from year-end 2017,2018, reflecting a slowing pace of decline. Owner-occupied commercial real estate construction loans are made to commercial businesses for the development of land or construction of a building where the repayment is derived from revenues generated from the business of the borrower.
Over half of the Company’s total loans are included in the commercial portfolio segment. These balances are spread across numerous industries, as noted in the table below. The Company manages the related risks to this portfolio by setting certain lending limits for each significant industry.
The following tables provide detail of Regions' commercial lending balances in selected industries.

Table 3—Selected Industry Exposure
 June 30, 2018
 Loans Unfunded Commitments Total Exposure
 (In millions)
Administrative, support, waste and repair$1,135
 $761
 $1,896
Agriculture528
 214
 742
Educational services2,430
 416
 2,846
Energy1,848
 2,023
 3,871
Financial services3,695
 3,447
 7,142
Government and public sector2,732
 450
 3,182
Healthcare4,167
 1,720
 5,887
Information1,342
 891
 2,233
Manufacturing4,592
 3,674
 8,266
Professional, scientific and technical services1,620
 1,321
 2,941
Real estate6,385
 6,381
 12,766
Religious, leisure, personal and non-profit services1,751
 710
 2,461
Restaurant, accommodation and lodging2,182
 603
 2,785
Retail trade2,461
 2,086
 4,547
Transportation and warehousing1,851
 888
 2,739
Utilities1,305
 2,475
 3,780
Wholesale goods3,331
 2,276
 5,607
Other (1)
34
 3,116
 3,150
Total commercial$43,389
 $33,452
 $76,841

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Table 3—Selected Industry Exposure
December 31, 2017 (2)
March 31, 2019
Loans Unfunded Commitments Total ExposureLoans Unfunded Commitments Total Exposure
(In millions)(In millions)
Administrative, support, waste and repair$976
 $620
 $1,596
$1,382
 $886
 $2,268
Agriculture525
 247
 772
502
 278
 780
Educational services2,353
 378
 2,731
2,594
 594
 3,188
Energy1,767
 1,877
 3,644
2,292
 2,343
 4,635
Financial services3,615
 3,336
 6,951
4,174
 3,707
 7,881
Government and public sector2,785
 394
 3,179
2,854
 522
 3,376
Healthcare4,216
 1,586
 5,802
3,880
 1,770
 5,650
Information1,294
 813
 2,107
1,582
 858
 2,440
Manufacturing4,181
 3,785
 7,966
4,899
 3,733
 8,632
Professional, scientific and technical services1,764
 1,266
 3,030
1,832
 1,427
 3,259
Real estate6,315
 5,772
 12,087
7,002
 6,632
 13,634
Religious, leisure, personal and non-profit services1,841
 726
 2,567
1,670
 775
 2,445
Restaurant, accommodation and lodging2,224
 642
 2,866
2,066
 545
 2,611
Retail trade2,336
 2,294
 4,630
2,550
 2,011
 4,561
Transportation and warehousing1,815
 863
 2,678
1,910
 1,208
 3,118
Utilities1,557
 2,114
 3,671
1,837
 2,257
 4,094
Wholesale goods3,148
 2,267
 5,415
3,561
 2,395
 5,956
Other (1)
(72) 1,604
 1,532
354
 2,697
 3,051
Total commercial$42,640
 $30,584
 $73,224
$46,941
 $34,638
 $81,579
 
December 31, 2018 (2)
 Loans Unfunded Commitments Total Exposure
 (In millions)
Administrative, support, waste and repair$1,353
 $882
 $2,235
Agriculture550
 235
 785
Educational services2,500
 606
 3,106
Energy2,275
 2,408
 4,683
Financial services4,063
 3,670
 7,733
Government and public sector2,826
 506
 3,332
Healthcare3,854
 1,869
 5,723
Information1,446
 1,002
 2,448
Manufacturing4,543
 4,061
 8,604
Professional, scientific and technical services1,730
 1,434
 3,164
Real estate6,696
 6,567
 13,263
Religious, leisure, personal and non-profit services1,735
 766
 2,501
Restaurant, accommodation and lodging2,071
 590
 2,661
Retail trade2,362
 2,267
 4,629
Transportation and warehousing1,869
 974
 2,843
Utilities1,729
 2,287
 4,016
Wholesale goods3,356
 2,549
 5,905
Other (1)
257
 2,458
 2,715
Total commercial$45,215
 $35,131
 $80,346
________
(1)"Other" contains balances related to non-classifiable and invalid business industry codes offset by payments in process and fee accounts that are not available at the loan level.
(2)As customers' businesses evolve (e.g. up or down the vertical manufacturing chain), Regions may need to change the assigned business industry code used to define the customer relationship. When these changes occur, Regions does not recast the customer history for prior periods into the new classification because the business industry code used in the prior period was deemed appropriate. As a result, comparable period changes may be impacted.

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Investor Real Estate
Loans for real estate development are repaid through cash flows related to the operation, sale or refinance of the property. This portfolio segment includes extensions of credit to real estate developers or investors where repayment is dependent on the sale of real estate or income generated from the real estate collateral. A portion of Regions’ investor real estate portfolio segment consists of loans secured by residential product types (land, single-family and condominium loans) within Regions’ markets. Additionally, this category includes loans made to finance income-producing properties such as apartment buildings, office and industrial buildings, and retail shopping centers. Total investor real estate loans decreased $73increased $150 million in comparison to 20172018 year-end balances. Due to the nature of the cash flows typically used to repay investor real estate loans, these loans are particularly vulnerable to weak economic conditions.
Residential First Mortgage
Residential first mortgage loans represent loans to consumers to finance a residence. These loans are typically financed over a 15 to 30 year term and, in most cases, are extended to borrowers to finance their primary residence. These loans experienced a $50decreased $163 million increase in comparison to 20172018 year-end balances. This increase was partially offset by the sale of $254 million ofbalances primarily performing troubled debt restructured loans and certain non-restructured interest-only loans duringdue to the first quarter 2019 sale of 2018.$167 million of affordable housing residential mortgage loans, which generated an $8 million pre-tax gain. Approximately $1.4 billion$469 million in new loan originations were retained on the balance sheet through the first sixthree months of 2018.2019.
Home Equity
Home equity lending includes both home equity loans and lines of credit. This type of lending, which is secured by a first or second mortgage on the borrower's residence, allows customers to borrow against the equity in their homes. The home equity portfolio totaled $9.7$9.0 billion at June 30, 2018March 31, 2019 as compared to $10.2$9.3 billion at December 31, 2017.2018. Substantially all of this portfolio was originated through Regions’ branch network.

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The following table presents information regarding the future principal payment reset dates for the Company's home equity lines of credit as of June 30, 2018.March 31, 2019. The balances presented are based on maturity date for lines with a balloon payment and draw period expiration date for lines that convert to a repayment period.
Table 4—Home Equity Lines of Credit - Future Principal Payment Resets
First Lien % of Total Second Lien % of Total TotalFirst Lien % of Total Second Lien % of Total Total
(Dollars in millions)(Dollars in millions)
2018$7
 0.11% $12
 0.20% $19
201958
 0.94
 48
 0.79
 106
$45
 0.79% $40
 0.70% $85
2020119
 1.92
 89
 1.45
 208
105
 1.84
 74
 1.3
 179
2021141
 2.29
 121
 1.96
 262
122
 2.13
 106
 1.86
 228
2022151
 2.45
 142
 2.30
 293
134
 2.35
 125
 2.19
 259
2023-20271,950
 31.63
 1,995
 32.36
 3,945
2028-2032764
 12.40
 565
 9.16
 1,329
2023165
 2.90
 151
 2.63
 316
2024-20282,314
 40.56
 2,189
 38.37
 4,503
2029-203375
 1.32
 58
 1.02
 133
Thereafter1
 0.02
 2
 0.02
 3
1
 0.01
 1
 0.03
 2
Total$3,191
 51.76% $2,974
 48.24% $6,165
$2,961
 51.90% $2,744
 48.10% $5,705
Of the $9.7$9.0 billion home equity portfolio at June 30, 2018,March 31, 2019, approximately $6.2$5.7 billion were home equity lines of credit and $3.5$3.3 billion were closed-end home equity loans (primarily originated as amortizing loans). Beginning in December 2016, new home equity lines of credit have a 10-year draw period and a 20-year repayment term. During the 10-year draw period customers do not have an interest-only payment option, except on a very limited basis. From May 2009 to December 2016, home equity lines of credit had a 10-year draw period and a 10-year repayment term. Prior to May 2009, home equity lines of credit had a 20-year repayment term with a balloon payment upon maturity or a 5-year draw period with a balloon payment upon maturity. The term “balloon payment” means there are no principal payments required until the balloon payment is due for interest-only lines of credit.
Other Consumer Credit Quality Data
The Company calculates an estimate of the current value of property secured as collateral for both residential first mortgage and home equity lending products (“current LTV”). The estimate is based on home price indices compiled by a third party. The third party data indicates trends for MSAs. Regions uses the third party valuation trends from the MSAs in the Company's footprint in its estimate. The trend data is applied to the loan portfolios taking into account the age of the most recent valuation and geographic area.
The following table presents current LTV data for components of the residential first mortgage and home equity classes of the consumer portfolio segment. Current LTV data for the remainingsome loans in the portfolio is not available, primarily because some of the loans are serviced by others. Data may also not be available due to mergers and systems integrations. The amounts in the table represent the entire loan balance. For purposes of the table below, if the loan balance exceeds

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the current estimated collateral, the entire balance is included in the “Above 100%” category, regardless of the amount of collateral available to partially offset the shortfall.
Table 5—Estimated Current Loan to Value Ranges
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
Residential
First Mortgage
 Home Equity 
Residential
First Mortgage
 Home Equity
Residential
First Mortgage
 Home Equity 
Residential
First Mortgage
 Home Equity
 1st Lien 2nd Lien 1st Lien 2nd Lien 1st Lien 2nd Lien 1st Lien 2nd Lien
(In millions)(In millions)
Estimated current LTV:                      
Above 100%$66
 $37
 $77
 $123
 $49
 $117
$76
 $25
 $47
 $64
 $28
 $52
80% - 100%1,754
 209
 403
 1,711
 275
 485
1,678
 161
 318
 1,720
 168
 346
Below 80%11,769
 6,075
 2,680
 11,639
 6,257
 2,766
12,044
 5,712
 2,573
 12,117
 5,852
 2,627
Data not available522
 75
 123
 588
 85
 130
315
 66
 112
 375
 66
 118
$14,111
 $6,396
 $3,283
 $14,061
 $6,666
 $3,498
$14,113
 $5,964
 $3,050
 $14,276
 $6,114
 $3,143

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Indirect—Vehicles
Indirect-vehicles lending, which is lending initiated through third-party business partners, largely consists of loans made through automotive dealerships. This portfolio class decreased $107$294 million from year-end 2017, primarily because Regions terminated2018. The decrease is due to the termination of a third-party purchase arrangement during the fourth quarter of 2016.2016 and Regions' decision in January 2019 to discontinue its indirect auto lending business due to competition-based margin compression impacting overall returns on the portfolio. Regions ceased originating new indirect auto loans in the first quarter of 2019 and intends to complete any in-process indirect auto loan closings by the end of the second quarter of 2019. The balance is expected to continue to decrease during 2018.Company will remain in the direct auto lending business.
Indirect—Other Consumer
Indirect-other consumer lending represents other point of sale lending through third parties. This portfolio class increased $422$198 million from year-end 2017,2018, primarily due to continued growth in existing point of sale initiatives.
Consumer Credit Card
Consumer credit card lending represents primarily open-ended variable interest rate consumer credit card loans. These balances decreased $26$71 million from year-end 2017.2018 reflecting seasonality.
Other Consumer
Other consumer loans primarily include direct consumer loans, overdrafts and other revolving loans. Other consumer loans decreased $25 million from year-end 2018.
Regions qualitatively considers factors such as periodic updates of FICO scores, unemployment, home prices, and geography as credit quality indicators for consumer loans. FICO scores are obtained at origination and refreshed FICO scores are obtained by the Company quarterly for all consumer loans. The following tables present estimated current FICO score data for components of classes of the consumer portfolio segment. Current FICO data is not available for the remaining loans in the portfolio for various reasons; for example, if customers do not use sufficient credit, an updated score may not be available. Residential first mortgage and home equity balances with FICO scores below 620 were 4 percent and 5 percent of the combined portfolios for June 30, 2018both March 31, 2019 and December 31, 2017, respectively.2018.

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Table 6—Estimated Current FICO Score Ranges
June 30, 2018March 31, 2019
Residential
First Mortgage
 Home Equity Indirect—Vehicles Indirect—Other Consumer 
Consumer
Credit Card
 
Other
Consumer
Residential
First Mortgage
 Home Equity Indirect—Vehicles Indirect—Other Consumer 
Consumer
Credit Card
 
Other
Consumer
 1st Lien 2nd Lien  1st Lien 2nd Lien 
(In millions)(In millions)
Below 620$662
 $242
 $158
 $296
 $49
 $89
 $69
$711
 $246
 $144
 $264
 $62
 $101
 $71
620-680751
 463
 272
 366
 181
 221
 144
722
 417
 247
 307
 233
 226
 145
681-7201,305
 730
 386
 397
 340
 278
 219
1,249
 686
 364
 345
 460
 279
 222
Above 72010,778
 4,824
 2,412
 2,077
 1,172
 668
 678
11,051
 4,485
 2,246
 1,787
 1,656
 660
 694
Data not available615
 137
 55
 83
 147
 8
 56
380
 130
 49
 56
 136
 8
 64
$14,111
 $6,396
 $3,283
 $3,219
 $1,889
 $1,264
 $1,166
$14,113
 $5,964
 $3,050
 $2,759
 $2,547
 $1,274
 $1,196
December 31, 2017December 31, 2018
Residential
First Mortgage
 Home Equity Indirect—Vehicles Indirect—Other Consumer 
Consumer
Credit Card
 
Other
Consumer
Residential
First Mortgage
 Home Equity Indirect—Vehicles Indirect—Other Consumer 
Consumer
Credit Card
 
Other
Consumer
 1st Lien 2nd Lien  1st Lien 2nd Lien 
(In millions)(In millions)
Below 620$741
 $261
 $161
 $328
 $43
 $85
 $72
$700
 $239
 $142
 $272
 $56
 $98
 $69
620-680829
 492
 300
 396
 153
 220
 146
747
 429
 259
 332
 212
 229
 148
681-7201,353
 775
 435
 419
 246
 288
 227
1,270
 708
 376
 384
 405
 288
 223
Above 72010,344
 5,000
 2,546
 2,088
 765
 689
 656
11,104
 4,610
 2,316
 1,992
 1,474
 721
 704
Data not available794
 138
 56
 95
 260
 8
 64
455
 128
 50
 73
 202
 9
 77
$14,061
 $6,666
 $3,498
 $3,326
 $1,467
 $1,290
 $1,165
$14,276
 $6,114
 $3,143
 $3,053
 $2,349
 $1,345
 $1,221
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses (“allowance”) consists of two components: the allowance for loan losses and the reserve for unfunded credit commitments. Discussion of the methodology used to calculate the allowance is included in Note 1 “Summary of Significant Accounting Policies” and Note 6 “Allowance for Credit Losses” to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2017,2018, as well as related discussion in Management’s Discussion and Analysis.

