v3.20.4
Allowance for Credit Losses
 12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Allowance for Credit Losses
NOTE 6. ALLOWANCE FOR CREDIT LOSSES
Regions determines the appropriate level of the allowance on a quarterly basis. The methodology is described in Note 1.
On January 1, 2020, Regions adopted CECL, which replaces the incurred loss methodology with an expected loss methodology. Refer to Note 1 for a description of the adoption of CECL and Regions' allowance methodology. Additionally, 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, 2019, for a description of the methodology prior to the adoption of CECL on January 1, 2020.
As of December 31, 2020, Regions' total loans included $3.6 billion of PPP loans. These loans are guaranteed by the Federal government and as the guarantee is not separable from the loans, Regions recorded an immaterial allowance on these loans.
ROLLFORWARD OF ALLOWANCE FOR CREDIT LOSSES
The cumulative effect of the adoption of CECL on January 1, 2020 for loans and unfunded commitments was an increase in the allowance of $501 million. During 2020, Regions increased the allowance by an additional $878 million to $2.3 billion, which represents management's best estimate of expected losses over the life of the portfolio. The increase was due primarily to
higher expected credit losses due to the economic impact and ongoing uncertainty of the COVID-19 pandemic and the purchase of Ascentium. Macroeconomic factors utilized in the CECL loss models include, but are not limited to, unemployment rate, GDP, HPI and the S&P 500 index, with unemployment being the most significant macroeconomic factor within the CECL models. Regions' models are sensitive to changes in the economic scenario, specifically to the level of unemployment. The December 31, 2020 economic forecast includes a high degree of uncertainty around how long the COVID-19 pandemic will persist, the timeliness and effectiveness of vaccinations and the effectiveness of government relief programs and debt payment relief provided by Regions. These factors cannot be fully reflected in the models. Therefore, the risks to the economic forecast and the model limitations were considered through model adjustments and the qualitative framework.
The following tables present analyses of the allowance for credit losses by portfolio segment for the years ended December 31, 2020, 2019 and 2018. The total allowance for loan losses and the related loan portfolio ending balances for the years ended 2019 and 2018 are disaggregated to detail the amounts derived through individual evaluation and collective evaluation for impairment. Prior to 2020, the allowance for loan losses related to individually evaluated loans was attributable to allowances for non-accrual commercial and investor real estate loans and all TDRs ("impaired loans") and the allowance for loan losses related to collectively evaluated loans was attributable to the remainder of the portfolio. With the adoption of CECL on January 1, 2020, the impaired loan designation and disclosures related to impaired loans are no longer required.
 2020
 CommercialInvestor Real
Estate		ConsumerTotal
 (In millions)
Allowance for loan losses, December 31, 2019$537 $45 $287 $869 
Cumulative change in accounting guidance (Note 1)(3)7 434 438 
Allowance for loan losses, January 1, 2020 (adjusted for change in accounting guidance)534 52 721 1,307 
Provision for loan losses927 129 256 1,312 
Initial allowance on acquired PCD loans60 — — 60 
Loan losses:
Charge-offs(368)(1)(244)(613)
Recoveries43 3 55 101 
Net loan losses(325)2 (189)(512)
Allowance for loan losses, December 31, 2020$1,196 $183 $788 $2,167 
Reserve for unfunded credit commitments, December 31, 201941 4 — 45 
Cumulative change in accounting guidance (Note 1)36 13 14 63 
Reserve for unfunded credit commitments, January 1, 2020 (adjusted for change in accounting guidance)77 17 14 108 
Provision (credit) for unfunded credit losses20 (3)1 18 
Reserve for unfunded credit commitments, December 31, 202097 14 15 126 
Allowance for credit losses, December 31, 2020$1,293 $197 $803 $2,293 
 2019
 CommercialInvestor Real
Estate		ConsumerTotal
 (In millions)
Allowance for loan losses, January 1, 2019$520 $58 $262 $840 
Provision (credit) for loan losses138 (16)265 387 
