Regions Financial RF · USD

NOTE 22. BUSINESS SEGMENT INFORMATION Each of Regions’ reportable segments is a strategic business unit that serves specific needs of Regions’ customers based on the products and services provided. The Company has three reportable segments: Corporate Bank, Consumer Bank, and Wealth Management, with the remainder in Other. The segments are based on the manner in which the CODM reviews the Company's performance. The Company's CODM is the CEO, President and Chair of the Board. As a part of the CODM review, pre-tax income is utilized to allocate resources amongst segments. The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable segment may be periodically revised and the prior periods updated to reflect these enhancements. Accordingly, the prior periods may be updated to reflect these enhancements. The Corporate Bank segment represents the Company’s commercial banking functions including commercial and industrial, commercial real estate and investor real estate lending. This segment also includes equipment lease financing, as well as capital markets activities, which include securities underwriting and placement, loan syndication and placement, foreign exchange, derivatives, merger and acquisition and other advisory services. Corporate Bank customers include corporate, middle market, and commercial real estate developers and investors. Corresponding deposit products related to these types of customers are also included in this segment.The Consumer Bank segment represents the Company’s branch network, including consumer banking products and services related to residential first mortgages, home equity lines and loans, consumer credit cards and other consumer loans, as well as the corresponding deposit relationships. These services are also provided through the Company's digital channels and contact center.The Wealth Management segment offers individuals, businesses, governmental institutions and non-profit entities a wide range of solutions to help protect, grow and transfer wealth. Offerings include credit related products, trust and investment management, asset management, retirement and savings solutions and estate planning.

NOTE 23. COMMITMENTS, CONTINGENCIES AND GUARANTEES COMMERCIAL COMMITMENTS Regions issues off-balance sheet financial instruments in connection with lending activities. The credit risk associated with these instruments is essentially the same as that involved in extending loans to customers and is subject to Regions’ normal credit approval policies and procedures. Regions measures inherent risk associated with these instruments by recording a reserve for unfunded commitments based on an assessment of the likelihood that the guarantee will be funded and the creditworthiness of the customer or counterparty. Collateral is obtained based on management’s assessment of the creditworthiness of the customer. Credit risk is represented in unused commitments to extend credit, standby letters of credit and commercial letters of credit. Credit risk associated with these instruments as of December 31 is represented by the contractual amounts indicated in the following table:20252024 (In millions)Unused commitments to extend credit$68,237 $63,232 Standby letters of credit2,283 2,096 Commercial letters of credit97 58 Liabilities associated with standby letters of credit34 33 Assets associated with standby letters of credit36 35 Reserve for unfunded credit commitments130116 Unused commitments to extend credit—To accommodate the financial needs of its customers, Regions makes commitments under various terms to lend funds to consumers, businesses and other entities. These commitments include (among others) credit card and other revolving credit agreements, term loan commitments and short-term borrowing agreements. Many of these loan commitments have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of these commitments are expected to expire without being funded, the total commitment amounts do not necessarily represent future liquidity requirements.Standby letters of credit—Standby letters of credit are also issued to customers which commit Regions to make payments on behalf of customers if certain specified future events occur. Regions has recourse against the customer for any amount required to be paid to a third party under a standby letter of credit. The credit risk involved in the issuance of these guarantees is essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when necessary.

NOTE 3. DEBT SECURITIESThe amortized cost, gross unrealized gains and losses, and estimated fair value of debt securities held to maturity and debt securities available for sale are as follows: December 31, 2025Recognized in OCI (1)Not recognized in OCI AmortizedCostGross Unrealized GainsGross Unrealized LossesCarrying ValueGrossUnrealizedGainsGrossUnrealizedLossesEstimatedFairValue (In millions)Debt securities held to maturity:Mortgage-backed securities:Residential agency$6,103 $— $(866)$5,237 $37 $(53)$5,221 Commercial agency370 — (1)369 — (6)363 $6,473 $— $(867)$5,606 $37 $(59)$5,584 Debt securities available for sale:U.S. Treasury securities$2,313 $10 $(47)$2,276 $2,276 Federal agency securities544 6 (7)543 543 Obligations of states and political subdivisions2 — — 2 2 Mortgage-backed securities:Residential agency18,820 244 (677)18,387 18,387 Commercial agency5,925 34 (130)5,829 5,829 Commercial non-agency91 — (9)82 82 Corporate and other debt securities439 5 (3)441 441 $28,134 $299 $(873)$27,560 $27,560 December 31, 2024Recognized in OCI (1)Not recognized in OCI AmortizedCostGross Unrealized GainsGross Unrealized LossesCarrying ValueGrossUnrealizedGainsGrossUnrealizedLossesEstimatedFairValue (In millions)Debt securities held to maturity:Mortgage-backed securities:Residential agency$4,663 $— $(743)$3,920 $— $(186)$3,734 Commercial agency507 — — 507 — (15)492 $5,170 $— $(743)$4,427 $— $(201)$4,226 Debt securities available for sale:U.S. Treasury securities$2,088 $2 $(87)$2,003 $2,003 Federal agency securities460 1 (17)444 444 Obligations of states and political subdivisions2 — — 2 2 Mortgage-backed securities:Residential agency20,482 20 (1,557)18,945 18,945 Commercial agency4,389 1 (300)4,090 4,090 Commercial non-agency92 — (10)82 82 Corporate and other debt securities670 2 (14)658 658 $28,183 $26 $(1,985)$26,224 $26,224 _________(1)Debt securities held to maturity gross unrealized losses recognized in OCI resulted from transfers of securities available for sale.The Company utilizes 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. See Note 20 for additional information. The Company reclassified debt securities with an amortized cost, excluding items recognized in OCI, of $1.0 billion in each of the first and second quarters of 2025, for a total of $2.0 billion from available for sale to held to maturity.

