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Fair Value Measurements
 6 Months Ended
Jun. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements
NOTE 9. 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, 2021 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. 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:
 June 30, 2022December 31, 2021
  Level 1Level 2
Level 3(1)
Total Estimated Fair ValueLevel 1Level 2
Level 3(1)
Total Estimated Fair Value
 (In millions)
Recurring fair value measurements
Debt securities available for sale:
U.S. Treasury securities$1,252 $— $— $1,252 $1,132 $— $— $1,132 
Federal agency securities— 683 — 683 — 92 — 92 
Obligations of states and political subdivisions— 3 — 3 — 4 — 4 
Mortgage-backed securities (MBS):
Residential agency— 19,007 — 19,007 — 18,962 — 18,962 
Residential non-agency— — 1 1 — — 1 1 
Commercial agency— 6,607 — 6,607 — 6,373 — 6,373 
Commercial non-agency— 315 — 315 — 536 — 536 
Corporate and other debt securities— 1,183 1 1,184 — 1,380 1 1,381 
Total debt securities available for sale$1,252 $27,798 $2 $29,052 $1,132 $27,347 $2 $28,481 
Loans held for sale$— $312 $57 $369 $— $693 $90 $783 
Marketable equity securities $583 $— $— $583 $464 $— $— $464 
Residential mortgage servicing rights$— $— $770 $770 $— $— $418 $418 
Derivative assets(2):
Interest rate swaps$— $1,490 $— $1,490 $— $919 $— $919 
Interest rate options— 77 10 87 — 36 12 48 
Interest rate futures and forward commitments— 11 — 11 — 11 — 11 
Other contracts— 301 — 301 — 132 1 133 
Total derivative assets$— $1,879 $10 $1,889 $— $1,098 $13 $1,111 
Derivative liabilities(2):
Interest rate swaps$— $2,091 $— $2,091 $— $855 $— $855 
Interest rate options— 63 1 64 — 19 — 19 
Interest rate futures and forward commitments— 4 — 4 — 3 — 3 
Other contracts— 264 3 267 — 132 3 135 
Total derivative liabilities$— $2,422 $4 $2,426 $— $1,009 $3 $1,012 
_________
(1)All following disclosures related to Level 3 recurring assets do not include those deemed to be immaterial.
(2)As permitted under U.S. GAAP, variation margin collateral payments made or received for derivatives that are centrally cleared are legally characterized as settled. As such, these derivative assets and derivative liabilities and the related variation margin collateral are presented on a net basis on the balance sheet.
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.
The following tables present an analysis for residential MSRs for the three and six months ended June 30, 2022 and 2021, respectively. An analysis of commercial mortgage loans held for sale is also presented for the three and six months ended June 30, 2022.
Residential mortgage servicing rights
Three Months Ended June 30Six Months Ended June 30
2022202120222021
(In millions)
Carrying value, beginning of period$542 $401 $418 $296 
Total realized/unrealized gains (losses) included in earnings(1)
37 (54)67 19 
Additions10 19 29 40 
Purchases181 26 256 37 
Carrying value, end of period$770 $392 $770 $392 
_________
(1)Included in mortgage income. Amounts presented exclude offsetting impact from related derivatives.
 Commercial mortgage loans held for sale
Three Months Ended June 30Six Months Ended June 30
20222022
(In millions)
Carrying value, beginning of period$12 $90 
Total realized/unrealized gains (losses) included in earnings(1)
(2)(5)
Additions47 97 
Sales— (125)
Carrying value, end of period$57 $57 
_________
(1)Included in capital markets income.
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 4.
Commercial mortgage loans held for sale
The significant unobservable inputs used in the fair value measurement of commercial mortgage loans held for sale are credit spreads for bonds in commercial mortgage-backed securitization. Commercial mortgage loans held for sale are valued 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. Increases or decreases in credit spreads would result in an inverse impact to fair value.
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, 2022, and December 31, 2021. 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, 2022, and December 31, 2021, 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, 2022
 
Level 3
Estimated Fair Value at
June 30, 2022
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)
$770Discounted cash flowWeighted-average CPR (%)
6.2% - 18.1% (7.9%)
OAS (%)
4.4% - 8.2% (4.8%)
_________
(1)See Note 4 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.
 December 31, 2021
 
Level 3
Estimated Fair Value at
December 31, 2021
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)
$418Discounted cash flowWeighted-average CPR (%)
7.2% - 22.2% (10.5%)
OAS (%)
3.7% - 7.7% (4.5%)
Commercial mortgage loans held for sale$90Discounted cash flowCredit spreads for bonds in the
commercial MBS
0.2% - 19.4% (1.3%)
_________
(1)See Note 6 to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2021 for additional disclosures related to assumptions used in the fair value calculation for residential mortgage servicing rights.
FAIR VALUE OPTION
As discussed above, the Company elected the option to measure certain commercial mortgage loans held for sale at fair value. At June 30, 2022, the balance of these loans was immaterial. At December 31, 2021, commercial mortgage loans held for sale at fair value had both an aggregate fair value and unpaid principal balance of $90 million.