Loan losses:
Charge-offs(150)(1)(292)(443)
Recoveries29 4 52 85 
Net loan losses(121)3 (240)(358)
Allowance for loan losses, December 31, 2019537 45 287 869 
Reserve for unfunded credit commitments, January 1, 201947 4 — 51 
Provision (credit) for unfunded credit losses(6)— — (6)
Reserve for unfunded credit commitments, December 31, 201941 4 — 45 
Allowance for credit losses, December 31, 2019$578 $49 $287 $914 
Portion of ending allowance for loan losses:
Individually evaluated for impairment$120 $4 $29 $153 
Collectively evaluated for impairment417 41 258 716 
Total allowance for loan losses$537 $45 $287 $869 
Portion of loan portfolio ending balance:
Individually evaluated for impairment$537 $34 $381 $952 
Collectively evaluated for impairment45,302 6,523 30,186 82,011 
Total loans evaluated for impairment$45,839 $6,557 $30,567 $82,963 

 2018
 CommercialInvestor Real
Estate		ConsumerTotal
 (In millions)
Allowance for loan losses, January 1, 2018$591 $64 $279 $934 
Provision (credit) for loan losses32 (5)202 229 
Loan losses:
Charge-offs(148)(9)(276)(433)
Recoveries45 8 57 110 
Net loan losses(103)(1)(219)(323)
Allowance for loan losses, December 31, 2018520 58 262 840 
Reserve for unfunded credit commitments, January 1, 201849 4 — 53 
Provision (credit) for unfunded credit losses(2)— — (2)
Reserve for unfunded credit commitments, December 31, 201847 4 — 51 
Allowance for credit losses, December 31, 2018$567 $62 $262 $891 
Portion of ending allowance for loan losses:
Individually evaluated for impairment$104 $2 $26 $132 
Collectively evaluated for impairment416 56 236 708 
Total allowance for loan losses$520 $58 $262 $840 
Portion of loan portfolio ending balance:
Individually evaluated for impairment$490 $25 $419 $934 
Collectively evaluated for impairment44,725 6,411 31,082 82,218 
Total loans evaluated for impairment$45,215 $6,436 $31,501 $83,152 
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 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 lines, home equity loans, 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 includes 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.
CREDIT QUALITY INDICATORS
The following tables present credit quality indicators for the loan portfolio segments and classes, excluding loans held for sale, as of December 31, 2020.
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.”
Regions considers factors such as periodic updates of FICO scores, unemployment rates, home prices, accrual status and geography as credit quality indicators for the consumer loan portfolio. FICO scores are obtained at origination as part of Regions' formal underwriting process. Refreshed FICO scores are obtained by the Company quarterly for all consumer loans, including residential first mortgage loans. Current FICO data is not available for certain loans in the portfolio for various reasons; for example, if customers do not use sufficient credit, an updated score may not be available. These categories are utilized to develop the associated allowance for credit losses. The higher the FICO score the less probability of default and vice versa.
With the adoption of CECL in 2020, the disclosure of credit quality indicators for loan portfolio segments and classes, excluding loans held for sale, is presented by credit quality indicator by vintage year. Regions defines the vintage date for the purposes of disclosure as the date of the most recent credit decision. In general, renewals are categorized as new credit decisions and reflect the renewal date as the vintage date. Loans that are modified as a TDR are considered to be a continuation of the original loan, therefore the origination date of the original loan is reflected as the vintage date. The following tables present applicable credit quality indicators for the loan portfolio segments and classes, excluding loans held for sale, as of December 31, 2020. Classes in the commercial and investor real estate portfolio segments are disclosed by risk rating. Classes in the consumer portfolio segment are disclosed by current FICO scores. Refer to Note 6 "Allowance for Credit Losses" in the
Annual Report on Form 10-K for the year ended December 31, 2019, for disclosure of the Credit Quality Indicators as of December 31, 2019.