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The allowance for loan losses totaled $838$853 million at June 30, 2018March 31, 2019 as compared to $934$840 million at December 31, 2017.2018. The allowance for loan losses as a percentage of net loans decreased from 1.17 percentwas 1.01% at both March 31, 2019 and December 31, 2017 to 1.04 percent at June 30, 2018. The decrease in percentage is attributable to reductions in non-performing, criticized and TDR loans, as well as total delinquencies.
The provision (credit) for loan losses decreasedincreased by $68$101 million for the first six monthsquarter of 20182019 as compared to the same period in 2017.2018. During the first six monthsquarter of 2018, the provision for loan losses was less than net charge-offs by approximately $96 million, as a result of broad-based improvements in credit metrics, as well as payoffs and paydowns of criticized loans. Net charge-offs for the first six months of 2018 were approximately $22 million lower as compared to the same period in 2017, also reflecting broad-based asset quality improvement. Additionally, lower than anticipated losses associated with certain 2017 hurricanes resulted in the releasea reduction of $30 million to the Company's $40 million hurricane-specific loan loss allowance, during 2018. Lastly, a $16 million net reduction toand the provision for loan losses from the first quarter of 2018 sale of $254 million in residential first mortgage loans consisting primarily of performing troubled debt restructured loans also contributedresulted in a $16 million net reduction to the results. provision for loan losses. Both of these factors, combined with broad-based improved credit metrics, resulted in the credit for loan losses for the first quarter of 2018. Higher loan balances and the stabilization and normalization of credit resulted in the increased provision for loan losses for the first quarter of 2019. The provision for loan losses for the first quarter of 2019 was approximately $13 million greater than net charge-offs, which included provision for loan growth. Net charge-offs for the first quarter of 2019 were approximately $6 million lower compared to the same period in 2018.
Management expects that net loan charge-offs will be in the 0.350.40 percent to 0.50 percent range for the 2018 year;2019 year based on recent trends and current market conditions, Regions currently expects to be at the lower end of that range.conditions. Economic trends such as interest rates, unemployment, volatility in commodity prices and collateral valuations will impact the future levels of net charge-offs and may result in volatility of certain credit metrics during the remainder of 2018.2019. Additionally, changes in circumstances related to individually large credits or certain portfolios may result in volatility.
Details regarding the allowance and net charge-offs, including an analysis of activity from the previous year’s totals, are included in Table 7 “Allowance for Credit Losses.”
Refer to Note 14 "Recent Accounting Pronouncements" to the consolidated financial statements for discussion regarding the pending accounting pronouncement that will replace the current incurred loss accounting model for the allowance for credit losses with a current expected credit loss approach (CECL), which will be effective for Regions on January 1, 2020.

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Table 7—Allowance for Credit Losses
Six Months Ended June 30Three Months Ended March 31
2018 20172019 2018
(Dollars in millions)(Dollars in millions)
Allowance for loan losses at beginning of year$934
 $1,091
$840
 $934
Loans charged-off:      
Commercial and industrial54
 83
27
 25
Commercial real estate mortgage—owner-occupied10
 13
3
 5
Commercial investor real estate mortgage8
 2
—
 8
Commercial investor real estate construction—
 —
Residential first mortgage9
 6
1
 8
Home equity14
 18
6
 6
Indirect—vehicles
21
 26
9
 12
Indirect—other consumer
22
 11
17
 12
Consumer credit card31
 27
17
 16
Other consumer38
 37
22
 20
207
 223
102
 112
Recoveries of loans previously charged-off:      
Commercial and industrial20
 13
6
 8
Commercial real estate mortgage—owner-occupied4
 4
3
 2
Commercial investor real estate mortgage3
 6
1
 2
Commercial investor real estate construction1
 1
Residential first mortgage4
 2
1
 1
Home equity9
 10
4
 4
Indirect—vehicles
9
 10
4
 5
Indirect—other consumer
—
 —
—
 —
Consumer credit card4
 3
2
 2
Other consumer7
 6
3
 4
61
 55
24
 28
Net charge-offs:      
Commercial and industrial34
 70
21
 17
Commercial real estate mortgage—owner-occupied6
 9
—
 3
Commercial investor real estate mortgage5
 (4)(1) 6
Commercial investor real estate construction(1) (1)
Residential first mortgage5
 4
—
 7
Home equity5
 8
2
 2
Indirect—vehicles
12
 16
5
 7
Indirect—other consumer
22
 11
17
 12
Consumer credit card27
 24
15
 14
Other consumer31
 31
19
 16
146
 168
78
 84
Provision for loan losses50
 118
Allowance for loan losses at June 30$838
 $1,041
Provision (credit) for loan losses91
 (10)
Allowance for loan losses at March 31$853
 $840
Reserve for unfunded credit commitments at beginning of year$53
 $69
$51
 $53
Provision (credit) for unfunded credit losses(5) (2)(1) (4)
Reserve for unfunded credit commitments at June 30$48
 $67
Allowance for credit losses at June 30$886
 $1,108
Reserve for unfunded credit commitments at March 31$50
 $49
Allowance for credit losses at March 31$903
 $889
Loans, net of unearned income, outstanding at end of period$80,478
 $80,127
$84,430
 $79,822
Average loans, net of unearned income, outstanding for the period$79,924
 $80,144
$83,725
 $79,891
Ratios:      
Allowance for loan losses at end of period to loans, net of unearned income1.04% 1.30%1.01% 1.05%
Allowance for loan losses at end of period to non-performing loans, excluding loans held for sale1.41x
 1.27x
163% 140%
Net charge-offs as percentage of average loans, net of unearned income (annualized)0.37% 0.42%0.38% 0.42%

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TROUBLED DEBT RESTRUCTURINGS (TDRs)
TDRs are modified loans in which a concession is provided to a borrower experiencing financial difficulty. Residential first mortgage, home equity, consumer credit card and other consumer TDRs are consumer loans modified under the CAP. Commercial and investor real estate loan modifications are not the result of a formal program, but represent situations where modifications were offered as a workout alternative. Renewals of classified commercial and investor real estate loans are considered to be TDRs, even if no reduction in interest rate is offered, if the existing terms are considered to be below market. More detailed information is included in Note 43 "Loans and the Allowance For Credit Losses" to the consolidated financial statements. The following table summarizes the loan balance and related allowance for accruing and non-accruing TDRs for the periods presented:
Table 8—Troubled Debt Restructurings 
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
Loan
Balance
 
Allowance for
Loan Losses
 
Loan
Balance
 
Allowance for
Loan Losses
Loan
Balance
 
Allowance for
Loan Losses
 
Loan
Balance
 
Allowance for
Loan Losses
(In millions)(In millions)
Accruing:              
Commercial$158
 $22
 $232
 $27
$106
 $14
 $108
 $17
Investor real estate40
 4
 90
 6
14
 1
 14
 1
Residential first mortgage165
 16
 368
 36
173
 18
 170
 16
Home equity219
 6
 245
 4
180
 7
 189
 6
Consumer credit card1
 —
 1
 —
1
 —
 1
 —
Other consumer7
 —
 9
 —
5
 —
 6
 —
590
 48
 945
 73
479
 40
 488
 40
Non-accrual status or 90 days past due and still accruing:              
Commercial178
 21
 115
 30
220
 24
 183
 18
Investor real estate1
 —
 1
 —
5
 —
 5
 —
Residential first mortgage44
 4
 69
 7
37
 4
 38
 4
Home equity14
 —
 14
 —
15
 1
 15
 —
237
 25
 199
 37
277
 29
 241
 22
Total TDRs - Loans$827
 $73
 $1,144
 $110
$756
 $69
 $729
 $62
              
TDRs - Held For Sale11
 —
 13
 —
8
 —
 5
 —
Total TDRs$838
 $73
 $1,157
 $110
$764
 $69
 $734
 $62
_________
Note: All loans listed in the table above are considered impaired under applicable accounting literature.
The following table provides an analysis of the changes in commercial and investor real estate TDRs. TDRs with subsequent restructurings that meet the definition of a TDR are only reported as TDR inflows in the period they were first modified. Other than resolutions such as charge-offs, foreclosures, payments, sales and transfers to held for sale, Regions may remove loans from TDR classification if the following conditions are met: the borrower's financial condition improves such that the borrower is no longer in financial difficulty, the loan has not had any forgiveness of principal or interest, the loan has not been restructured as an "A" note/"B" note, the loan has been reported as a TDR over one fiscal year-end and the loan is subsequently refinanced or restructured at market terms such that it qualifies as a new loan.
For the consumer portfolio, changes in TDRs are primarily due to inflows from CAP modifications and outflows from payments and charge-offs. Given the types of concessions currently being granted under the CAP, as detailed in Note 43 “Loans and the Allowance for Credit Losses” to the consolidated financial statements, Regions does not expect that the market interest rate condition will be widely achieved. Therefore, Regions expects consumer loans modified through CAP to continue to be identified as TDRs for the remaining term of the loan.

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Table 9—Analysis of Changes in Commercial and Investor Real Estate TDRs
Six Months Ended
June 30, 2018		 
Six Months Ended
 June 30, 2017
Three Months Ended
March 31, 2019		 
Three Months Ended
March 31, 2018
Commercial Investor
Real Estate		 Commercial Investor
Real Estate		Commercial Investor
Real Estate		 Commercial Investor
Real Estate
(In millions)(In millions)
Balance, beginning of period$347
 $91
 $520
 $95
$291
 $19
 $347
 $91
Inflows207
 48
 272
 50
74
 1
 165
 48
Outflows:              
Charge-offs(18) —
 (10) (1)(8) —
 (2) —
Foreclosure—
 —
 (1) —
Payments, sales and other (1)
(200) (98) (188) (34)(31) (1) (83) (46)
Balance, end of period$336
 $41
 $593
 $110
$326
 $19
 $427
 $93
_________
(1) The majority of this category consists of payments and sales. "Other" outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held for sale. It also includes $21less than $1 million of both commercial loans and $5 million of investor real estate loans refinanced or restructured as new loans and removed from TDR classification for the sixthree months ended June 30, 2018.March 31, 2019. During the sixthree months ended June 30, 2017,March 31, 2018, $8 million of commercial loans and none$5 million of investor real estate loans were refinanced or restructured as new loans and removed from TDR classification.

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NON-PERFORMING ASSETS
Non-performing assets are summarized as follows:
Table 10—Non-Performing Assets
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(Dollars in millions)(Dollars in millions)
Non-performing loans:      
Commercial and industrial$384
 $404
$336
 $307
Commercial real estate mortgage—owner-occupied98
 118
67
 67
Commercial real estate construction—owner-occupied5
 6
14
 8
Total commercial487
 528
417
 382
Commercial investor real estate mortgage4
 5
8
 11
Commercial investor real estate construction—
 1
Total investor real estate4
 6
8
 11
Residential first mortgage38
 47
34
 40
Home equity66
 69
64
 63
Total consumer104
 116
98
 103
Total non-performing loans, excluding loans held for sale595
 650
523
 496
Non-performing loans held for sale10
 17
13
 10
Total non-performing loans(1)
605
 667
536
 506
Foreclosed properties61
 73
53
 52
Non-marketable investments received in foreclosure8
 8
Total non-performing assets(1)
$666
 $740
$597
 $566
Accruing loans 90 days past due:      
Commercial and industrial$4
 $4
$11
 $8
Commercial real estate mortgage—owner-occupied1
 1
1
 —
Total commercial5
 5
12
 8
Commercial investor real estate mortgage—
 1
Total investor real estate—
 1
Residential first mortgage(2)
63
 92
66
 66
Home equity31
 37
37
 34
Indirect—vehicles8
 9
7
 9
Indirect—other consumer1
 1
Consumer credit card17
 19
20
 20
Other consumer5
 4
4
 5
Total consumer124
 161
135
 135
$129
 $167
$147
 $143
Restructured loans not included in the categories above$590
 $945
$479
 $488
Non-performing loans(1) to loans and non-performing loans held for sale
0.75% 0.83%0.63% 0.61%
Non-performing assets(1) to loans, foreclosed properties and non-performing loans held for sale
0.83% 0.92%
Non-performing assets(1) to loans, foreclosed properties, non-marketable investments, and non-performing loans held for sale
0.71% 0.68%
_________
(1)Excludes accruing loans 90 days past due.
(2)Excludes residential first mortgage loans that are 100% guaranteed by the FHA and all guaranteed loans sold to the GNMA where Regions has the right but not the obligation to repurchase. Total 90 days or more past due guaranteed loans excluded were $105$76 million at June 30, 2018March 31, 2019 and $124$84 million at December 31, 2017.2018.
Non-performing loans at June 30, 2018March 31, 2019 have decreasedincreased compared to year-end levels dueas asset quality continued to continued broad-based improvement in credit quality.normalize. Total commercial and investor real estate non-performing loans, excluding loans held for sale, that were paying as agreed (e.g., less than 30 days past due) represented approximately 5060 percent of the total balance at June 30, 2018.March 31, 2019.
Economic trends such as interest rates, unemployment, volatility in commodity prices, and collateral valuations will impact the future level of non-performing assets. Circumstances related to individually large credits could also result in volatility throughout 2018.volatility.

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Total loans past due 90 days or more and still accruing, excluding government guaranteed loans, were $129$147 million at June 30, 2018, a decreaseMarch 31, 2019, an increase from $167$143 million at December 31, 2017.2018.