The Company has elected the option 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. The balance of these loans held for sale was immaterial at June 30, 2022 and December 31, 2021.
Regions has elected the fair value option for all eligible agency residential first mortgage loans originated with the intent to sell. This election allows 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. Fair values of residential first 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.
The following table summarizes the difference between the aggregate fair value and the aggregate unpaid principal balance for residential first mortgage loans held for sale measured at fair value:
 June 30, 2022December 31, 2021
 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)
Residential first mortgage loans held for sale, at fair value$292 $287 $5 $680 $659 $21 
Interest income on mortgage loans held for sale is recognized based on contractual rates and is reflected in interest income on loans held for sale. The following table details net gains and losses resulting from changes in fair value of residential mortgage loans held for sale, which were recorded in mortgage income in the consolidated statements of income during the three and six months ended June 30, 2022 and 2021. These changes in fair value are mostly offset by economic hedging activities. An immaterial portion of these amounts was attributable to changes in instrument-specific credit risk.
 Three Months Ended June 30Six Months Ended June 30
2022202120222021
 (In millions)
Net gains (losses) resulting for the change in fair value of residential first mortgage loans held for sale$(16)$10 $(39)$(40)
NON-RECURRING FAIR VALUE MEASUREMENTS
Items measured at fair value on a non-recurring basis include loans held for sale for which the fair value option has not been elected, foreclosed property and other real estate and equity investments without a readily determinable fair value; all of which may be considered either Level 2 or Level 3 valuation measurements. Non-recurring fair value adjustments related to loans held for sale, foreclosed property and other real estate are typically a result of the application of lower of cost or fair value accounting during the period. Non-recurring fair value adjustments related to equity investments without readily determinable fair values are the result of impairments or price changes from observable transactions. The balances of each of these assets, as well as the related fair value adjustments during the periods, were immaterial at both June 30, 2022 and December 31, 2021.
FAIR VALUE OF FINANCIAL INSTRUMENTS
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, 2022 are as follows:
 June 30, 2022
 Carrying
Amount
Estimated
Fair
Value(1)
Level 1Level 2Level 3
 (In millions)
Financial assets:
Cash and cash equivalents$20,500 $20,500 $20,500 $— $— 
Debt securities held to maturity836 817 — 817 — 
Debt securities available for sale29,052 29,052 1,252 27,798 2 
Loans held for sale612 612 — 552 60 
Loans (excluding leases), net of unearned income and allowance for loan losses(2)(3)
90,576 86,989 — — 86,989 
Other earning assets1,428 1,428 583 845 — 
Derivative assets1,889 1,889 — 1,879 10 
Financial liabilities:
Derivative liabilities2,426 2,426 — 2,422 4 
Deposits(4)
138,263 138,213 — 138,213 — 
Long-term borrowings2,319 2,462 — 2,460 2 
Loan commitments and letters of credit119 119 — — 119 
_________
(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 makes 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. The fair value discount on the loan portfolio's net carrying amount at June 30, 2022 was $3.6 billion or 4.0 percent.
(3)Excluded from this table is the sales-type, direct financing, and leveraged lease carrying amount of $1.5 billion at June 30, 2022.
(4)The fair value of non-interest-bearing demand accounts, interest-bearing checking accounts, savings accounts, money market accounts and certain other time deposit accounts is the amount payable on demand at the reporting date (i.e., the carrying amount). Fair values for certificates of deposit are estimated by using discounted cash flow analyses, based on market spreads to benchmark rates.
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, 2021 are as follows:
 December 31, 2021
 Carrying
Amount
Estimated
Fair
Value(1)
Level 1Level 2Level 3
 (In millions)
Financial assets:
Cash and cash equivalents$29,411 $29,411 $29,411 $— $— 
Debt securities held to maturity899 950 — 950 — 
Debt securities available for sale28,481 28,481 1,132 27,347 2 
Loans held for sale1,003 1,003 — 899 104 
Loans (excluding leases), net of unearned income and allowance for loan losses(2)(3)
84,866 85,086 — — 85,086 
Other earning assets(4)
1,104 1,104 464 640 — 
Derivative assets1,111 1,111 — 1,098 13 
Financial liabilities:
Derivative liabilities1,012 1,012 — 1,009 3 
Deposits(5)
139,072 139,101 — 139,101 — 
Long-term borrowings2,407 2,847 — 2,845 2 
Loan commitments and letters of credit123 123 — — 123 
_________
(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 makes 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. The fair value premium on the loan portfolio's net carrying amount at December 31, 2021 was $220 million or 0.3 percent.
(3)Excluded from this table is the sales-type, direct financing, and leveraged lease carrying amount of $1.4 billion at December 31, 2021.
(4)Excluded from this table is the operating lease carrying amount of $83 million at December 31, 2021.
(5)The fair value of non-interest-bearing demand accounts, interest-bearing checking accounts, savings accounts, money market accounts and certain other time deposit accounts is the amount payable on demand at the reporting date (i.e., the carrying amount). Fair values for certificates of deposit are estimated by using discounted cash flow analyses, based on market spreads to benchmark rates.