December 31, 2020
Term LoansRevolving Loans Revolving Loans Converted to Amortizing
Unallocated (1)
Total
Origination Year
20202019201820172016Prior
(In millions)
Commercial and industrial:
   Risk Rating:
   Pass$12,260 $6,115 $3,550 $2,413 $1,166 $2,493 $12,138 $— $(39)$40,096 
   Special Mention133 250 376 84 5 48 722 — — 1,618 
   Substandard Accrual41 50 78 55 20 4 490 — — 738 
   Non-accrual42 59 97 20 23 19 158 — — 418 
Total commercial and industrial$12,476 $6,474 $4,101 $2,572 $1,214 $2,564 $13,508 $— $(39)$42,870 
Commercial real estate mortgage—owner-occupied:
   Risk Rating:
   Pass$1,379 $882 $913 $547 $401 $801 $140 $— $(3)$5,060 
   Special Mention18 31 23 22 10 44 6 — — 154 
   Substandard Accrual3 38 16 16 4 15 2 — — 94 
   Non-accrual14 23 19 21 6 14 — — — 97 
Total commercial real estate mortgage—owner-occupied:$1,414 $974 $971 $606 $421 $874 $148 $— $(3)$5,405 
Commercial real estate construction—owner-occupied:
   Risk Rating:
   Pass$61 $75 $39 $24 $24 $40 $9 $— $— $272 
   Special Mention1 — — 2 2 — — — — 5 
   Substandard Accrual— 3 1 3 4 3 — — — 14 
   Non-accrual— — — 1 — 8 — — — 9 
Total commercial real estate construction—owner-occupied:$62 $78 $40 $30 $30 $51 $9 $— $— $300 
Total commercial$13,952 $7,526 $5,112 $3,208 $1,665 $3,489 $13,665 $— $(42)$48,575 
Commercial investor real estate mortgage:
   Risk Rating:
   Pass$1,663 $1,243 $1,137 $252 $65 $162 $332 $— $(5)$4,849 
   Special Mention5 77 76 15 — 7 — — — 180 
   Substandard Accrual69 114 57 — 2 9 — — — 251 
   Non-accrual— 44 1 — — 1 68 — — 114 
Total commercial investor real estate mortgage$1,737 $1,478 $1,271 $267 $67 $179 $400 $— $(5)$5,394 
December 31, 2020
Term LoansRevolving Loans Revolving Loans Converted to Amortizing
Unallocated (1)
Total
Origination Year
20202019201820172016Prior
(In millions)
Commercial investor real estate construction:
   Risk Rating:
   Pass$224 $601 $266 $1 $— $1 $679 $— $(11)$1,761 
   Special Mention30 36 31 — — — 9 — — 106 
   Substandard Accrual1 1 — — — — — — — 2 
   Non-accrual— — — — — — — — — — 
Total commercial investor real estate construction$255 $638 $297 $1 $— $1 $688 $— $(11)$1,869 
Total investor real estate$1,992 $2,116 $1,568 $268 $67 $180 $1,088 $— $(16)$7,263 
Residential first mortgage:
FICO scores
   Above 720$5,564 $1,738 $809 $1,023 $1,279 $2,709 $— $— $— $13,122 
   681-720525 189 103 112 113 360 — — — 1,402 
   620-680211 100 73 64 67 404 — — — 919 
   Below 62031 44 50 51 60 499 — — — 735 
   Data not available52 23 13 16 15 126 10 — 142 397 
Total residential first mortgage$6,383 $2,094 $1,048 $1,266 $1,534 $4,098 $10 $— $142 $16,575 
Home equity lines:
FICO scores
   Above 720$— $— $— $— $— $— $3,334 $45 $— $3,379 
   681-720— — — — — — 492 10 — 502 
   620-680— — — — — — 319 11 — 330 
   Below 620— — — — — — 181 7 — 188 
   Data not available— — — — — — 107 3 30 140 
Total home equity lines$— $— $— $— $— $— $4,433 $76 $30 $4,539 
Home equity loans
FICO scores
   Above 720$417 $251 $233 $325 $304 $580 $— $— $— $2,110 
   681-72057 40 35 39 37 76 — — — 284 
   620-68021 17 19 22 25 65 — — — 169 
   Below 6202 7 9 13 15 52 — — — 98 
   Data not available1 2 2 4 5 17 — — 21 52 
Total home equity loans$498 $317 $298 $403 $386 $790 $— $— $21 $2,713 
Indirect—vehicles:
FICO scores
   Above 720$— $18 $305 $137 $92 $40 $— $— $— $592 
   681-720— 5 50 22 16 8 — — — 101 
   620-680— 4 44 23 18 8 — — — 97 
   Below 620— 3 42 26 24 14 — — — 109 
   Data not available— — 4 6 4 4 — — 17 35 
Total indirect- vehicles$— $30 $445 $214 $154 $74 $— $— $17 $934 
December 31, 2020
Term LoansRevolving Loans Revolving Loans Converted to Amortizing
Unallocated (1)
Total
Origination Year
20202019201820172016Prior
(In millions)
Indirect—other consumer:
FICO scores
   Above 720$297 $721 $392 $138 $60 $31 $— $— $— $1,639 
   681-72039 173 116 41 18 9 — — — 396 
   620-6809 73 63 27 12 6 — — — 190 
   Below 6201 22 22 9 5 2 — — — 61 
   Data not available— 3 3 2 1 1 — — 135 145 
Total indirect- other consumer$346 $992 $596 $217 $96 $49 $— $— $135 $2,431 
Consumer credit card:
FICO scores
   Above 720$— $— $— $— $— $— $667 $— $— $667 
   681-720— — — — — — 255 — — 255 
   620-680— — — — — — 208 — — 208 
   Below 620— — — — — — 91 — — 91 