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At June 30, 2018,March 31, 2019, Regions had approximately $75 million to $150$135 million of potential problem commercial and investor real estate loans that were not included in non-accrual loans, but for which management had concerns as to the ability of such borrowers to comply with their present loan repayment terms. This is a likely estimate of the amount of commercial and investor real estate loans that have the potential to migrate to non-accrual status in the next quarter.
In order to arrive at the estimate of potential problem loans, credit personnel from geographic regions forecast certain larger dollar loans that may potentially be downgraded to non-accrual at a future time, depending on the occurrence of future events. These personnel consider a variety of factors, including the borrower’s capacity and willingness to meet the contractual repayment terms, make principal curtailments or provide additional collateral when necessary, and provide current and complete financial information including global cash flows, contingent liabilities and sources of liquidity. Based upon the consideration of these factors, a probability weighting is assigned to loans to reflect the potential for migration to the pool of potential problem loans during this specific time period. Additionally, for other loans (for example, smaller dollar loans), a trend analysis is incorporated to determine the estimate of potential future downgrades. Because of the inherent uncertainty in forecasting future events, the estimate of potential problem loans ultimately represents the estimated aggregate dollar amounts of loans as opposed to an individual listing of loans.
The majority of the loans on which the potential problem loan estimate is based are considered criticized and classified. Detailed disclosures for substandard accrual loans (as well as other credit quality metrics) are included in Note 43 “Loans and the Allowance for Credit Losses” to the consolidated financial statements.
The following table provides an analysis of non-accrual loans (excluding loans held for sale) by portfolio segment:
Table 11—Analysis of Non-Accrual Loans
 Non-Accrual Loans, Excluding Loans Held for Sale
Six Months Ended June 30, 2018
 Commercial 
Investor
Real Estate
 
Consumer(1)
 Total
 (In millions)
Balance at beginning of period$528
 $6
 $116
 $650
Additions204
 19
 —
 223
Net payments/other activity(145) (3) (9) (157)
Return to accrual(24) (1) —
 (25)
Charge-offs on non-accrual loans(2)
(58) (8) —
 (66)
Transfers to held for sale(3)
(14) —
 (3) (17)
Transfers to real estate owned(2) —
 —
 (2)
Sales(2) (9) —
 (11)
Balance at end of period$487
 $4
 $104
 $595

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 Non-Accrual Loans, Excluding Loans Held for Sale
Three Months Ended March 31, 2019
 Commercial 
Investor
Real Estate
 
Consumer(1)
 Total
 (In millions)
Balance at beginning of period$382
 $11
 $103
 $496
Additions104
 —
 —
 104
Net payments/other activity(29) (3) (5) (37)
Return to accrual(1) —
 —
 (1)
Charge-offs on non-accrual loans(2)
(25) —
 —
 (25)
Transfers to held for sale(3)
(12) —
 —
 (12)
Transfers to real estate owned(1) —
 —
 (1)
Sales(1) —
 —
 (1)
Balance at end of period$417
 $8
 $98
 $523

Non-Accrual Loans, Excluding Loans Held for Sale
Six Months Ended June 30, 2017		Non-Accrual Loans, Excluding Loans Held for Sale
Three Months Ended March 31, 2018
Commercial 
Investor
Real Estate
 
Consumer(1)
 TotalCommercial 
Investor
Real Estate
 
Consumer(1)
 Total
(In millions)(In millions)
Balance at beginning of period$836
 $17
 $142
 $995
$528
 $6
 $116
 $650
Additions257
 6
 —
 263
78
 18
 —
 96
Net payments/other activity(231) (4) (22) (257)(84) (1) 2
 (83)
Return to accrual(68) (4) —
 (72)(16) (1) —
 (17)
Charge-offs on non-accrual loans(2)
(91) (1) —
 (92)(28) (8) —
 (36)
Transfers to held for sale(3)
(10) (2) —
 (12)(5) —
 (2) (7)
Transfers to foreclosed properties(2) —
 —
 (2)
Sales—
 —
 —
 —
(2) —
 —
 (2)
Balance at end of period$691
 $12
 $120
 $823
$471
 $14
 $116
 $601
________
(1)All net activity within the consumer portfolio segment other than sales and transfers to held for sale (including related charge-offs) is included as a single net number within the net payments/other activity line.
(2)Includes charge-offs on loans on non-accrual status and charge-offs taken upon sale and transfer of non-accrual loans to held for sale.
(3)Transfers to held for sale are shown net of charge-offs of $6$2 million and $4$3 million recorded upon transfer for the sixthree months ended June 30,March 31, 2019 and 2018, and 2017, respectively.

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GOODWILL
Goodwill totaled $4.9$4.8 billion at both June 30, 2018March 31, 2019 and December 31, 20172018 and is allocated to each of Regions’ reportable segments (each a reporting unit), at which level goodwill is tested for impairment on an annual basis or more often if events and circumstances indicate the fair value of the reporting unit may have declined below the carrying value (refer to Note 1 “Summary of Significant Accounting Policies” to the 2017 consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 20172018 for further discussion of when Regions tests goodwill for impairment and the Company's methodology and valuation approaches used to determine the estimated fair value of each reporting unit).
The result of the assessment performed for the secondfirst quarter of 20182019 did not indicate that the estimated fair values of the Company’s reporting units (Corporate Bank, Consumer Bank and Wealth Management) had declined below their respective carrying values. Therefore, Regions determined that a test of goodwill impairment was not required for each of Regions’ reporting units for the June 30, 2018March 31, 2019 interim period.
OTHER EARNING ASSETS
Other earning assets totaled $1.7 billion at June 30, 2018, consisting primarily of $778 million of FRB and FHLB stock, $420 million of operating lease assets, and $423 million marketable equity securities. At December 31, 2017, other earning assets totaled $1.9 billion, consisting primarily of $684 million of FRB and FHLB stock, $489 million of operating lease assets, and $414 million of marketable equity securities.

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DEPOSITS
Regions competes with other banking and financial services companies for a share of the deposit market. Regions’ ability to compete in the deposit market depends heavily on the pricing of its deposits and how effectively the Company meets customers’ needs. Regions employs various means to meet those needs and enhance competitiveness, such as providing a high level of customer service, competitive pricing and convenient branch locations for its customers. Regions also serves customers through providing centralized, high-quality banking services and alternative product delivery channels such as mobile and internet banking.
The following table summarizes deposits by category:
Table 12—Deposits
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions)(In millions)
Non-interest-bearing demand$36,055
 $36,127
$34,775
 $35,053
Savings8,971
 8,413
9,031
 8,788
Interest-bearing transaction19,403
 20,161
19,724
 19,175
Money market—domestic24,255
 25,306
23,806
 24,111
Money market—foreign—
 23
Low-cost deposits88,684
 90,030
Time deposits6,599
 6,859
7,704
 7,122
Customer deposits95,040
 94,249
Corporate treasury time deposits680
 242
$95,283
 $96,889
$95,720
 $94,491
Total deposits at June 30, 2018 decreasedMarch 31, 2019 increased approximately $1.6$1.2 billion compared to year-end 2017 levels.2018 levels, with the deposit mix experiencing movement from lower cost to higher cost products. During the first quarter of 2019, balance increases in interest-bearing transaction accounts, savings, customer time deposits, and brokered treasury time deposits were partially offset by balance decreases in non-interest-bearing demand and money market accounts. Specifically, interest-bearing transaction and time deposit balances increased due to the offering of higher rates, portfolio remixing, and overall account growth. Savings account balances increased, generally reflecting seasonal trends. The decreasenon-interest-bearing demand decline was driven by decreasesdue primarily to customers using liquidity to pay down debt or invest in their businesses, as well as portfolio remixing. The decrease in money market accounts and interest-bearing transaction accounts offset by increases in savings accounts. Interest-bearing transaction accounts have declined primarily due toaccount balances reflects the Company's continued strategic reduction of certain trust customer deposits, which require collateralization by securities, and have been shifted into other fee income-producing customer investments. Money market accounts have continued to decline as a resultfinal portion of a decisionlonger-term initiative to reduce higher-cost retail brokered deposits that were no longer a necessary component of the Company's funding strategy. Customersweep deposits. Treasury brokered time deposits declined approximately $260 million as a result of the Company's strong liquidity profile providing less need for higher-cost deposits as part of itswere used to supplement incremental balance sheet funding strategy. Also contributing to the decrease was a continuing customer preference for more liquid deposit products as market interest rates remain relatively low.needs.
SHORT-TERM BORROWINGS
Short-term borrowings, which consist of FHLB advances, totaled $1.4$1.6 billion at June 30, 2018 as compared to $500 million atboth March 31, 2019 and December 31, 2017.2018. The levels of these borrowings can fluctuate depending on the Company's funding needs and the sources utilized.
In the near term, Regions expects the use of wholesale unsecured borrowings for its funding needs to remain low. Short-term secured borrowings, such as securities sold under agreements to repurchase and FHLB advances, are a core portion of Regions' funding strategy.
The securities financing market and specifically short-term FHLB advances continue to provide reliable funding at attractive rates. See the "Liquidity Risk" section for further detail of Regions' borrowing capacity with the FHLB.


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LONG-TERM BORROWINGS
Table 13—Long-Term Borrowings
June 30, 2018 December 31, 2017March 31, 2019 December 31, 2018
(In millions)(In millions)
Regions Financial Corporation (Parent):      
2.00% senior notes due May 2018$—
 $101
3.20% senior notes due February 20211,101
 1,101
$1,101
 $1,101
2.75% senior notes due August 2022995
 995
996
 996
3.80% senior notes due August 2023995
 497
7.75% subordinated notes due September 2024100
 100
100
 100
6.75% subordinated debentures due November 2025158
 158
157
 157
7.375% subordinated notes due December 2037297
 297
298
 298
Valuation adjustments on hedged long-term debt(82) (50)(16) (47)
2,569
 2,702
3,631
 3,102
Regions Bank:      
Federal Home Loan Bank advances5,153
 3,653
2.25% senior notes due September 2018749
 749
7.50% subordinated notes due May 2018—
 500
FHLB advances6,902
 6,902
2.75% senior notes due April 2021548
 —
548
 548
3 month LIBOR plus 0.38% of floating rate senior notes due April 2021349
 —
349
 349
3.374% senior notes converting to 3 month LIBOR plus 0.50%, callable August 2020, due August 2021499
 499
3 month LIBOR plus 0.50% of floating rate senior notes, callable August 2020, due August 2021499
 499
6.45% subordinated notes due June 2037495
 495
495
 495
Other long-term debt34
 35
34
 33
Valuation adjustments on hedged long-term debt(7) (2)—
 (3)
7,321
 5,430
9,326
 9,322
Total consolidated$9,890
 $8,132
$12,957
 $12,424
Long-term borrowings increased by approximately $1.8 billion$533 million since year-end 2017. FHLB advances increased $1.5 billion. During2018 due primarily to a $500 million issuance of senior notes through a reopening of the first quarter of 2018, Regions issued $550 million of 2.75%Company's 3.80% senior bank notes due April 1, 2021 and simultaneously entered into an interest rate swapAugust 2023, which were effectively converting the 2.75% senior bank notesconverted to floating rate notes at 1 month LIBOR. Also duringLIBOR through the first quarter, Regions issued $350 millionsimultaneous execution of senior floatingan interest rate bank notes at 3 month LIBOR plus 38 basis points due April 1, 2021. During the second quarter of 2018, approximately $600 million of senior and subordinated notes matured.swap.
Long-term FHLB advances have a weighted-average interest rate of 2.02.6 percent at June 30, 2018both March 31, 2019 and 1.4 percent at December 31, 20172018 with remaining maturities ranging from less than one year to thirteennine years and a weighted-average of 0.8 years.

On August 2, 2018, Regions provided notice to holders of the 2.25% senior notes due September 14, 2018 issued by Regions Bank of the company's intent to call the notes. Consistent with the terms of the securities, the total amount outstanding of $750 million will be called at par on August 14, 2018.approximately 1 year.    
STOCKHOLDERS’ EQUITY
Stockholders’ equity was $15.8$15.5 billion at June 30, 2018March 31, 2019 as compared to $16.2 billion$15.1 billion at December 31, 2017.2018. During the first sixthree months of 2018,2019, net income increased stockholders’ equity by $789$394 million, while cash dividends on common stock reduced stockholders' equity by $201$142 million and cash dividends on preferred stock reduced stockholder's equity by $32$16 million. Changes in accumulated other comprehensive income decreasedincreased stockholders' equity by $506$366 million, primarily due to the net change in unrealized gains (losses) on securities available for sale and derivative instruments.instruments as a result of changes in market interest rates during the first quarter of 2019. Common stock repurchased during the first sixthree months of 20182019 reduced stockholders' equity by $470$190 million. These shares were immediately retired and therefore are not included in treasury stock.
Total equity includes noncontrolling interest of $11 million, representing the unowned portion of a low income housing tax credit fund syndication, of which Regions held the majority interest at March 31, 2019.
On June 28, 2018, Regions received no objection from the Federal Reserve to its 2018 capital plan that was submitted as part of the CCAR process, which included the repurchase of common shares and a common stock dividend increase.
See Note 76 “Stockholders’ Equity and Accumulated Other Comprehensive Income (Loss)” for additional information.

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REGULATORY REQUIREMENTS
CAPITAL RULES
Regions and Regions Bank are required to comply with regulatory capital requirements established by Federal and State banking agencies. These regulatory capital requirements involve quantitative measures of the Company's assets, liabilities and selected off-balance sheet items, and also qualitative judgments by the regulators. Failure to meet minimum capital requirements can subject the Company to a series of increasingly restrictive regulatory actions.
Under the Basel III Rules, Regions is designated as a standardized approach bank and, as such, began transitioning to the Basel III Rules in January 2015 subject to a phase-in period extending to January 2019. When fully phased in, the Basel III Rules will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures. Additionally, the Basel III Rules place greater emphasis on common equity. The Basel III Rules, among other things, (i) introduce a measure called CET1, (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting specified requirements, (iii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expand the scope of the deductions/adjustments to capital as compared to prior regulations.
Additionally, the Basel III Rules introduce a new capital conservation buffer designed to absorb losses during periods of economic stress. The capital conservation buffer is on top of minimum risk-weighted asset ratios. The Basel III Rules also prescribe a standardized approach for risk-weightings of assets and off-balance sheet exposures to derive the capital ratios.
In September 2017, the federal banking agencies proposed to revise and simplify the capital treatment for selected categories of deferred tax assets, MSRs, investments in non-consolidated financial entities and minority interests for banking organizations, such as Regions and Regions Bank, that are not subject to the advanced approach. In November 2017, the federal banking agencies revised the Basel III Rules to extend the current transitional treatment of these items for standardized approach banking organizations until the September 2017 proposal is finalized. The September 2017 proposal would also change the capital treatment of high volatility commercial real estate loans under the standardized approach. These changes would have the impact of increasing regulatory capital ratios for some standardized approach banking organizations such as Regions. Regions continues to review the proposal and its impact on the Company’s capital requirements.
In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”). Among other things, these standards revise the Basel Committee’s standardized approach for credit risk (including by recalibrating risk-weights and introducing new capital requirements for certain “unconditionally cancellable commitments,” such as unused credit card lines of credit) and provide a new standardized approach for operational risk capital. Under the Basel framework, these standards will generally be effective on January 1, 2022, with an aggregate output floor phasing in through January 1, 2027. Under the current U.S. capital rules, operational risk capital requirements and a capital floor apply only to advanced approach institutions, and not to Regions or Regions Bank. The impact of Basel IV on the Company will depend on the manner in which it is implemented by the federal banking regulators.

On April 10, 2018, the federal banking agencies issued a proposal to simplify capital rules for large banks. The proposal introduces a “stress capital buffer," which would replace the existing capital conservation buffer and incorporate forward-looking stress test results into non-stress capital requirements. The proposed stress capital buffer is defined as the greater of the sum of a bank’s degradation in its CET1 capital ratio in CCAR, excluding any planned capital actions, and four quarters of planned common stock dividends or a floor of 2.5% of risk-weighted assets.

On May 14, 2018, the federal banking agencies issued a proposal that would amend regulatory capital rules to provide banks with the option to phase in the day-one effects on regulatory capital that may result from adoption of the new current expected credit losses accounting standard (see Note 15 "Recent Accounting Pronouncements"). Additionally, the agencies are proposing amendments to stress testing regulations which would delay incorporation of the new accounting standard in stress testing until the 2020 stress test cycle.

The Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”) was enacted on May 24, 2018, which provides certain limited amendments to the Dodd-Frank Act as well as other modifications to certain post-crisis regulatory requirements. The EGRRCPA raises the asset threshold for the Systemically Important Financial Institution designations from $50 billion to $250 billion and eliminates the company-run stress tests for institutions with less than $250 billion in assets. The EGRRCPA will likely decrease the overall regulatory burden on institutions like Regions, however the ultimate impact is uncertain at this time and will depend on the implementation of the law by the federal banking agencies. On July 6, 2018, the federal banking agencies issued an interagency statement regarding the impact of the EGRRCPA. The statement provides information on rules and associated reporting requirements that EGRRCPA affected such as company-run stress testing, resolution plans, Volcker Rule, HVCRE exposures, and other provisions. Among other things, the statement permits banks to use current information to estimate

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and report HVCRE acquisition, development and construction loans as defined in the EGRRCPA. Regions implemented this change effective June 30, 2018 and it did not have a material impact.
bank. Additional discussion of the Basel III Rules, and their applicability to Regions, recent proposals and final rules issued by the federal banking agencies and recent laws enacted that impact regulatory requirements is included in the "Regulatory Requirements" section of Management's Discussion and Analysis in the 2018 Annual Report on Form 10-K. Additional discussion is also included in Note 14 "Regulatory Capital Requirements and Restrictions" to the consolidated financial statements in the 2018 Annual Report on Form 10-K for the year ended December 31, 2017, as well as related discussion in Management's Discussion and Analysis.10-K.
The following table summarizes the applicable holding company and bank regulatory requirements:
Table 14—Regulatory Capital Requirements
Transitional Basis Basel III Regulatory Capital Rules (1)
June 30, 2018
Ratio (2)
 
December 31, 2017
Ratio
 
Minimum
Requirement
 
To Be Well
Capitalized
March 31, 2019
Ratio (1)
 
December 31, 2018
Ratio
 
Minimum
Requirement
 
To Be Well
Capitalized
Basel III common equity Tier 1 capital:              
Regions Financial Corporation11.00% 11.05% 4.50% N/A
9.81% 9.90% 4.50% N/A
Regions Bank12.99
 12.49
 4.50
 6.50%11.50
 11.59
 4.50
 6.50%
Tier 1 capital:              
Regions Financial Corporation11.80% 11.86% 6.00% 6.00%10.58% 10.68% 6.00% 6.00%
Regions Bank12.99
 12.49
 6.00
 8.00
11.50
 11.59
 6.00
 8.00
Total capital:              
Regions Financial Corporation13.59% 13.78% 8.00% 10.00%12.35% 12.46% 8.00% 10.00%
Regions Bank14.34
 13.97
 8.00
 10.00
12.82
 12.92
 8.00
 10.00
Leverage capital:              
Regions Financial Corporation10.10% 10.01% 4.00% N/A
9.26% 9.32% 4.00% N/A
Regions Bank11.14
 10.54
 4.00
 5.00%10.08
 10.12
 4.00
 5.00%
________
(1)
(1) The current quarter Basel III CET1 capital, Tier 1 capital, Total capital, and Leverage capital ratios are estimated.
The 2018 and 2017 capital ratios were calculated at different points of the phase-in period under the Basel III Rules and therefore are not directly comparable.
(2)The current quarter Basel III CET1 capital, Tier 1 capital, Total capital, and Leverage capital ratios are estimated.
    
LIQUIDITY COVERAGE RATIO
TheRegions is currently subject to the Basel III-based U.S. LCR rule, which is a quantitative liquidity metric designed to ensure that a covered bank or BHC maintains an adequate level of unencumbered high-quality liquid assets under an acute 30-day liquidity stress scenario. Following the threshold amendments recently made by EGRRCPA, the LCR rule currently applies in a modified, less stringent, form to BHCs, such as Regions, having $100 billion or more but less than $250 billion in total consolidated assets and less than $10 billion in total on-balance sheet foreign exposure. However, on October 31, 2018, the Federal Reserve, the OCC and the FDIC approved a final rule in 2014 implementing a minimum LCR requirement for certain large BHCs, savings and loan holding companies and depositoryproposed rules that would, among other things, make institutions and a less stringent LCR requirement (the "modified LCR") for other banking organizations, such as Regions with $50less than $250 billion or more in total consolidated assets.assets no longer subject to the LCR requirement. The finalLCR rule also imposes a monthly calculation requirement. As of January 1, 2017, the LCR calculation rule has been fully phased in. In December 2016, the Federal Reserve issued a final rule on the public disclosure of the LCR calculation that requires BHCs, such as Regions, to disclose publicly, on a quarterly basis, quantitative and qualitative information about certain components of its LCR beginning October 1,with results from the fourth quarter of 2018.
At June 30, 2018,March 31, 2019, the Company was fully compliant with the LCR requirements. Changes in the mix and size of the Company's balance sheet and investment portfolio are likely to occur in the future, and additional funding may need to be sourced to remain compliant.
See the “Supervision and Regulation—Liquidity Regulation” subsection of the “Business” section and the “Risk Factors” section ofin the Company's2018 Annual Report on Form 10-K for the year ended December 31, 2017 for more information.

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RATINGS
Table 15 “Credit Ratings” reflects the debt ratings information of Regions Financial Corporation and Regions Bank by Standard and Poor's ("S&P"), Moody’s, Fitch and Dominion Bond Rating Service ("DBRS") as of June 30, 2018March 31, 2019 and December 31, 2017.2018.
Table 15—Credit Ratings
 As of June 30, 2018March 31, 2019 and December 31, 20172018
 S&PMoody’sFitchDBRS
Regions Financial Corporation    
Senior unsecured debtBBB+Baa2BBB+BBBHAL
Subordinated debtBBBBaa2BBBBBBBBBH
Regions Bank    
Short-termA-2P-1F2R-1LR-IL
Long-term bank depositsN/AA2A-AL
Long-term ratingA-A2BBB+N/A
Senior unsecured debtA-Baa2BBB+ALA
Subordinated debtBBB+Baa2BBBBBBHAL
OutlookStablePositiveStableStablePositive
     
_________
N/A - Not applicable.
In general, ratings agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, probability of government support, and level and quality of earnings. Any downgrade in credit ratings by one or more ratings agencies may impact Regions in several ways, including, but not limited to, Regions’ access to the capital markets or short-term funding, borrowing cost and capacity, collateral requirements, and acceptability of its letters of credit, thereby potentially adversely impacting Regions’ financial condition and liquidity. See the “Risk Factors” section in the Annual Report on Form 10-K for the year ended December 31, 20172018 for more information.
A security rating is not a recommendation to buy, sell or hold securities, and the ratings are subject to revision or withdrawal at any time by the assigning rating agency. Each rating should be evaluated independently of any other rating.
NON-GAAP MEASURES
The table below presents computations of earnings and certain other financial measures, which exclude certain significant items that are included in the financial results presented in accordance with GAAP. These non-GAAP financial measures include “adjusted average total loans,” “adjusted efficiency ratio,” “adjusted fee income ratio,” “return on average tangible common stockholders’ equity,” averageon a consolidated and continuing operations basis, and end of period “tangible common stockholders’ equity,” and “Basel III CET1, on a fully phased-in basis” and related ratios. Regions believes that expressing earnings and certain other financial measures excluding these significant items provides a meaningful base for period-to-period comparisons, which management believes will assist investors in analyzing the operating results of the Company and predicting future performance. These non-GAAP financial measures are also used by management to assess the performance of Regions’ business because management does not consider the activities related to the adjustments to be indications of ongoing operations. Regions believes that presentation of these non-GAAP financial measures will permit investors to assess the performance of the Company on the same basis as that applied by management. Management and the Board utilize these non-GAAP financial measures as follows:
Preparation of Regions’ operating budgets
Monthly financial performance reporting
Monthly close-out reporting of consolidated results (management only)
Presentations to investors of Company performance
Total average loans is presented including (1) the impact of the fourth quarter of 2018 reclassification of purchase cards to commercial and industrial loans from others assets, (2) excluding the impact of the first quarter 2018 residential first mortgage loan sale, and (3) excluding the indirect vehicles third-party exit portfolio to arrive at adjusted average total loans (non-GAAP). Regions believes adjusting average total loans provides a meaning calculation of loan growth rates and presents them on the same basis as that applied by management.
The adjusted efficiency ratio (non-GAAP), which is a measure of productivity, is generally calculated as adjusted non-interest expense divided by adjusted total revenue on a taxable-equivalent basis. The adjusted fee income ratio (non-GAAP) is generally calculated as adjusted non-interest income divided by adjusted total revenue on a taxable-equivalent basis. Management uses these

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ratios to monitor performance and believes these measures provide meaningful information to investors. Non-interest expense (GAAP) is presented excluding adjustments to arrive at adjusted non-interest expense (non-GAAP), which is the numerator for

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the adjusted efficiency ratio. Non-interest income (GAAP) is presented excluding adjustments to arrive at adjusted non-interest income (non-GAAP), which is the numerator for the adjusted fee income ratio. Net interest income and other financing income on a taxable-equivalent basis and non-interest income are added together to arrive at total revenue on a taxable-equivalent basis. Adjustments are made to arrive at adjusted total revenue on a taxable-equivalent basis (non-GAAP), which is the denominator for the adjusted efficiency and adjusted fee income ratios.
Tangible common stockholders’ equity ratios have become a focus of some investors in analyzing the capital position of the Company absent the effects of intangible assets and preferred stock. Traditionally, the Federal Reserve and other banking regulatory bodies have assessed a bank’s capital adequacy based on Tier 1 capital, the calculation of which is codified in federal banking regulations. Analysts and banking regulators have assessed Regions’ capital adequacy using the tangible common stockholders’ equity measure. Because tangible common stockholders’ equity is not formally defined by GAAP, this measure is considered to be a non-GAAP financial measure and other entities may calculate it differently than Regions’ disclosed calculations. Since analysts and banking regulators may assess Regions’ capital adequacy using tangible common stockholders’ equity, Regions believes that it is useful to provide investors the ability to assess Regions’ capital adequacy on this same basis.
The Basel Committee'scalculation of the fully phased-in pro-forma "Common equity Tier 1" (CET1) is based on Regions’ understanding of the Final Basel III framework will strengthen international capital and liquidity regulations. When fully phased-in, Basel III will increase capital requirements through higher minimum capital levels as well as through increases in risk-weights for certain exposures. Additionally, the Basel III Rules place greater emphasis on common equity. The Federal Reserve released its final Basel III Rules detailing the U.S. implementation of Basel III in 2013.requirements. For Regions, as a standardized approach bank, began transitioning to the Basel III framework became effective on a phased-in approach starting in January 2015 with full implementation extending to 2019. The Basel III rules are now fully phased in, other than with respect to deductions and adjustments whose transitional treatment has been extended until the federal banking agencies' September 2017 proposal to revise and simplify the capital treatment of selected categories of assets is finalized. The calculation provided in the following table includes estimated pro-forma amounts for the ratio on a fully phased-in basis. Regions’ current understanding of the final framework includes certain assumptions, including the Company’s interpretation of the requirements, and informal feedback received through the regulatory process. Regions’ understanding of the framework is evolving and will likely change as analyses and discussions with regulators continue. Because Regions is not currently subject to a phase-in period extending through January 2019. Because the Basel III implementation regulations will not be fully phased-in until 2019 and, are not formally defined by GAAP, these measures arecapital rules, this pro-forma measure is considered to be a non-GAAP financial measures.measure, and other entities may calculate it differently from Regions’ disclosed calculation. Since analysts and banking regulators may assess Regions’ capital adequacy using the fully phased-in Basel III framework, Regions believes that it is useful to provide investors information enabling themthe ability to assess Regions’ capital adequacy on thethis same basis.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Although these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. In particular, a measure of earnings that excludes selected items does not represent the amount that effectively accrues directly to stockholders.
The following tables provide: 1) a reconciliation of average total loans to adjusted average total loans (non-GAAP), 2) a reconciliation of net income (GAAP) to net income available to common shareholders (GAAP), 3) a reconciliation of non-interest expense from continuing operations (GAAP) to adjusted non-interest expense from continuing operations (non-GAAP), 4) a reconciliation of non-interest income from continuing operations (GAAP) to adjusted non-interest income from continuing operations (non-GAAP), 5) a computation of adjusted total revenue (non-GAAP), 6) a computation of the adjusted efficiency ratio (non-GAAP), 7) a computation of the adjusted fee income ratio (non-GAAP), 8) a reconciliation of average and ending stockholders’ equity (GAAP) to average and ending tangible common stockholders’ equity (non-GAAP) and calculations of related ratios (non-GAAP), 9) a reconciliation of stockholders’ equity (GAAP) to Basel III CET1, on a fully phased-in basis (non-GAAP), and 10) calculation of the related ratio based on Regions’ current understanding of the Basel III requirements (non-GAAP).
Table 16—GAAP to Non-GAAP Reconciliations 
Three Months Ended June 30 Six Months Ended June 30Three Months Ended March 31
2018 2017 2018 20172019 2018
(In millions, net of unearned income)(Dollar in millions)
ADJUSTED AVERAGE BALANCES OF LOANS          
Average total loans$79,957
 $80,110
 $79,924
 $80,144
$83,725
 $79,891
Less: Balances of residential first mortgage loans sold (1)
—
 254
 81
 254
Less: Indirect—vehicles third-party909
 1,611
 984
 1,722
Add: Purchasing card balances (1)
—
 208
Less: Balances of residential first mortgage loans sold (2)
—
 164
Less: Indirect—vehicles2,924
 3,309
Adjusted average total loans (non-GAAP)$79,048
 $78,245
 $78,859
 $78,168
$80,801
 $76,626


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 Three Months Ended
June 30		 Six Months Ended
June 30		 Three Months Ended March 31
 2018 2017 2018 2017 2019 2018
 (Dollars in millions) (Dollars in millions)
INCOME — CONSOLIDATED
            
Net income (GAAP) $375
 $316
 $789
 $617
 $394
 $414
Preferred dividends (GAAP) (16) (16) (32) (32) (16) (16)
Net income available to common shareholders (GAAP)A$359
 $300
 $757
 $585
A$378
 $398
ADJUSTED EFFICIENCY AND FEE INCOME RATIOS — CONTINUING OPERATIONS
            
Non-interest expense (GAAP)B$911
 $875
 $1,795
 $1,718
B$860
 $884
Significant items:            
Branch consolidation, property and equipment charges (1) (7) (4) (8) (6) (3)
Expenses associated with residential mortgage loan sale —
 —
 (4) —
 —
 (4)
Salary and employee benefits—severance charges (34) (3) (49) (7) (2) (15)
Adjusted non-interest expense (non-GAAP)C$876
 $865
 $1,738
 $1,703
C$852
 $862
Net interest income and other financing income (GAAP) $926
 $882
 $1,835
 $1,741
D$948
 $909
Taxable-equivalent adjustment 12
 22
 25
 44
 13
 13
Net interest income and other financing income, taxable-equivalent basisD938
 904
 1,860
 1,785
Net interest income and other financing income, taxable-equivalent basis - continuing operationsE961
 922
Non-interest income (GAAP)E512
 490
 1,019
 964
F502
 507
Significant items:            
Securities (gains) losses, net (1) (1) (1) (1) 7
 —
Gain on sale of affordable housing residential mortgage loans (2)
 —
 (5) —
 (5)
Leveraged lease termination gains —
 —
 (4) —
 —
 (4)
Gain on sale of affordable housing residential mortgage loans (3)
 (8) —
Adjusted non-interest income (non-GAAP)F$511
 $484
 $1,014
 $958
G$501
 $503
Total revenueD+F=H$1,450
 $1,416
Adjusted total revenueD+G=I$1,449
 $1,412
Total revenue, taxable-equivalent basisD+E=G$1,450
 $1,394
 $2,879
 $2,749
E+F=J$1,463
 $1,429
Adjusted total revenue, taxable-equivalent basis (non-GAAP)D+F=H$1,449
 $1,388
 $2,874
 $2,743
E+G=K$1,462
 $1,425
Efficiency ratio (GAAP)B/G62.74% 62.75% 62.33% 62.49%B/J58.81% 61.92%
Adjusted efficiency ratio (non-GAAP)C/H60.41% 62.29% 60.47% 62.10%C/K58.29% 60.54%
Fee income ratio (GAAP)E/G35.31% 35.19% 35.40% 35.10%F/J34.31% 35.49%
Adjusted fee income ratio (non-GAAP)F/H35.24% 34.90% 35.28% 34.94%G/K34.26% 35.29%
RETURN ON AVERAGE TANGIBLE COMMON STOCKHOLDERS’ EQUITY — CONSOLIDATED
            
