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.

Banking regulations identify five capital categories: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. At December 31, 2020 and 2019, Regions and Regions Bank exceeded all current regulatory requirements, and were classified as "well-capitalized." Management believes that no events or changes have occurred subsequent to December 31, 2020 that would change this designation.

In the third quarter of 2020, the federal banking agencies finalized a rule related to the impact of CECL in regulatory capital requirements. The rule allows an add-back to the regulatory capital for the impacts of CECL for a two-year period. At the end of the two years, the impact is then phased-in over the following three years. The add-back is calculated as the impact of initial adoption, adjusted for 25 percent of subsequent changes in the allowance. At December 31, 2020, the impact of the addback on CET1 was approximately $582 million, or approximately 54 basis points.


	December 31, 2020 (1)				Minimum Requirement		To Be Well Capitalized
	Amount		Ratio
Basel III Regulatory Capital Rules	(Dollars in millions)
Common equity Tier 1 capital:
Regions Financial Corporation	$	10,525	9.84	%	4.50	%	N/A
Regions Bank	12,972		12.17		4.50		6.50	%
Tier 1 capital:
Regions Financial Corporation	$	12,181	11.39	%	6.00	%	6.00	%
Regions Bank	12,972		12.17		6.00		8.00
Total capital:
Regions Financial Corporation	$	14,498	13.56	%	8.00	%	10.00	%
Regions Bank	14,803		13.89		8.00		10.00
Leverage capital:
Regions Financial Corporation	$	12,181	8.71	%	4.00	%	N/A
Regions Bank	12,972		9.30		4.00		5.00	%


	December 31, 2019				Minimum Requirement		To Be Well Capitalized
	Amount		Ratio
Basel III Regulatory Capital Rules	(Dollars in millions)
Common equity Tier 1 capital:
Regions Financial Corporation	$	10,228	9.68	%	4.50	%	N/A
Regions Bank	12,212		11.58		4.50		6.50	%
Tier 1 capital:
Regions Financial Corporation	$	11,537	10.91	%	6.00	%	6.00	%
Regions Bank	12,212		11.58		6.00		8.00
Total capital:
Regions Financial Corporation	$	13,406	12.68	%	8.00	%	10.00	%
Regions Bank	13,621		12.92		8.00		10.00
Leverage capital:
Regions Financial Corporation	$	11,537	9.65	%	4.00	%	N/A
Regions Bank	12,212		10.24		4.00		5.00	%

During the third quarter of 2020, the Federal Reserve finalized Regions' SCB requirement for the fourth quarter of 2020 through the third quarter of 2021 at 3.0 percent. The 3.0 percent requirement represented the amount of capital degradation under the supervisory severely adverse scenario, inclusive of four quarters of planned common stock dividends. The Federal Reserve may decide at any point through March 31, 2021 to update Regions' and other firms' SCB requirement based on the results of its supervisory stress test associated with the capital plan resubmission disclosed in December 2020.

Substantially all net assets are owned by subsidiaries. The primary source of operating cash available to Regions is provided by dividends from subsidiaries. Statutory limits are placed on the amount of dividends the subsidiary bank can pay without prior regulatory approval. In addition, regulatory authorities require the maintenance of minimum capital-to-asset ratios at banking subsidiaries. Under the Federal Reserve’s Regulation H, Regions Bank may not, without approval of the Federal Reserve, declare or pay a dividend to Regions if the total of all dividends declared in a calendar year exceeds the total of (a) Regions Bank’s net income for that year and (b) its retained net income for the preceding two calendar years, less any required transfers to additional paid-in capital or to a fund for the retirement of preferred stock. Under Alabama law, Regions Bank may not pay a dividend to Regions in excess of 90 percent of its net earnings until the bank’s surplus is equal to at least 20 percent of capital. Regions Bank is also required by Alabama law to seek the approval of the Alabama Superintendent of Banking prior to paying a dividend to Regions if the total of all dividends declared by Regions Bank in any calendar year will exceed the total of (a) Regions Bank’s net earnings for that year, plus (b) its retained net earnings for the preceding two years, less any required transfers to surplus. The statute defines net earnings as “the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets, after deducting from the total thereof all current operating expenses, actual losses, accrued dividends on preferred stock, if any, and all federal, state and local taxes.” In addition to dividend restrictions, Federal statutes also prohibit unsecured loans from banking subsidiaries to the parent company.

In addition, Regions must adhere to various HUD regulatory guidelines including required minimum capital to maintain their HUD approved status. Failure to comply with the HUD guidelines could result in withdrawal of this certification. As of December 31, 2020, Regions was in compliance with HUD guidelines. Regions is also subject to various capital requirements by secondary market investors.