   Data not available— — — — — — 7 — (15)(8)
Total consumer credit card$— $— $— $— $— $— $1,228 $— $(15)$1,213 
Other consumer:
FICO scores
   Above 720$209 $163 $84 $30 $7 $3 $117 $— $— $613 
   681-72061 44 20 5 1 1 52 — — 184 
   620-68034 28 13 4 1 1 42 — — 123 
   Below 62011 11 6 3 1 — 19 — — 51 
   Data not available46 1 — — — — 3 — 2 52 
Total other consumer$361 $247 $123 $42 $10 $5 $233 $— $2 $1,023 
Total consumer loans$7,588 $3,680 $2,510 $2,142 $2,180 $5,016 $5,904 $76 $332 $29,428 
Total Loans$23,532 $13,322 $9,190 $5,618 $3,912 $8,685 $20,657 $76 $274 $85,266 
(1)These amounts consist of fees that are not allocated at the loan level and loans serviced by third parties wherein Regions does not receive FICO or vintage information.
AGING AND NON-ACCRUAL ANALYSIS
The following tables include an aging analysis of DPD and loans on non-accrual status for each portfolio segment and class as of December 31, 2020 and December 31, 2019. Loans on non-accrual status with no related allowance included $112 million of commercial and industrial loans as of December 31, 2020. Non–accrual loans with no related allowance typically include loans where the underlying collateral is deemed sufficient to recover all remaining principal. Prior to the adoption of CECL on January 1, 2020, all TDRs and all non-accrual commercial and investor real estate loans, excluding leases, were deemed to be impaired. The definition of impairment and the required impaired loan disclosures were removed with CECL. Refer to Note 6 "Allowance for Credit Losses" in the Annual Report on Form 10-K for the year ended December 31, 2019 for disclosure of Regions' impaired loans as of December 31, 2019. Loans that have been fully charged-off do not appear in the tables below.
 2020
 Accrual Loans   
 30-59 DPD60-89 DPD90+ DPDTotal
30+ DPD		Total
Accrual		Non-accrualTotal
 (In millions)
Commercial and industrial$37 $22 $7 $66 $42,452 $418 $42,870 
Commercial real estate mortgage—owner-occupied4 1 1 6 5,308 97 5,405 
Commercial real estate construction—owner-occupied1 — — 1 291 9 300 
Total commercial42 23 8 73 48,051 524 48,575 
Commercial investor real estate mortgage3 — — 3 5,280 114 5,394 
Commercial investor real estate construction— — — — 1,869 — 1,869 
Total investor real estate3 — — 3 7,149 114 7,263 
Residential first mortgage104 41 156 301 16,522 53 16,575 
Home equity lines24 11 19 54 4,493 46 4,539 
Home equity loans10 7 13 30 2,705 8 2,713 
Indirect—vehicles15 4 4 23 934 — 934 
Indirect—other consumer12 8 5 25 2,431 — 2,431 
Consumer credit card8 6 14 28 1,213 — 1,213 
Other consumer12 3 2 17 1,023 — 1,023 
Total consumer185 80 213 478 29,321 107 29,428 
$230 $103 $221 $554 $84,521 $745 $85,266 
 
 2019
 Accrual Loans   
 30-59 DPD60-89 DPD90+ DPDTotal
30+ DPD		Total
Accrual		Non-accrualTotal
 (In millions)
Commercial and industrial$30 $21 $11 $62 $39,624 $347 $39,971 
Commercial real estate mortgage—owner-occupied11 3 1 15 5,464 73 5,537 
Commercial real estate construction—owner-occupied2 — — 2 320 11 331 
Total commercial43 24 12 79 45,408 431 45,839 
Commercial investor real estate mortgage1 1 — 2 4,934 2 4,936 
Commercial investor real estate construction— — — — 1,621 — 1,621 
Total investor real estate1 1 — 2 6,555 2 6,557 
Residential first mortgage83 47 136 266 14,458 27 14,485 
Home equity lines30 12 32 74 5,259 41 5,300 
Home equity loans12 6 10 28 3,078 6 3,084 
Indirect—vehicles31 10 7 48 1,812 — 1,812 
Indirect—other consumer16 9 3 28 3,249 — 3,249 
Consumer credit card11 8 19 38 1,387 — 1,387 
Other consumer13 5 5 23 1,250 — 1,250 
Total consumer196 97 212 505 30,493 74 30,567 
$240 $122 $224 $586 $82,456 $507 $82,963 
TROUBLED DEBT RESTRUCTURINGS
Regions regularly modifies commercial and investor real estate loans in order to facilitate a workout strategy. Typical modifications include accommodations, such as renewals and forbearances. The majority of Regions’ commercial and investor real estate TDRs are the result of renewals of classified loans at an interest rate that is not considered to be a market interest rate. For smaller dollar commercial loans, Regions may periodically grant interest rate and other term concessions, similar to those under the consumer program described below.