Average stockholders’ equity (GAAP) $15,682
 $16,803
 $15,765
 $16,727
 $15,192
 $15,848
Less: Average intangible assets (GAAP) 5,066
 5,108
 5,071
 5,114
 4,940
 5,076
Average deferred tax liability related to intangibles (GAAP) (98) (156) (99) (156) (94) (99)
Average preferred stock (GAAP) 820
 820
 820
 820
 820
 820
Average tangible common stockholders’ equity (non-GAAP)I$9,894
 $11,031
 $9,973
 $10,949
L$9,526
 $10,051
Return on average tangible common stockholders’ equity (non-GAAP(3)
A/I14.54% 10.91% 15.31% 10.77%
Return on average tangible common stockholders’ equity (non-GAAP)(4)
A/L16.09% 16.08%

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  March 31, 2019 December 31, 2018
  (Dollars in millions, except per share data)
TANGIBLE COMMON RATIOS — CONSOLIDATED
    
Ending stockholders’ equity (GAAP) $15,512
 $15,090
Less: Ending intangible assets (GAAP) 4,937
 4,944
  Ending deferred tax liability related to intangibles (GAAP) (94) (94)
  Ending preferred stock (GAAP) 820
 820
Ending tangible common stockholders’ equity (non-GAAP)M$9,849
 $9,420
Ending total assets (GAAP) $128,802
 $125,688
Less: Ending intangible assets (GAAP) 4,937
 4,944
  Ending deferred tax liability related to intangibles (GAAP) (94) (94)
Ending tangible assets (non-GAAP)N$123,959
 $120,838
End of period shares outstandingO1,013
 1,025
Tangible common stockholders’ equity to tangible assets (non-GAAP)M/N7.95% 7.80%
Tangible common book value per share (non-GAAP)M/O$9.72
 $9.19
  June 30, 2018 December 31, 2017
  (Dollars in millions, except per share data)
TANGIBLE COMMON RATIOS — CONSOLIDATED
    
Ending stockholders’ equity (GAAP) $15,777
 $16,192
Less: Ending intangible assets (GAAP) 5,060
 5,081
  Ending deferred tax liability related to intangibles (GAAP) (97) (99)
  Ending preferred stock (GAAP) 820
 820
Ending tangible common stockholders’ equity (non-GAAP)J$9,994
 $10,390
Ending total assets (GAAP) $124,557
 $124,294
Less: Ending intangible assets (GAAP) 5,060
 5,081
  Ending deferred tax liability related to intangibles (GAAP) (97) (99)
Ending tangible assets (non-GAAP)K$119,594
 $119,312
End of period shares outstandingL1,114
 1,134
Tangible common stockholders’ equity to tangible assets (non-GAAP)J/K8.36% 8.71%
Tangible common book value per share (non-GAAP)J/L$8.97
 $9.16
 June 30, 2018 December 31, 2017 March 31, 2019 December 31, 2018
 (Dollars in millions, except per share data) (Dollars in millions, except per share data)
BASEL III COMMON EQUITY TIER 1 RATIO—FULLY PHASED-IN PRO-FORMA (4)(5)
        
Stockholders’ equity (GAAP) $15,777
 $16,192
 $15,512
 $15,090
Non-qualifying goodwill and intangibles (4,953) (4,972) (4,833) (4,839)
Adjustments, including all components of accumulated other comprehensive income, disallowed deferred tax assets, threshold deductions and other adjustments 1,230
 712
 584
 940
Preferred stock (GAAP) (820) (820) (820) (820)
Basel III common equity Tier 1—Fully Phased-In Pro-Forma (non-GAAP)
M$11,234
 $11,112
P$10,443
 $10,371
Basel III risk-weighted assets—Fully Phased-In Pro-Forma (non-GAAP) (5)(6)
N$102,819
 $101,498
Q$107,128
 $105,475
Basel III common equity Tier 1 ratio—Fully Phased-In Pro-Forma (non-GAAP)
M/N10.93% 10.95%P/Q9.75% 9.83%
_________
(1) Adjustments to average loan balances assume a simple day-weighted average impact for the first six months of 2018, and are equal to the ending balance of the residential first mortgage loans sold for the prior periods.
(1)On December 31, 2018, purchasing cards were reclassified to commercial and industrial loans from other assets.
(2)InAdjustments to average loan balances assume a simple day-weighted average impact for the fourthfirst quarter of 2016, the Company sold2018.
(3)The gain on sale of affordable housing residential mortgage loans to Freddie Mac. Approximately $91 million were sold with recourse, resulting in a deferred gain of $5 million, which was recognized during the secondfirst quarter of 2017.2019 was the result of the sale of approximately $167 million of loans.
(4)Income statement amounts have been annualized in calculation.
(3) Income statement amounts have been annualized in calculation.
(4)(5) Current quarter amounts and the resulting ratio are estimated.
(5)Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III on a fully phased-in basis. The amounts included above are a reasonable approximation, based on current understanding of the requirements.
(6) Regions continues to develop systems and internal controls to precisely calculate risk-weighted assets as required by Basel III on a fully phased-in basis. The amounts included above are a reasonable approximation, based on current understanding of the requirements.

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OPERATING RESULTS
NET INTEREST INCOME AND MARGIN
Table 17—Consolidated Average Daily Balances and Yield/Rate Analysis
Three Months Ended June 30Three Months Ended March 31
2018 20172019 2018
Average
Balance
 
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Income/
Expense
 
Yield/
Rate
Average
Balance
 
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Income/
Expense
 
Yield/
Rate
(Dollars in millions; yields on taxable-equivalent basis)(Dollars in millions; yields on taxable-equivalent basis)
Assets                      
Earning assets:                      
Federal funds sold and securities purchased under agreements to resell$—
 $—
 —% $1
 $—
 —%$—
 $—
 —% $1
 $—
 —%
Debt securities:           
Debt securities—taxable24,386
 156
 2.57
 25,090
 150
 2.40
24,251
 165
 2.72
 24,588
 154
 2.52
Loans held for sale388
 4
 4.21
 509
 4
 3.43
302
 3
 3.63
 359
 3
 3.21
Loans, net of unearned income (1)(2)
79,957
 893
 4.46
 80,110
 823
 4.10
83,725
 994
 4.78
 79,891
 864
 4.35
Investment in operating leases, net439
 4
 3.59
 631
 6
 2.88
364
 3
 3.41
 472
 4
 2.82
Other earning assets2,558
 17
 2.60
 2,861
 10
 1.47
1,849
 19
 4.29
 2,853
 19
 2.71
Total earning assets107,728
 1,074
 3.98
 109,202
 993
 3.63
110,491
 1,184
 4.31
 108,164
 1,044
 3.88
Allowance for loan losses(848)     (1,069)    (843)     (933)    
Cash and due from banks1,953
     1,856
    1,893
     1,951
    
Other non-earning assets14,127
     13,854
    14,002
     14,312
    
$122,960
     $123,843
    $125,543
     $123,494
    
Liabilities and Stockholders’ Equity                      
Interest-bearing liabilities:                      
Savings$8,981
 3
 0.15
 $8,359
 4
 0.15
$8,852
 4
 0.17
 $8,615
 4
 0.18
Interest-bearing checking19,534
 18
 0.38
 19,272
 8
 0.19
19,309
 33
 0.69
 19,935
 16
 0.32
Money market24,235
 19
 0.30
 26,712
 10
 0.15
23,989
 40
 0.68
 24,601
 14
 0.24
Time deposits6,692
 17
 0.98
 7,005
 15
 0.87
8,124
 31
 1.56
 6,813
 15
 0.91
Total interest-bearing deposits (3)
59,442
 57
 0.38
 61,348
 37
 0.24
60,274
 108
 0.73
 59,964
 49
 0.33
Federal funds purchased and securities sold under agreements to repurchase41
 1
 1.83
 —
 —
 —
343
 2
 2.41
 103
 —
 —
Other short-term borrowings1,161
 5
 1.90
 422
 2
 0.99
1,735
 11
 2.55
 156
 1
 1.46
Long-term borrowings8,742
 73
 3.35
 6,748
 50
 2.97
11,753
 102
 3.47
 9,531
 72
 3.00
Total interest-bearing liabilities69,386
 136
 0.79
 68,518
 89
 0.52
74,105
 223
 1.22
 69,754
 122
 0.71
Non-interest-bearing deposits (3)
35,811
 —
 —
 36,141
 —
 —
33,896
 —
 —
 35,464
 —
 —
Total funding sources105,197
 136
 0.52
 104,659
 89
 0.34
108,001
 223
 0.83
 105,218
 122
 0.46
Net interest spread    3.19
     3.11
    3.09
     3.17
Other liabilities2,081
     2,387
    2,350
     2,428
    
Stockholders’ equity15,682
     16,797
    15,192
     15,848
    
$122,960
     $123,843
    $125,543
     $123,494
    
Net interest income and other financing income/margin on a taxable-equivalent basis (4)
  $938
 3.49%   $904
 3.32%  $961
 3.53%   $922
 3.46%
_____
(1)Loans, net of unearned income include non-accrual loans for all periods presented.
(2)Interest income includes net loan fees of $6$1 million and $5 million for each of the periods presented.three months ended March 31, 2019 and 2018, respectively.
(3)Total deposit costs may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest-bearing deposits. The rates for total deposit costs equal 0.24%0.46% and 0.15%0.21% for the three months ended June 30,March 31, 2019 and 2018, and 2017, respectively.
(4)The computation of taxable-equivalent net interest income and other financing income is based on the statutory federal income tax rate of 21% for both March 31, 2019 and 35% for June 30, 2018, and 2017, respectively, adjusted for applicable state income taxes net of the related federal tax benefit.




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 Six Months Ended June 30
 2018 2017
 Average Balance Income/
Expense		 Yield/
Rate		 Average
Balance		 Income/
Expense		 Yield/
Rate
 (Dollars in millions; yields on taxable-equivalent basis)
Assets           
Earning assets:           
Federal funds sold and securities purchased under agreements to resell$—
 $—
 —% $1
 $—
 —%
Debt securities—taxable24,486
 310
 2.56
 24,988
 297
 2.40
Loans held for sale373
 7
 3.73
 525
 8
 3.20
Loans, net of unearned income (1)(2)
79,924
 1,757
 4.40
 80,144
 1,618
 4.04
Investment in operating leases, net456
 8
 3.19
 655
 11
 3.07
Other earning assets2,706
 36
 2.66
 3,307
 25
 1.54
Total earning assets107,945
 2,118
 3.93
 109,620
 1,959
 3.58
Allowance for loan losses(890)     (1,081)    
Cash and due from banks1,952
     1,877
    
Other non-earning assets14,219
     13,908
    
 $123,226
     $124,324
    
Liabilities and Stockholders’ Equity           
Interest-bearing liabilities:           
Savings$8,799
 7
 0.16
 $8,205
 7
 0.16
Interest-bearing checking19,734
 34
 0.35
 19,592
 16
 0.17
Money market24,417
 33
 0.27
 26,968
 19
 0.14
Time deposits6,752
 32
 0.94
 7,075
 30
 0.85
Total interest-bearing deposits (3)
59,702
 106
 0.36
 61,840
 72 0.23
Federal funds purchased and securities sold under agreements to repurchase72
 1
 1.55
 —
 —
 —
Other short-term borrowings661
 6
 1.85
 356
 2
 0.86
Long-term borrowings9,135
 145
 3.17
 7,103
 100
 2.82
Total interest-bearing liabilities69,570
 258
 0.75
 69,299
 174 0.51
Non-interest-bearing deposits (3)
35,638
 —
 —
 35,886
 —
 —
Total funding sources105,208
 258
 0.49
 105,185
 174 0.33
Net interest spread    3.18
     3.07
Other liabilities2,253
     2,416
    
Stockholders’ equity15,765
     16,723
    
 $123,226
     $124,324
    
Net interest income and other financing income/margin on a taxable-equivalent basis (4)
  $1,860
 3.48%   $1,785
 3.28%
_______
(1)Loans, net of unearned income include non-accrual loans for all periods presented.
(2)Interest income includes net loan fees of $11 million for both six months ended June 30, 2018 and 2017.
(3)Total deposit costs may be calculated by dividing total interest expense on deposits by the sum of interest-bearing deposits and non-interest-bearing deposits. The rates for total deposit costs equal 0.22% and 0.15% for the six months ended June 30, 2018 and 2017, respectively.
(4)The computation of taxable-equivalent net interest income and other financing income is based on the statutory federal income tax rate of 21% and 35% for June 30, 2018 and 2017, respectively, adjusted for applicable state income taxes net of the related federal tax benefit.

For the secondfirst quarter of 2018,2019, net interest income and other financing income (taxable-equivalent basis) totaled $938$961 million compared to $904$922 million in the secondfirst quarter of 2017.2018. The net interest margin (taxable-equivalent basis) was 3.49 percent for the second quarter of 2018 and 3.32 percent for the second quarter of 2017. Net interest income and other financing income (taxable-equivalent basis) totaled $1.9 billion and $1.8 billion for the first six months of 2018 and 2017, respectively. The net interest margin (taxable-equivalent basis) was 3.48 percent and 3.283.53 percent for the first six monthsquarter of 20182019 and 2017, respectively.3.46 percent for the first quarter of 2018. The increase in net interest margin (taxable-equivalent basis) for the secondfirst quarter and first six months of 2018,2019, compared to the same periodsperiod of 2017,2018, was primarily due to higher market interest rates and prudent deposit cost management.

