

	2019						2018
	Notional Amount		Estimated Fair Value				Notional Amount		Estimated Fair Value
	Notional Amount		Gain⁽¹⁾		Loss⁽¹⁾		Notional Amount		Gain⁽¹⁾		Loss⁽¹⁾
	(In millions)
Derivatives in fair value hedging relationships:
Interest rate swaps	$	2,900					$	3,231
Derivatives in cash flow hedging relationships:
Interest rate swaps	17,250						8,750
Interest rate floors ⁽²⁾	6,750		208				3,250		72
Total derivatives designated as hedging instruments	$	26,900	$	208			$	15,231	$	72
Derivatives not designated as hedging instruments:
Interest rate swaps	$	68,075	$	376	$	164	$	49,737	$	193	$	237
Interest rate options	11,347		27		9		7,178		29		20
Interest rate futures and forward commitments	27,324		10		11		7,961		4		9
Other contracts	10,276		48		58		7,287		72		74
Total derivatives not designated as hedging instruments	$	117,022	$	461	$	242	$	72,163	$	298	$	340
Total derivatives	$	143,922	$	669	$	242	$	87,394	$	370	$	340

Total gross derivative instruments, before netting			$	669	$	242			$	370	$	340
Less: Legally enforceable master netting agreements			105		105				108		108
Less: Cash collateral received/posted			229		90				135		71
Total gross derivative instruments, after netting ⁽³⁾			$	335	$	47			$	127	$	161

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. Additional information regarding accounting policies for derivatives is described in Note 1.

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.

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 and interest rate floors.

Regions recognized an unrealized after-tax gain of $58 million and $51 million in accumulated other comprehensive income (loss) at December 31, 2019 and 2018, respectively, related to discontinued cash flow hedges of loan instruments which will be amortized into earnings in conjunction with the recognition of interest payments through 2026. Regions recognized pre-tax income of $14 million and $45 million during the years ended December 31, 2019 and 2018, respectively related to the amortization of discontinued cash flow hedges of loan instruments.

Regions expects to reclassify into earnings approximately $50 million in pre-tax expense due to the receipt or payment of interest payments and floor premium amortization on all cash flow hedges within the next twelve months. Included in this amount is $9 million in pre-tax net gains 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 7 years as of December 31, 2019, and a portion of these hedges are forward starting.



	2019
	Interest Income						Interest Expense			Non-interest Expense
	Debt securities-taxable			Loans, including fees			Long-term borrowings			Other
	(In millions)
Total amounts presented in the consolidated statements of income	$	643		$	3,866		$	351		$	927

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	—		$	—		$	(14	)	$	—
Recognized on derivatives	(2		)	—			92			—
Recognized on hedged items	2			—			(92		)	—
Net income (expense) recognized on fair value hedges	$	—		$	—		$	(14	)	$	—

Gains/(losses) on cash flow hedging relationships: ⁽¹⁾
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income ⁽²⁾	$	—		$	(24	)	$	—		$	—
Net income (expense) recognized on cash flow hedges ⁽²⁾	$	—		$	(24	)	$	—		$	—



	2018
	Interest Income					Interest Expense			Non-interest Expense
	Debt securities-taxable			Loans, including fees		Long-term borrowings			Other
	(In millions)
Total amounts presented in the consolidated statements of income	$	625		$	3,613	$	322		$	963

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	(1	)	$	—	$	(15	)	$	—
Recognized on derivatives	4			—		1			—
Recognized on hedged items	(4		)	—		(1		)	—
Net income (expense) recognized on fair value hedges	$	(1	)	$	—	$	(15	)	$	—

Gains/(losses) on cash flow hedging relationships: ⁽¹⁾
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income ⁽²⁾	$	—		$	12	$	—		$	—
Net income (expense) recognized on cash flow hedges ⁽²⁾	$	—		$	12	$	—		$	—



	2017
	Interest Income					Interest Expense		Non-interest Expense
	Debt securities-taxable			Loans, including fees		Long-term borrowings		Other
	(In millions)
Total amounts presented in the consolidated statements of income	$	596		$	3,228	$	212	$	952

Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
Amounts related to interest settlements on derivatives	$	(4	)	$	—	$	2	$	—
Recognized on derivatives	—			—		—		(19		)
Recognized on hedged items	—			—		—		20
Net income (expense) recognized on fair value hedges	$	(4	)	$	—	$	2	$	1

Gains/(losses) on cash flow hedging relationships: ⁽¹⁾
Interest rate contracts:
Realized gains (losses) reclassified from AOCI into net income ⁽²⁾	$	—		$	86	$	—	$	—
Net income (expense) recognized on cash flow hedges ⁽²⁾	$	—		$	86	$	—	$	—

The following tables present 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 as of December 31:



	2019						2018
	Hedged Items Currently Designated						Hedged Items Currently Designated
	Carrying 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	$	—		$	—		$	85		$	—
Long-term borrowings	(2,954		)	(49		)	(3,103		)	50

During 2019 and 2018, the Company terminated fair value hedges related to available for sale debt securities with carrying values of $337 million and $604 million, respectively. The remaining basis adjustments related to these terminated hedges were $3 million and $4 million, respectively. The Company also de-designated fair value hedges in conjunction with a 2019 debt tender offer. New fair value hedges were transacted for the debt that was not tendered and the basis adjustment of $2 million related to the terminated fair value hedges was included in the carrying amount of the remaining debt at December 31, 2019. See Note 12 for further information regarding the debt tender offer.

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 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 income) 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 December 31, 2019 and 2018, Regions had $366 million and $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 December 31, 2019 and 2018, Regions had $662 million and $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 income.

Regions has elected to account for residential MSRs at fair market 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 December 31, 2019 and 2018, the total notional amount related to these contracts was $4.8 billion and $5.7 billion, respectively.



Derivatives Not Designated as Hedging Instruments	2019			2018			2017
	(In millions)
Capital markets income:
Interest rate swaps	$	13		$	19		$	11
Interest rate options	23			28			28
Interest rate futures and forward commitments	10			3			10
Other contracts	(1		)	5			(10		)
Total capital markets income	45			55			39
Mortgage income:
Interest rate swaps	68			(12		)	2
Interest rate options	(1		)	—			(7		)
Interest rate futures and forward commitments	5			(8		)	(3		)
Total mortgage income	72			(20		)	(8		)
	$	117		$	35		$	31

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 2020 and 2029. Swap participations, whereby Regions has sold credit protection have maturities between 2020 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 December 31, 2019 was approximately $592 million. This scenario occurs if variable interest rates were at zero percent and all counterparties defaulted with zero recovery. The fair value of sold protection at December 31, 2019 and 2018 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.

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.

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 December 31, 2019 and 2018, were $64 million and $45 million, respectively, for which Regions had posted collateral of $67 million and $43 million, respectively, in the normal course of business.