Regions works to meet the individual needs of consumer borrowers to stem foreclosure through its CAP. Regions designed the program to allow for customer-tailored modifications with the goal of keeping customers in their homes and avoiding foreclosure where possible. Modification may be offered to any borrower experiencing financial hardship regardless of the borrower’s payment status. Consumer TDRs primarily involve an interest rate concession, however under the CAP, Regions may also offer a short-term deferral, a term extension, a new loan product, or a combination of these options. For loans restructured under the CAP, Regions expects to collect the original contractually due principal. The gross original contractual interest may be collectible, depending on the terms modified. All CAP modifications are considered TDRs regardless of the term because they are concessionary in nature and because the customer documents a financial hardship in order to participate.
As noted above, the majority of Regions’ TDRs are results of interest rate concessions and not a forgiveness of principal. Accordingly, the financial impact of the modifications is best illustrated by the impact to the allowance calculation at the loan or pool level, as a result of the loans being considered impaired due to their TDR status. Regions most often does not record a charge-off at the modification date.
As provided in the CARES Act passed into law on March 27, 2020, certain loan modifications related to the COVID-19 pandemic beginning March 1, 2020 through the earlier of 60 days after the end of the pandemic or December 31, 2020 were eligible for relief from TDR classification. Regions elected this provision of the CARES Act; therefore, modified loans that met the required guidelines for relief are not considered TDRs and are excluded from the disclosures below. The CARES Act relief and short-term nature of most COVID-19 deferrals precluded the majority of Regions' COVID-19 loan modifications from being classified as TDRs as of December 31, 2020. Further, on December 27, 2020, the Consolidated Appropriations Act was signed into law and extended the relief from TDR classification through the earlier of 60 days after the national emergency concerning the COVID-19 outbreak ends or January 1, 2022. Regions elected this provision.
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.
 2020
   Financial Impact
of Modifications
Considered TDRs
 Number of
Obligors		Recorded
Investment		Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial151250—
Commercial real estate mortgage—owner-occupied2116—
Commercial real estate construction—owner-occupied11—
Total commercial173267—
Commercial investor real estate mortgage1178—
Commercial investor real estate construction45—
Total investor real estate1583—
Residential first mortgage3788511
Home equity lines———
Home equity loans434—
Consumer credit card14——
Indirect—vehicles and other consumer661—
Total consumer5019011
68944011
 
 2019
   Financial Impact
of Modifications
Considered TDRs
 Number of
Obligors		Recorded
Investment		Increase in
Allowance at
Modification
 (Dollars in millions)
Commercial and industrial97$259 $3 
Commercial real estate mortgage—owner-occupied5129 — 
Commercial real estate construction—owner-occupied12 — 
Total commercial149290 3 
Commercial investor real estate mortgage1226 — 
Commercial investor real estate construction1218 2 
Total investor real estate2444 2 
Residential first mortgage15932 4 
Home equity lines—— — 
Home equity loans997 — 
Consumer credit card37— — 
Indirect—vehicles and other consumer751 — 
Total consumer37040 4 
543$374 $9