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Management expects tohigher yields on earning assets, particularly loans, exceeding the increase adjusted net interest income and other financing income (non-GAAP and non-taxable equivalent) in the range of 4 to 6 percent on a full year basis in 2018. Based on recent performance and market conditions, the Company currently expects to be toward the upper end of the range.total funding costs.
MARKET RISK—INTEREST RATE RISK
Regions’ primary market risk is interest rate risk. This includes uncertainty with respect to absolute interest rate levels as well as relative interest rate levels, which are impacted by both the shape and the slope of the various yield curves that affect the financial products and services that the Company offers. To quantify this risk, Regions measures the change in its net interest income and other financing income in various interest rate scenarios compared to a base case scenario. Net interest income and other financing income sensitivity to market rate movements is a useful short-term indicator of Regions’ interest rate risk.
Sensitivity Measurement—Financial simulation models are Regions’ primary tools used to measure interest rate exposure. Using a wide range of sophisticated simulation techniques provides management with extensive information on the potential impact to net interest income and other financing income caused by changes in interest rates. Models are structured to simulate cash flows and accrual characteristics of Regions’ balance sheet. Assumptions are made about the direction and volatility of interest rates, the slope of the yield curve, and the changing composition of the balance sheet that results from both strategic plans and from customer behavior. Among the assumptions are expectations of balance sheet growth and composition, the pricing and maturity characteristics of existing business and the characteristics of future business. Interest rate-related risks are expressly considered, such as pricing spreads, the pricing of deposit accounts, prepayments and other option risks. Regions considers these factors, as well as the degree of certainty or uncertainty surrounding their future behavior.
The primary objective of asset/liability management at Regions is to coordinate balance sheet composition with interest rate risk management to sustain reasonable and stable net interest income and other financing income throughout various interest rate cycles. In computing interest rate sensitivity for measurement, Regions compares a set of alternative interest rate scenarios to the results of a base case scenario derived using “market forward rates.” The standard set of interest rate scenarios includes the traditional instantaneous parallel rate shifts of plus 100 and 200 basis points. While not presented, up-rateGiven low market rates by historical standards, the Company continues to present the minus 100 basis point shock. Rising and falling rate scenarios of greater magnitude are also analyzed. LargerWhile not presented in Table 18, the impact of a larger magnitude down-rate scenarios continue to be of limited usedown rate scenario based on historical yield curve minimums is explained in the current rate environment; however, recent increases in short-term rates have caused Regions to transition to a minus 100 basis point scenario, as opposed to the minus 50 basis point scenario that had been presented in recent years.following section. In addition to parallel curve shifts, multiple curve steepening and flattening scenarios are contemplated. Regions includes simulations of gradual interest rate movements phased in over a six-month period that may more realistically mimic the speed of potential interest rate movements.
Exposure to Interest Rate Movements—Movements—As of June 30, 2018,March 31, 2019, Regions was asset sensitive to both gradual and instantaneous parallel yield curve shifts as compared to the base case for the measurement horizon ending June 2019.March 2020. The estimated exposure associated with the parallel yield curve shift of minus 100 basis points in the table below reflects the combined impacts of movements in short-term and long-term interest rates. The decline in short-term interest rates (such as the Fed Funds rate, the rate of Interest on Excess Reserves and 1 month LIBOR) will lead to a reduction of yield on assets and liabilities contractually tied to such rates. Recent Fed Funds increases have not resulted in a meaningfulmodest increase in deposit and other funding costs for Regions. Therefore, it is expected that declines in depositfunding costs will only partially offset the decline in asset yields. A reduction in intermediate and long-term interest rates (such as intermediate to longer-term U.S. Treasuries, swap and mortgage rates) will drive yields lower on certain fixed rate, newly originated or renewed loans, reduce prospective yields on certain investment portfolio purchases, and increase amortization of premium expense on existing securities in the investment portfolio. At current rate levels, the interest income sensitivity afforded by potential further extension of investment securities and the resulting impact on premium amortization is reduced, making intermediate and long-term interest rate sensitivity primarily attributable to changes in the level of reinvestment yields on fixed rate assets.
With respect to sensitivity along the yield curve, the balance sheet is estimated to be asset sensitive to short-term, intermediate-term, and long-term rates individually. Current simulation models estimate that, as compared to the base case, net interest income and other financing income over a 12 month horizon would respond favorably by approximately $83$82 million if intermediate and longer-term interest rates were to immediately and on a sustained basis exceed the base scenario by 100 basis points. Conversely, if intermediate and longer-term interest rates were to immediately and on a sustained basis underperform the base case by 100 basis points, then net interest income and other financing income, as compared to the base case, would decline by approximately $116$119 million.
The table below summarizes Regions' positioning in various parallel yield curve shifts (i.e., including all yield curve tenors). The scenarios are inclusive of all interest rate risk hedging activities. Forward starting hedges that have been transacted are contemplated to the extent they start within the measurement horizon. Forward starting hedging relationships are currently being used to protect net interest income and other financing income as the macroeconomic cycle continues to evolve. Therefore, the Company's sensitivity levels are expected to decline to be roughly neutral in early 2020. More information regarding forward starting hedges is disclosed in Table 19 and its accompanying description.

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Table 18—Interest Rate Sensitivity
 
Estimated Annual Change
in Net Interest Income
June 30, 2018March 31, 2019
 (In millions)
Gradual Change in Interest Rates 
+ 200 basis points
$167164
+ 100 basis points9694
- 100 basis points(125124)
  
Instantaneous Change in Interest Rates 
+ 200 basis points
$159145
+ 100 basis points10794
- 100 basis points(197179)
As market interest rates have increased in recent years, larger magnitude falling rate shock scenarios have become possible, although the probability of such a movement is currently low. Regions has established a scenario by which yield curve tenors will fall to a consistent level. The shock magnitude for each tenor, when compared to market forward rates, equates to the lesser of -200 basis points, or a rate modestly lower than the historical all-time minimum. This provides a sufficiently punitive rate environment, while maintaining a higher level of reasonableness. An instantaneous shock under this environment would be expected to reduce net interest income and other financing income when compared to the base case by $384 million over the next 12 months.
As discussed above, the interest rate sensitivity analysis presented in Table 18 is informed by a variety of assumptions and estimates regarding the course of the balance sheet in both the baseline scenario as well as the scenarios of instantaneous and gradual shifts in the yield curve. Though there are many assumptions that affect the estimates for net interest income and other financing income, those pertaining to deposit pricing, deposit mix and overall balance sheet composition are particularly impactful. Given the uncertainties associated with the prolonged period of low interest rates, management evaluates the impact to its sensitivity analysis of these key assumptions. Sensitivity calculations are hypothetical and should not be considered to be predictive of future results.
The Company’s baseline balance sheet growth assumptions include moderate loan and deposit growth reflecting management's best estimate. The behavior of deposits in response to changes in interest rate levels is largely informed by analyses of prior rate cycles, but with suitable adjustments based on management’s expectations in the current rate environment. In the +200+ 100 basis point gradual interest rate change scenario in Table 18, the total cumulative interest bearinginterest-bearing deposit re-pricing sensitivity over the 12 month horizon is expected to be approximately 60between 50 percent and 70 percent of changes in short-term market rates (e.g., Fed Funds), as compared to approximately 55 percent in the 2004 to 2007 historical timeframe. Recently observed market rate movements have yielded higher levels of asset sensitivity than modeled due primarily to outperformance in deposit betas as compared to the model assumption.. A 5 percentage point lowerhigher sensitivity than the 60 percent baseline assumption would increasedecrease 12 month net interest income and other financing income in the gradual +200+100 basis points scenario by approximately $60$22 million. While the estimates should be used as a guide, differences may result driven by the pace of rate changes, and other market and competitive factors.
Similarly, management assumes that the change in the mix of deposits in a rising rate environment versus the baseline balance sheet growth assumptions is informed by analyses of prior rate cycles. Management assumes that in rising rate scenarios, some shift from non-interest bearing to interest-bearing products will occur. As the rate cycle has progressed and a mix shift has become inherent in the baseline forecast, management has reduced the sensitivity impact on the shock scenarios. The magnitude of the shift is rate dependent butand equates to approximately $3.5$1.5 billion over 12 months in the gradual +200+100 basis point scenario in Table 18. In the event this shift increased by an additional $3.0$1.5 billion over 12 months, the result would be a reduction of 12 month net interest income and other financing income in the gradual +200+100 basis points scenario by approximately $30$19 million.
Interest rate movements may also have an impact on the value of Regions’ securities portfolio, which can directly impact the carrying value of stockholders’ equity. Regions from time to time may hedge these price movements with derivatives (as discussed below).
Derivatives—Regions uses financial derivative instruments for management of interest rate sensitivity. ALCO, which consists of members of Regions’ senior management team, in its oversight role for the management of interest rate sensitivity, approves the use of derivatives in balance sheet hedging strategies. Derivatives are also used to offset the risks associated with customer derivatives, which include interest rate, credit and foreign exchange risks. The most common derivatives Regions employs are forward rate contracts, Eurodollar futures contracts, interest rate swaps, options on interest rate swaps, interest rate caps and floors, and forward sale commitments.
Forward rate contracts are commitments to buy or sell financial instruments at a future date at a specified price or yield. A Eurodollar futures contract is a future on a Eurodollar deposit. Eurodollar futures contracts subject Regions to market risk associated with changes in interest rates. Because futures contracts are cash settled daily, there is minimal credit risk associated with Eurodollar

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futures. Interest rate swaps are contractual agreements typically entered into to exchange fixed for variable (or vice versa) streams of interest payments. The notional principal is not exchanged but is used as a reference for the size of interest settlements. Interest rate options are contracts that allow the buyer to purchase or sell a financial instrument at a predetermined price and time. Forward sale commitments are contractual obligations to sell market instruments at a future date for an already agreed-upon price. Foreign currency contracts involve the exchange of one currency for another on a specified date and at a specified rate. These contracts

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are executed on behalf of the Company's customers and are used by customers to manage fluctuations in foreign exchange rates. The Company is subject to the credit risk that another party will fail to perform.
Regions has made use of interest rate swaps and floors in balance sheet hedging strategies to effectively convert a portion of its fixed-rate funding position and available for sale securities portfolios to a variable-rate position and to effectively convert a portion of its variable-rate loan portfolios to fixed-rate. Regions also uses derivatives to economically manage interest rate and pricing risk associated with its mortgage origination business. In the period of time that elapses between the origination and sale of mortgage loans, changes in interest rates have the potential to cause a decline in the value of the loans in this held-for-sale portfolio. Futures contracts and forward sale commitments are used to protect the value of the loan pipeline and loans held for sale from changes in interest rates and pricing.
The following table presents additional information about the hedging interest rate derivatives used by Regions to manage interest rate risk:
Table 19—Hedging Derivatives by Interest Rate Risk Management Strategy
 June 30, 2018
   Weighted-Average
 Notional
Amount		 Maturity (Years) Receive Rate Pay Rate
 (Dollars in millions)
Interest rate swaps:       
Derivatives in fair value hedging relationships:       
     Receive fixed/pay variable$3,400
 2.5
 1.6% 2.2%
     Receive variable/pay fixed101
 8.3
 2.2
 2.4
Derivatives in cash flow hedging relationships:       
     Receive fixed/pay variable8,825
 5.5
 1.7
 2.2
     Total derivatives designated as hedging instruments$12,326
 4.7
 1.7% 2.2%
 March 31, 2019
   Weighted-Average  
 Notional
Amount		 Maturity (Years) 
Receive Rate(1)
 
Pay Rate(1)
 
Strike Price(1)
 (Dollars in millions)
Derivatives in fair value hedging relationships:         
     Receive fixed/pay variable swaps$3,650
 3.0
 1.9% 2.6% —%
     Receive variable/pay fixed swaps81
 4.6
 2.6
 2.4
 —
Derivatives in cash flow hedging relationships:         
     Receive fixed/pay variable swaps9,750
 5.6
 2.1
 2.4
 —
     Interest rate floors4,750
 5.9
 —
 —
 2.1
     Total derivatives designated as hedging instruments$18,231
 5.2
 2.1% 2.4% 2.1%

_________
(1)Variable rate indexes on swap and floor contracts reference a combination of short-term LIBOR benchmarks, primarily 1 month LIBOR.
A portion of the cash flow hedging relationships designated above in Table 19 are forward starting, and therefore do not impact, or have limited impact to the estimated annual change in net interest income discussed in Table 18. As of March 31, 2019, $4.75 billion notional of the outstanding cash flow swaps were forward starting. All interest rate floors are forward starting. Forward starting swaps and floors have maturities of approximately five years from their respective start dates. Subsequent to March 31, 2019, the Company executed $750 million notional of forward starting cash flow swaps and $1.0 billion notional of forward starting floors with similar characteristics, start dates and maturities, to the forward starting hedges already transacted. Inclusive of these contracts, the total receive rate and strike price on all forward starting cash flow swaps and floors was 2.7 percent and 2.1 percent, respectively.
Regions manages the credit risk of these instruments in much the same way as it manages credit risk of the loan portfolios by establishing credit limits for each counterparty and through collateral agreements for dealer transactions. For non-dealer transactions, the need for collateral is evaluated on an individual transaction basis and is primarily dependent on the financial strength of the counterparty. Credit risk is also reduced significantly by entering into legally enforceable master netting agreements. When there is more than one transaction with a counterparty and there is a legally enforceable master netting agreement in place, the exposure represents the net of the gain and loss positions with and collateral received from and/or posted to that counterparty. All of interest rate swap derivatives traded by Regions are subject to mandatory clearing. The counterparty risk for cleared trades effectively moves from the executing broker to the clearinghouse allowing Regions to benefit from the risk mitigation controls in place at the respective clearinghouse. The “Credit Risk” section in Regions’ Annual Report on Form 10-K for the year ended December 31, 20172018 contains more information on the management of credit risk.
Regions also uses derivatives to meet the needs of its customers. Interest rate swaps, interest rate options and foreign exchange forwards are the most common derivatives sold to customers. Other derivative instruments with similar characteristics are used to hedge market risk and minimize volatility associated with this portfolio. Instruments used to service customers are held in the trading account, with changes in value recorded in the consolidated statements of income.

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The primary objective of Regions’ hedging strategies is to mitigate the impact of interest rate changes, from an economic perspective, on net interest income and other financing income and the net present value of its balance sheet. The overall effectiveness of these hedging strategies is subject to market conditions, the quality of Regions’ execution, the accuracy of its valuation assumptions, counterparty credit risk and changes in interest rates. See Note 109 “Derivative Financial Instruments and Hedging Activities” to the consolidated financial statements for a tabular summary of Regions’ quarter-end derivatives positions and further discussion.
Regions accounts for residential MSRs at fair market value with any changes to fair value being recorded within mortgage income. Regions enters into derivative and balance sheet transactions to economically mitigate the impact of market value fluctuations related to residential MSRs. Derivative instruments entered into in the future could be materially different from the current risk profile of Regions’ current portfolio.

