v3.26.1
Derivative Financial Instruments and Hedging Activities
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities
NOTE 9. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The following tables present the notional amount and estimated fair value of derivative instruments:
 March 31, 2026December 31, 2025
 
Notional
Amount(1)
Estimated Fair ValueNotional
Amount		Estimated Fair Value
 
Gain(1)
Loss(1)
Gain(1)
Loss(1)
 (In millions)
Derivatives in cash flow hedging relationships:
Interest rate swaps$39,048 $47 $284 $39,918 $80 $196 
Interest rate options2,000 3 2 2,000 2 1 
Total derivatives in cash flow hedging relationships41,048 50 286 41,918 82 197 
Derivatives in fair value hedging relationships:
Interest rate swaps8,502 38 60 8,067 23 73 
Total derivatives designated as hedging instruments$49,550 $88 $346 $49,985 $105 $270 
Derivatives not designated as hedging instruments:
Interest rate swaps $94,028 $997 $972 $93,891 $1,023 $996 
Interest rate options 11,748 17 11 10,674 14 6 
Interest rate futures and forward commitments1,682 11 3 1,537 8 1 
Other contracts16,802 457 437 15,051 185 172 
Total derivatives not designated as hedging instruments $124,260 $1,482 $1,423 $121,153 $1,230 $1,175 
Total derivatives$173,810 $1,570 $1,769 $171,138 $1,335 $1,445 
Total gross derivative instruments, before netting$1,570 $1,769 $1,335 $1,445 
Less: Netting adjustments (2)
1,269 1,276 1,120 964 
Total gross derivative instruments, after netting$301 $493 $215 $481 
_________
(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. Includes accrued interest as applicable. The table reflects net notional presentation and gross asset and liability presentation to capture the economic impact of the trades.
(2)Netting adjustments represent amounts recorded to convert derivative assets and derivative liabilities from a gross basis to a net basis in accordance with applicable accounting guidance. The net basis takes into account the impact of cash collateral received or posted, legally enforceable master netting agreements, and variation margin that allow Regions to settle derivative contracts with the counterparty on a net basis and to offset the net position with the related cash collateral. Cash collateral, all of which is included as a netting adjustment, totaled $32 million and $83 million for derivative assets at March 31, 2026 and December 31, 2025, respectively. Cash collateral totaled $202 million and $123 million for derivative liabilities at March 31, 2026 and December 31, 2025, respectively.
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" in the Annual Report on Form 10-K for the year ended December 31, 2025 for additional information regarding accounting policies for derivatives.
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 swaps, options (e.g., floors, caps and collars), and agreements with a combination of these instruments to manage overall cash flow changes related to interest rate risk exposure on variable rate loans. The agreements effectively modify the Company’s exposure to interest rate risk by utilizing receive fixed/pay SOFR interest rate swaps and interest rate options. As of March 31, 2026, Regions was hedging its exposure to the variability in future cash flows into 2035.
As of March 31, 2026, cash flow hedges were held at a pre-tax net loss of $213 million, which includes pre-tax net gains of $10 million related to terminated cash flow floors and swaps. Regions expects to reclassify into earnings approximately $121 million in pre-tax losses due to the net receipt/payment of interest and amortization on all cash flow hedges within the next twelve months. Included in this amount is $2 million in pre-tax net gains related to the amortization of terminated cash flow floors and swaps.
See Note 6 for the impact of cash flow hedges on the consolidated statements of income regarding the realized gains or (losses) reclassified from AOCI into net income.
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 and time deposits. These agreements involve the receipt of fixed-rate amounts in exchange for floating-rate interest payments over the life of the agreements. Regions also enters into interest rate swap agreements to manage interest rate exposure on certain of the Company's fixed-rate prepayable and non-prepayable debt securities available for sale. These agreements involve the payment of fixed-rate amounts in exchange for floating-rate interest receipts.
The following tables present the effect of fair value hedging derivative instruments on the consolidated statements of income and the total amounts for the respective line items affected:
Three Months Ended March 31, 2026
Interest IncomeInterest Expense
Debt securitiesLong-term borrowings
(In millions)
Total income (expense) presented in the consolidated statements of income$298 $(52)
Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
   Amounts related to interest settlements on derivatives$1 $(5)
   Recognized on derivatives29 2 
   Recognized on hedged items(29)(2)
Income (expense) recognized on fair value hedges$1 $(5)
Three Months Ended March 31, 2025
Interest IncomeInterest Expense
Debt securitiesLong-term borrowings
(In millions)
Total income (expense) presented in the consolidated statements of income$266 $(85)
Gains/(losses) on fair value hedging relationships:
Interest rate contracts:
   Amounts related to interest settlements on derivatives$3 $(14)
   Recognized on derivatives(46)25 
   Recognized on hedged items46 (25)
Income (expense) recognized on fair value hedges$3 $(14)
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.
March 31, 2026December 31, 2025
Hedged Items Currently DesignatedHedged Items Currently Designated
Amortized Cost Basis of Assets/(Liabilities) Hedge Accounting Basis AdjustmentAmortized Cost Basis of Assets/(Liabilities)Hedge Accounting Basis Adjustment
(In millions)(In millions)
Debt securities available for sale$9,239 $(28)$9,325 $— 
Long-term borrowings(2,350)50 (2,348)52 
Included in the amortized cost basis and hedge accounting basis adjustment of fair value hedges of debt securities available for sale are hedges designated under the portfolio layer method. At March 31, 2026 and December 31, 2025, the Company designated $3.4 billion and $2.5 billion, respectively, as the hedged amount from a closed portfolio of prepayable financial assets with a carrying amount of $6.5 billion and $6.1 billion, respectively. At March 31, 2026, the hedge accounting basis adjustment on active portfolio layer hedges reduced the carrying amount by $23 million.
The Company previously terminated fair value hedges related to available for sale debt securities. The terminated hedges had a remaining basis adjustment of $29 million.
DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
The Company holds a portfolio of derivative instruments not designated as accounting hedges, therefore these derivatives are marked-to market through earnings (in capital markets income or mortgage income as appropriate) and included in other assets and other liabilities, as appropriate. See Note 1 "Summary of Significant Accounting Policies" in the Annual Report on Form 10-K for the year ended December 31, 2025 for more information regarding these derivative instruments.
The following table presents the location and amount of gain recognized in income on derivatives not designated as hedging instruments in the consolidated statements of income for the periods presented below:

Three Months Ended March 31
Derivatives Not Designated as Hedging Instruments20262025
 (In millions)
Capital markets income:
Interest rate swaps$10 $6 
Interest rate options7 8 
Interest rate futures and forward commitments3 3 
Other contracts7 (2)
Total capital markets income27 15 
Mortgage income:
Interest rate swaps— 16 
Interest rate options— 1 
Interest rate futures and forward commitments3 (1)
Total mortgage income3 16 
$30 $31 
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 2026 and 2031. Swap participations, whereby Regions has sold credit protection have maturities between 2026 and 2035. 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 March 31, 2026 was approximately $596 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 March 31, 2026 and December 31, 2025 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.
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 totaled $104 million and $54 million at March 31, 2026 and December 31, 2025, respectively, for which Regions had posted collateral of $121 million and $51 million, respectively, in the normal course of business.