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MARKET RISK—PREPAYMENT RISK
Regions, like most financial institutions, is subject to changing prepayment speeds on mortgage-related assets under different interest rate environments. Prepayment risk is a significant risk to earnings and specifically to net interest income and other financing income. For example, mortgage loans and other financial assets may be prepaid by a debtor, so that the debtor may refinance its obligations at lower rates. As loans and other financial assets prepay in a falling rate environment, Regions must reinvest these funds in lower-yielding assets. Prepayments of assets carrying higher rates reduce Regions’ interest income and overall asset yields. Conversely, in a rising rate environment, these assets will prepay at a slower rate, resulting in opportunity cost by not having the cash flow to reinvest at higher rates. Prepayment risk can also impact the value of securities and the carrying value of equity. Regions’ greatest exposures to prepayment risks primarily rest in its mortgage-backed securities portfolio, the mortgage fixed-rate loan portfolio and the residential MSR, all of which tend to be sensitive to interest rate movements. Each of these assets is also exposed to prepayment risk due to factors which are not necessarily the result of interest rates, but rather due to changes in policies or programs related, either directly or indirectly, to the U.S. Government's governance over certain lending and financing within the mortgage market. Such policies can work to either encourage or discourage financing dynamics and represent a risk that is extremely difficult to forecast and may be the result of non-economic factors. The Company attempts to monitor and manage such exposures within reasonable expectations while acknowledging all such risks cannot be foreseen or avoided. Further, Regions has prepayment risk that would be reflected in non-interest income in the form of servicing income on the residential MSR. Regions actively monitors prepayment exposure as part of its overall net interest income and other financing income forecasting and interest rate risk management.
LIQUIDITY RISK
Liquidity is an important factor in the financial condition of Regions and affects Regions’ ability to meet the borrowing needs and deposit withdrawal requirements of its customers. The liquidity coverage ratio rule is designed to ensure that financial institutions have the necessary assets on hand to withstand short-term liquidity disruptions. See the "Liquidity Coverage Ratio" discussion included in the "Regulatory Requirements" section of Management's Discussion and Analysis for additional information.
Regions intends to fund its obligations primarily through cash generated from normal operations. Regions also has obligations related to potential litigation contingencies. See Note 1312 “Commitments, Contingencies and Guarantees” to the consolidated financial statements for additional discussion of the Company’s funding requirements. Regions also has obligations related to potential litigation contingencies.
Assets, consisting principally of loans and securities, are funded by customer deposits, borrowed funds and stockholders’ equity. Regions’ goal in liquidity management is to satisfy the cash flow requirements of depositors and borrowers, while at the same time meeting the Company’s cash flow needs. Having and using various sources of liquidity to satisfy the Company’s funding requirements is important.
In order to ensure an appropriate level of liquidity is maintained, Regions performs specific procedures including scenario analyses and stress testing at the bank, holding company, and affiliate levels. Regions' liquidity policy requires the holding company to maintain cash sufficient to cover the greater of (1) 18 months of debt service and other cash needs or (2) a minimum cash balance of $500 million. Cash and cash equivalents at the holding company totaled $1.0$2.3 billion at June 30, 2018.March 31, 2019. Compliance with the holding company cash requirements is reported to the Risk Committee of the Board on a quarterly basis. Regions also has minimum liquidity requirements for the Bank and subsidiaries. The Bank's funding and contingency planning does not currently include any reliance on short-term unsecured sources. Risk limits are established withinby the Board through its Risk Appetite Statement and Liquidity Policy. The Company's Liquidity Risk Oversight CommitteeBoard, LROC, and ALCO which regularly reviewsreview compliance with the established limits.
The securities portfolio is one of Regions’ primary sources of liquidity. Proceeds from maturities and principal and interest payments of securities provide a constant flow of funds available for cash needs (see Note 32 “Debt Securities” to the consolidated financial statements). The agency guaranteed mortgage-backed securities portfolio is another source of liquidity in various secured borrowing capacities.
Maturities in the loan portfolio also provide a steady flow of funds. Additional funds are provided from payments on consumer loans and one-to-four family residential first mortgage loans. Regions’ liquidity is further enhanced by its relatively stable customer deposit base. Liquidity needs can also be met by borrowing funds in state and national money markets, although Regions does not currently rely on short-term unsecured wholesale market funding.

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The balance with the FRB is the primary component of the balance sheet line item, “interest-bearing deposits in other banks.” At June 30, 2018,March 31, 2019, Regions had approximately $2.4$2.1 billion in cash on deposit with the FRB, an increase from approximately $1.9$1.5 billion at December 31, 2017.2018.
Regions’ borrowing availability with the FRB as of June 30, 2018,March 31, 2019, based on assets pledged as collateral on that date, was $17.4$19.8 billion.
Regions’ financing arrangement with the FHLB adds additional flexibility in managing the Company's liquidity position. As of June 30, 2018,March 31, 2019, Regions’ outstanding balance of FHLB borrowings was $6.6$8.5 billion and its total borrowing capacity from the FHLB totaled $17.1$17.5 billion. FHLB borrowing capacity is contingent on the amount of collateral pledged to the FHLB. Regions Bank pledged certain securities, commercial and real estate mortgage loans, residential first mortgage loans on one-to-four family

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dwellings and home equity lines of credit as collateral for the FHLB advances outstanding. Additionally, investment in FHLB stock is required in relation to the level of outstanding borrowings. Refer to Note 8 "Other Earning Assets" to the consolidated financial statements in the 20172018 Annual Report on Form 10-K for additional information. The FHLB has been and is expected to continue to be a reliable and economical source of funding.
Regions maintains a shelf registration statement with the SEC that can be utilized by Regions to issue various debt and/or equity securities. Additionally, Regions' Board has authorized Regions may alsoBank to issue up to $10 billion in aggregate principal amount of bank notes from time to time, either as part of a bank note program or as stand-alone issuances.outstanding at any one time. Refer to Note 13 "Long-Term Borrowings" to the consolidated financial statements in the 20172018 Annual Report on Form 10-K for additional information.
Regions may, from time to time, consider opportunistically retiring outstanding issued securities, including subordinated debt in privately negotiated or open market transactions for cash or common shares. Regulatory approval would be required for retirement of some instruments.
CREDIT RISK
Regions’ objective regarding credit risk is to maintain a credit portfolio that provides for stable credit costs with acceptable volatility through an economic cycle. Regions has a diversified loan portfolio in terms of product type, collateral and geography. See Table 2 for further details of each loan portfolio segment. See the “Portfolio Characteristics” section of the Annual Report on Form 10-K for the year ended December 31, 20172018 for a discussion of risk characteristics of each loan type.
INFORMATION SECURITY RISK
Regions faces a variety of operational risks, including information security risks. Information security risks, such as evolving and adaptive cyber attacks that are conducted regularly against Regions and other large financial institutions to compromise or disable information systems, have generally increased in recent years. This trend is expected to continue for a number of reasons, including the proliferation of new technologies, including technology-based products and services used by us and our customers, the increasing use of mobile devices and cloud technologies, the ability to conduct more financial transactions conducted online, and the increasing sophistication and activities of organized crime, hackers, terrorists, nation-states, activists and other external parties or fraud on the part of employees.
Regions devotes significant financial and non-financial resources to identify and mitigate threats to the confidentiality, availability and integrity of its information systems. Regions regularly assesses the threats and vulnerabilities to its environment so it can update and maintain its systems and controls to effectively mitigate these risks. Layered security controls are designed to complement each other to protect customer information and transactions. Regions regularly tests its control environment utilizing practices such as penetration testing and more targeted assessments to ensure its controls are working as expected. Regions will continue to commit the resources necessary to mitigate these growing cyber risks, as well as continue to develop and enhance controls, processes and technology to protect its systems from attacks or unauthorized access. In addition, Regions maintains a strong commitment to a comprehensive risk management program that includes due diligence and oversight of third-party relationships with vendors.
Regions’ system of internal controls also incorporates an organization-wide protocol for the appropriate reporting and escalation of information security matters to management and the Board, to ensure effective and efficient resolution and, if necessary, disclosure of any matters. The Board is actively engaged in the oversight of Regions’ continuous efforts to reinforce and enhance its operational resilience. The Board monitors Regions’ information management risk policies and practices primarily through its Risk Committee, which oversees areas of operational risk such as information technology activities; risks associated with development, infrastructure, and cybersecurity; approval and oversight of information security risk assessments, strategies, policies and programs; and disaster recovery, business continuity, and incident response plans. Additionally, the Board’s Audit Committee regularly reviews Regions’ cybersecurity practices, mainly by receiving reports on the cybersecurity management program prepared by the Chief Information Security Officer, risk management, and Internal Audit. The Board, through its various committees, is briefed at least quarterly on information security matters.
Regions participates in information sharing organizations such as FS-ISAC, to gather and share information with peer banks and other financial institutions to better prepare and protect its information systems from attack. FS-ISAC is a nonprofit organization whose objective is to protect the financial services sector against cyber and physical threats and risk. It acts as a trusted third party

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that provides anonymity to allow members to submit threat, vulnerability and incident information in a non-attributable and trusted manner so information that would normally not be shared is instead made available to other members for the greater good of the membership. In addition to FS-ISAC, Regions is a member of BITS. BITS serves the financial community and its members by providing industry best practices on a variety of security and fraud topics.
Regions has contracts with vendors to provide denial of service mitigation. These vendors have also committed the necessary resources to support Regions in the event of a cyber event. Even though Regions devotes significant resources to combat cyber security risks, there is no guarantee that these measures will provide absolute security. As an additional security measure, Regions has engaged a computer forensics firm and an industry-leading consulting firm on retainer in case of a cyber event. Furthermore, someRegions has also developed and maintains robust business continuity and disaster recovery plans that it could implement in the event of a cyber event so as to mitigate the effects of any such event. Some of Regions' exposure with respect to data breaches may be offset by applicable insurance.
Even if Regions successfully prevents cyber attacks on to its own network, the Company may still incur losses that result from customers' account information obtained through breaches of retailers' networks where customers have transacted business. The fraud losses, as well as the costs of investigations and re-issuing new customer cards, may impact Regions' financial results. In addition, Regions also relies on some vendors to provide certain components of its business infrastructure, and although Regions actively assesses and monitors the information security capabilities of these vendors, Regions' reliance on them may also increase exposure to information security risk.
In the event of a cyber attackcyber-attack or other data breach, Regions may be required to incur significant expenses, including with respect to remediation costs, costs of implementing additional preventative measures, addressing any reputational harm and addressing any related regulatory inquiries or civil litigation arising from the event.

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PROVISION (CREDIT) FOR LOAN LOSSES
The provision (credit) for loan losses is used to maintain the allowance for loan losses at a level that in management’s judgment is appropriate to absorb probable losses inherent in the portfolio at the balance sheet date. The provision (credit) for loan losses totaled $60$91 million in the secondfirst quarter of 20182019 compared to $48$(10) million during the secondfirst quarter of 2017. The provision for loan losses totaled $50 million for the first six months of 2018 compared to $118 million for the first six months of 2017.2018. Refer to the "Allowance for Credit Losses" section of Management's Discussion and Analysis for further detail.
NON-INTEREST INCOME
Table 20—Non-Interest Income from Continuing Operations
 Three Months Ended June 30 Quarter-to-Date Change 6/30/2018 vs. 6/30/2017
 2018 2017 Amount Percent
 (Dollars in millions)
Service charges on deposit accounts$175
 $169
 $6
 3.6 %
Card and ATM fees112
 104
 8
 7.7 %
Investment management and trust income58
 57
 1
 1.8 %
Capital markets income57
 38
 19
 50.0 %
Mortgage income37
 40
 (3) (7.5)%
Bank-owned life insurance18
 22
 (4) (18.2)%
Commercial credit fee income17
 18
 (1) (5.6)%
Investment services fee income19
 15
 4
 26.7 %
Securities gains (losses), net1
 1
 —
 NM
Market value adjustments on employee benefit assets(2) 2
 (4) (200.0)%
Other miscellaneous income20
 24
 (4) (16.7)%
 $512
 $490
 $22
 4.5 %
Six Months Ended June 30 Year-to-Date Change 6/30/2018 vs. 6/30/2017Three Months Ended March 31  3/31/2019 vs. 3/31/2018
2018 2017 Amount Percent2019 2018 Amount Percent
(Dollars in millions)(Dollars in millions)
Service charges on deposit accounts$346
 $337
 $9
 2.7 %$175
 $171
 $4
 2.3 %
Card and ATM fees216
 208
 8
 3.8 %109
 104
 5
 4.8 %
Investment management and trust income116
 113
 3
 2.7 %
Investment management and trust fee income57
 58
 (1) (1.7)%
Capital markets income107
 70
 37
 52.9 %42
 50
 (8) (16.0)%
Mortgage income75
 81
 (6) (7.4)%27
 38
 (11) (28.9)%
Investment services fee income19
 17
 2
 11.8 %
Commercial credit fee income18
 17
 1
 5.9 %
Bank-owned life insurance35
 41
 (6) (14.6)%23
 17
 6
 35.3 %
Commercial credit fee income34
 36
 (2) (5.6)%
Investment services fee income36
 31
 5
 16.1 %
Securities gains (losses), net1
 1
 —
 NM
(7) —
 (7) NM
Market value adjustments on employee benefit assets(3) 7
 (10) (142.9)%
Market value adjustments on employee benefit assets - defined benefit5
 (1) 6
 NM
Market value adjustments on employee benefit assets - other(1) —
 (1) NM
Other miscellaneous income56
 39
 17
 43.6 %35
 36
 (1) (2.8)%
$1,019
 $964
 $55
 5.7 %$502
 $507
 $(5) (1.0)%
________
NM - Not Meaningful

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Service charges on deposit accounts—Service charges on deposit accounts include non-sufficient fund fees and other service charges. The increasesincrease during the secondfirst quarter of 2018 and the first six months of 20182019 compared to the same periodsperiod of 2017 were2018 was primarily due to continued customer account growth and increases in non-sufficient fund activity.
Card and ATM fees—Card and ATM fees include the combined amounts of credit card/bank card income and debit card and ATM related revenue. The increases in the second quarter of 2018 and first six months of 2018 compared to the same periods of 2017 were primarily the result of account growth and the related increase in commercial and consumer checkcard interchange income.
Capital markets income —income—Capital markets income primarily relates to capital raising activities that includes securities underwriting and placement, loan syndication and placement, as well as foreign exchange, derivatives, merger and acquisition and other advisory fees.services. The increasesdecrease in the secondfirst quarter of 2018 and the first six months of 20182019 compared to the same periodsperiod in

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2017 were 2018 was primarily due to increases in income from mergers and acquisitions advisory fees, customer interest rate swap income, loan syndication fees, andlower fees generated from the placement of permanent financing for real estate customers. Partially offsetting this decrease was an increase in merger and acquisition advisory services.
Mortgage income—Mortgage income is generated through the origination and servicing of residential mortgage loans for long-term investors and sales of residential mortgage loans in the secondary market. The decrease in mortgage income during the first three months of 2019 compared to the same period in 2018 was primarily due to reduction in the valuation of mortgage serving rights and related hedges, lower production and lower sales revenue. The decreases were partially offset by an increase in servicing income.
Bank-owned life insurance—Bank-owned life insurance increased in the first quarter of 2019 compared to the same period in 2018 due primarily to an increase in claims benefits and favorable market adjustments.
Securities gains (losses), net—Net securities underwriting and placement.gains (losses) primarily result from the Company's asset/liability management process. The net loss incurred during the first quarter of 2019 was primarily due to the sale of certain lower-yielding securities.
Market value adjustments on employee benefit assets—Market value adjustments on employee benefit assets, decreased inboth defined benefit and other, are the second quarter and the first six monthsreflection of 2018 compared to the same periods of 2017 reflecting market value variations related to assets held for certain employee benefits. TheseThe adjustments reported as employee benefit assets - other are offset in salaries and benefits expense.benefits.
Other miscellaneous income—Other miscellaneous income includes net revenue from affordable housing, valuation adjustments to equity investments, fees from safe deposit boxes, check fees and other miscellaneous income. Net revenue from affordable housing includes actual gains and losses resulting from the sale of affordable housing investments, cash distributions from the investments and any related impairment charges. Other miscellaneous income increasedwas relatively unchanged in the first six monthsquarter of 20182019 compared to the same period in 2018. However, there were certain transactions in each quarter that offset. During the first quarter of 2017 primarily due to2018, $7 million in net gains associated with the sale of certain low income housing investments a $6 million increase to the value of an equity method investment, and $4 million in leveraged lease termination gains, all of which occurred duringwere recorded. During the first quarter of 2018.2019, an $8 million gain associated with the sale of $167 million of affordable housing residential mortgage loans was recognized.
NON-INTEREST EXPENSE
Table 21—Non-Interest Expense from Continuing Operations
 Three Months Ended June 30 Quarter-to-Date Change 6/30/2018 vs 6/30/2017
 2018 2017 Amount Percent
 (Dollars in millions)
Salaries and employee benefits$511
 $470
 $41
 8.7 %
Net occupancy expense84
 85
 (1) (1.2)%
Furniture and equipment expense81
 84
 (3) (3.6)%
Outside services48
 43
 5
 11.6 %
FDIC insurance assessments25
 26
 (1) (3.8)%
Professional, legal and regulatory expenses33
 28
 5
 17.9 %
Marketing25
 22
 3
 13.6 %
Branch consolidation, property and equipment charges1
 7
 (6) (85.7)%
Visa class B shares expense10
 1
 9
 NM
Provision (credit) for unfunded credit losses(1) (3) 2
 (66.7)%
Other miscellaneous expenses94
 112
 (18) (16.1)%
 $911
 $875
 $36
 4.1 %
Six Months Ended June 30 Year-to-Date Change 6/30/2018 vs. 6/30/2017Three Months Ended March 31 3/31/2019 vs. 3/31/2018
2018 2017 Amount Percent2019 2018 Amount Percent
(Dollars in millions)(Dollars in millions)
Salaries and employee benefits$1,006
 $931
 $75
 8.1 %$478
 $495
 $(17) (3.4)%
Net occupancy expense167
 168
 (1) (0.6)%82
 83
 (1) (1.2)%
Furniture and equipment expense162
 163
 (1) (0.6)%76
 81
 (5) (6.2)%
Outside services95
 83
 12
 14.5 %45
 47
 (2) (4.3)%
FDIC insurance assessments49
 53
 (4) (7.5)%
Professional, legal and regulatory expenses60
 49
 11
 22.4 %20
 27
 (7) (25.9)%
Marketing51
 46
 5
 10.9 %23
 26
 (3) (11.5)%
FDIC insurance assessments13
 24
 (11) (45.8)%
Branch consolidation, property and equipment charges4
 8
 (4) (50.0)%6
 3
 3
 100.0 %
Visa class B shares expense12
 4
 8
 200.0 %4
 2
 2
 100.0 %
Provision (credit) for unfunded credit losses(5) (2) (3) 150.0 %(1) (4) 3
 (75.0)%
Other miscellaneous expenses194
 215
 (21) (9.8)%114
 100
 14
 14.0 %
$1,795
 $1,718
 $77
 4.5 %$860
 $884
 $(24) (2.7)%
Salaries and employee benefits—Salaries and employee benefits includeconsist of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and medical, life and disability insurance, as well as, expenses from liabilities held for employee benefit purposes. Salaries and employee benefits increaseddecreased for the secondfirst quarter and first six months of 20182019 compared to the same periodsperiod in 2017. The primary drivers of the increases were higher2018 primarily due to staffing reductions and lower severance charges, annual merit increases and higher production-based incentive expenses, partially offset by staffing reductions.charges. Severance charges totaled $49 million and $7$2 million for the first six months of 2018 and 2017, respectively.quarter 2019 compared to $15 million for first quarter 2018. Full-time equivalent headcount from

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from continuing operations decreased to 20,32620,056 at June 30,March 31, 2019 from 20,666 at March 31, 2018, from 21,412 at June 30, 2017, reflecting the impact of the Company's efficiency initiatives implemented as part of its strategic priorities.
Outside services—Outside services consists of expenses related to routine services provided by third parties, such as contract labor, servicing costs, data processing, loan pricing and research, data license purchases, data subscriptions, and check printing. Outside services increased during the second quarter and the first six months of 2018 compared to the same periods of 2017 primarily due to increased servicing costs related to point-of-sale lending through third parties and additional expenses recorded related to a new Wealth Management platform.
Professional legal and regulatory expenses—fees—Professional, legal and regulatory expenses consist of amounts related to legal, consulting, other professional fees and regulatory charges. Professional, legal and regulatory expenses increaseddecreased during the secondfirst quarter andof 2019 compared to the first six monthsquarter of 2018 primarily due to lower consulting fees.
FDIC insurance assessments—FDIC insurance assessments decreased in the first quarter of 2019 compared to the same periods in 2017period of 2018 due to higher consulting feesthe discontinuation of the FDIC assessment surcharge that was implemented during the third quarter of 2016 and litigation-related costs.
Visa class B shares expense—Visa class B share expense is associated with shares soldwas in a prior year. The Visa class B shares have restrictions tied to finalization of certain covered litigation. Visa class B shares expense increased in both the second quarter andplace throughout the first sixnine months of 2018 compared to the same periods of 2017 as a result of changes in the status of that litigation.2018.
Other miscellaneous expenses—Other miscellaneous expenses include expenses related to communications, postage, supplies, certain credit-related costs, foreclosed property expenses, and mortgage repurchase costs.costs, operational losses and other costs (benefits) related to employee benefit plans. Other miscellaneous expenses decreasedincreased during the secondfirst quarter and the first six months of 20182019 compared to the same periodsperiod of 20172018 primarily due to decreased valuation chargesan increase in non-service related pension costs associated with other real estate anda lower non-service cost related pension and other postretirement benefits expense resulting from a settlement charge recorded in the second quarter of 2017.discount rate as well as higher operational losses.
INCOME TAXES
The Company’s income tax expense from continuing operations for the three months ended June 30, 2018March 31, 2019 was $89$105 million and $133$128 million for the three months ended June 30, 2017,March 31, 2018, resulting in effective taxes rates of 19.221.0 percent and 29.523.6 percent, respectively. Income tax expense from continuing operations for the six months ended June 30, 2018 was $217 million compared to income tax expense of $260 million for the same period in 2017, resulting in effective tax rates of 21.5 percent and 29.9 percent, respectively. The effective tax rate is lower in both current periods due to Tax Reform enacted in December 2017 that reduced the federal statutory rate from 35 percent to 21 percent effective January 1, 2018. The Company expects the full-year effective tax rate will range fromto be 20 percent to 22 percent for 2018 excluding2019.
Many factors impact the impact of unanticipated discrete items.
The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, the mix of income between various tax jurisdictions with differing tax rates, net tax benefits related to affordable housing investments, bank-owned life insurance, tax-exempt interest, and nondeductible expenses. In addition, the effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as the termination of certain leveraged leases, share-based payments, valuation allowance changes and changes to unrecognized tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.
At June 30, 2018,March 31, 2019, the Company reported a net deferred tax assetliability of $222$120 million compared to a net deferred tax asset of $163$20 million at December 31, 2017. The increase in the net deferred tax asset2018. This change was due primarily due to an increasea decrease in the deferred tax asset related to the unrealized losses on available for sale securities and derivative instruments, and was partially offset by an increase in the deferred tax liability related to employee benefits and a decrease in the deferred tax asset related to the allowance for loan losses.instruments.
DISCONTINUED OPERATIONS
On April 4, 2018, Regions entered into a stock purchase agreement to sell Regions Insurance Group, Inc. and related affiliates to BB&T Insurance Holdings, Inc. The transaction closed on July 2, 2018. Morgan Keegan was sold on April 2, 2012.
Regions' results from discontinued operations are presented in Note 23 "Discontinued Operations" to the consolidated financial statements.statements in the Annual Report on Form 10-K for the year ended December 31, 2018. The three and six months ended June 30, 2018 lossesresults from discontinued operations for both the first quarter of 2019 and 2018 were immaterial, and the six months ended June 30, 2017 income from discontinued operations was primarily the result of recoveries of legal expenses related to Morgan Keegan.immaterial.


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Item 3. Quantitative and Qualitative Disclosures about Market Risk
Reference is made to pages 8372 through 8675 included in Management’s Discussion and Analysis.
Item 4. Controls and Procedures
Based on an evaluation, as of the end of the period covered by this Form 10-Q, under the supervision and with the participation of Regions’ management, including its Chief Executive Officer and Chief Financial Officer, the Chief Executive Officer and Chief Financial Officer have concluded that Regions’ disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) are effective. During the quarter ended June 30, 2018,March 31, 2019, there have been no changes in Regions’ internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, Regions’ internal control over financial reporting.


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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Information required by this item is set forth in Note 13,12, “Commitments, Contingencies and Guarantees” in the Notes to the Consolidated Financial Statements (Unaudited) in Part I. Item 1. of this report, which is incorporated by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Information concerning Regions’ repurchases of its outstanding common stock during the three month period ended June 30, 2018,March 31, 2019, is set forth in the following table:
Issuer Purchases of Equity Securities
Period
Total Number of
Shares Purchased
 
Average Price Paid
Per Share
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs
April 1-30, 20181,000,000
 $18.89
 1,000,000
 $216,625,445
May 1-31, 201811,436,681
 $18.92
 11,436,681
 $30,276
June 1-30, 2018—
 $—
 —
 $30,276
Total 2nd Quarter12,436,681
 $18.92
 12,436,681
 $30,276
Period 
Total Number of
Shares Purchased
 
Average Price Paid
Per Share
 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs
January 1-31, 2019 3,092,227
 $15.42
 3,092,227
 $332,061,751
February 1-28, 2019 4,269,778
 $15.50
 4,269,778
 $265,808,406
March 1-31, 2019 4,809,858
 $15.76
 4,809,858
 $189,920,841
Total 1st Quarter 12,171,863
 $15.58
 12,171,863
 $189,920,841
On June 28, 2017, Regions' Board authorized a $1.47 billion common stock repurchase plan, permitting repurchases from the beginning of the third quarter of 2017 through the second quarter of 2018. As of June 30, 2018, Regions had repurchased approximately 90.6 million shares of common stock at a total cost of approximately $1.5 billion under this plan and concluded the plan during the second quarter of 2018.
Regions' Board authorized, effective June 28, 2018, a new $2.031 billion common stock repurchase plan, permitting repurchases from the beginning of the third quarter of 2018 through the end of the second quarter of 2019. As of March 31, 2019, Regions has repurchased approximately 102.6 million shares of common stock, through open market purchases and a contractual repurchase agreement, at a total cost of $1.8 billion under this plan. The Company beganalso continued to repurchase shares on the open market under thisits capital plan in the thirdsecond quarter of 2018, and as2019. As of AugustMay 7, 2018,2019, Regions had repurchased approximately 16.44.8 million shares of common stock at a total cost of approximately $308.8$74.5 million. All of these shares were immediately retired upon repurchase and, therefore, will not be included in treasury stock.
Restrictions on Dividends and Repurchase of Stock
Holders of Regions common stock are only entitled to receive such dividends as Regions’ Board may declare out of funds legally available for such payments. Furthermore, holders of Regions common stock are subject to the prior dividend rights of the holders of Regions preferred stock then outstanding.
Regions understands the importance of returning capital to shareholders. Management will continue to execute the capital planning process, including evaluation of the amount of the common dividend, with the Board and in conjunction with the regulatory supervisors, subject to the Company’s results of operations. Also, Regions is a BHC, and its ability to declare and pay dividends is dependent on certain federal regulatory considerations, including the guidelines of the Federal Reserve regarding capital adequacy and dividends.
On November 1, 2012, Regions completed the sale of 20 million depositary shares, each representing a 1/40th ownership interest in a share of its 6.375% Non-Cumulative Perpetual Preferred Stock, Series A, par value $1.00 per share (“Series A Preferred Stock”), with a liquidation preference of $1,000 per share of Series A Preferred Stock (equivalent to $25 per depositary share). The terms of the Series A Preferred Stock prohibit Regions from declaring or paying any dividends on any junior series of its capital stock, including its common stock, or from repurchasing, redeeming or acquiring such junior stock, unless Regions has declared and paid full dividends on the Series A Preferred Stock for the most recently completed dividend period. The Series A Preferred Stock is redeemable at Regions’ option in whole or in part, from time to time, on any dividend payment date on or after December 15, 2017, or in whole, but not in part, at any time within 90 days following a regulatory capital treatment event (as defined in the certificate of designations establishing the Series A Preferred Stock).
On April 29, 2014, Regions completed the sale of 20 million depositary shares, each representing a 1/40th ownership interest in a share of its 6.375% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series B, par value $1.00 per share (“Series B Preferred Stock”), with a liquidation preference of $1,000 per share of Series B Preferred Stock (equivalent to $25 per depositary share). The terms of the Series B Preferred Stock prohibit Regions from declaring or paying any dividends on any junior series of its capital stock, including its common stock, or from repurchasing, redeeming or acquiring such junior stock, unless Regions has declared and paid full dividends on the Series B Preferred Stock for the most recently completed dividend period. The Series B Preferred Stock is redeemable at Regions’ option in whole or in part, from time to time, on any dividend payment date on or after September 15, 2024, or in whole but not in part, at any time following a regulatory capital treatment event (as defined in the certificate of designations establishing the Series B Preferred Stock).

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Item 6. Exhibits
The following is a list of exhibits including items incorporated by reference
3.1 
Amended and Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Form 10-Q Quarterly Report filed by registrant on August 6, 2012.
  
3.2 
Certificate of Designations, incorporated by reference to Exhibit 3.3 to Form 8-A filed by registrant on November 1, 2012.
   
3.3 
Certificate of Designations, incorporated by reference to Exhibit 3.3 to the Form 8-A filed by registrant on April 28, 2014.
  
3.4 
Certificate of Designations, incorporated by reference to Exhibit 3.4 to the Form 8-A filed by registrant on April 29, 2019.
3.5
By-laws as amended and restated, incorporated by reference to Exhibit 3.2 to Form 8-K Current Report filed by registrant on July 25, 2018.
   
10.14.1 
2018 FormDeposit Agreement, dated as of NoticeApril 30, 2019, by and Form of Restricted Stock Unit Award Agreement underamong Regions Financial Corporation, 2015 Long Term Incentive Plan.Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary, and the holders from time to time of the depositary receipts described therein, incorporated by reference to Exhibit 4.1 to Form 8-A filed by registrant on April 29, 2019.
   
10.2
2018 Form of Notice and Form of Performance Stock Unit Award Agreement under Regions Financial Corporation 2015 Long Term Incentive Plan.
10.3
2018 Form of Notice and Form of Performance Unit Award Agreement under Regions Financial Corporation 2015 Long Term Incentive Plan.
10.44.2 
Form of Change-in-Control Agreement with executive officer John M. Turner, Jr.,depositary receipt representing the Depositary Shares, incorporated by reference to Exhibit 99.34.2 to Form 8-K Current Report8-A filed by registrant on June 19, 2018.April 29, 2019.
 
10.5
Amendment Number Three to the Regions Financial Corporation Supplemental 401(k) Plan Restated as of January 1, 2014.
10.6
Form of Aircraft Time Sharing Agreement, incorporated by reference to Exhibit 99.2 to Form 8-K Current Report filed by registrant on June 19, 2018.
10.7
Regions Financial Corporation Use of Corporate Aircraft Policy, amended and restated June 2018.
12
Computation of Ratio of Earnings to Fixed Charges.
  
31.1 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  
31.2 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  
32 
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  
101 Interactive Data File


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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   
DATE: AugustMay 8, 20182019 Regions Financial Corporation
  
  
/S/    HARDIE B. KIMBROUGH, JR.        
  
Hardie B. Kimbrough, Jr.
Executive Vice President and Controller
(Chief Accounting Officer and Authorized Officer)


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