NOTE 19. INCOME TAXES The components of income tax expense for the years ended December 31 were as follows:202520242023 (In millions)Current income tax expense:Federal$388 $383 $417 State121 57 84 Total current expense$509 $440 $501 Deferred income tax expense (benefit):Federal$84 $1 $25 State(6)20 7 Total deferred expense $78 $21 $32 Total income tax expense$587 $461 $533 Income tax expense does not reflect the tax effects of unrealized losses on securities transferred to held to maturity, unrealized gains and losses on securities available for sale, unrealized gains and losses on derivative instruments and the net change from defined benefit pension plans and other postretirement benefits. Refer to Note 14 for additional information on shareholders' equity and accumulated other comprehensive income (loss).The Company accounts for investment tax credits from renewable energy sources using the deferral method. Investment tax credits generated totaled $64 million, $179 million and $94 million for 2025, 2024, and 2023, respectively. Income tax expense and the effective tax rate for financial reporting purposes differs from the amount computed by applying the statutory federal income tax rate of 21 percent. In 2025, the Company adopted accounting guidance that updates certain disclosure requirements and prior periods have been updated to reflect the current year presentation. A reconciliation between the statutory tax rate and effective tax rate is shown in the following table: 202520242023AmountPercentAmountPercentAmountPercent (Dollars in millions)Tax on income computed at statutory federal income tax rate$576 21.0 %$494 21.0 %$547 21.0 %Increase (decrease) in taxes resulting from:State and local income tax, net of federal tax effect (1)55 2.0 %60 2.6 %69 2.7 %Tax credits:Affordable housing and economic development credits, net of amortization (2)(36)(1.3)%(48)(1.9)%(41)(1.6)%Other tax credits(6)(0.3)%(5)(0.4)%(13)(0.4)%Non-taxable and non-deductible items:Tax-exempt interest(40)(1.4)%(39)(1.7)%(38)(1.5)%Other non-deductible expenses23 0.8 %23 1.0 %22 0.8 %Bank-owned life insurance(22)(0.8)%(24)(1.0)%(19)(0.7)%Other, net1 0.1 %(2)(0.1)%3 0.1 %Change in UTB36 1.3 %2 0.1 %3 0.1 %Income tax expense and total effective tax rate$587 21.4 %$461 19.6 %$533 20.5 %_______(1) In 2025, Alabama and Tennessee combined comprise more than half of the tax effect in this category. In both 2024 and 2023, Alabama comprises more than half of the tax effect in this category.

Regions administers long-term incentive compensation plans that permit the granting of incentive awards in the form of restricted stock awards, performance awards, stock options and stock appreciation rights. No stock options were outstanding during 2025, 2024 or 2023. While Regions has the ability to issue stock appreciation rights, none have been issued to date. The terms of all awards issued under these plans are determined by the CHR Committee of the Board; however, no awards may be granted after the tenth anniversary from the date the plans were initially approved by shareholders. Incentive awards usually vest based on employee service, generally within three years from the date of the grant. On April 16, 2025, the shareholders of the Company approved the Regions Financial Corporation 2025 LTIP, which permits the Company to grant to employees and directors various forms of incentive compensation. These forms of incentive compensation are similar to the types of compensation approved in prior plans. The 2025 LTIP authorizes 38 million common share equivalents available for grant, where grants of options and grants of full value awards (e.g., shares of restricted stock, restricted stock units and performance stock units) count as one share equivalent. Unless otherwise determined by the CHR Committee of the Board, grants of restricted stock, restricted stock units, and performance stock units accrue dividends, or their notional equivalent, as they are declared by the Board, and are paid upon vesting of the award. Upon adoption of the 2025 LTIP, Regions closed the prior LTIP to new grants, and, accordingly, prospective grants must be made under the 2025 LTIP or a successor plan. All existing grants under prior LTIPs are unaffected by adoption of the 2025 LTIP. The number of remaining share equivalents available for future issuance under the 2025 LTIP was approximately 35 million at December 31, 2025.Grantees of restricted stock awards or units must either remain employed with the Company for certain periods of time from the date of grant in order for shares to be released or issued or retire after meeting the standards of a retiree, at which time shares would be issued and released. Grants of performance-based restricted stock typically have a three-year performance period, and shares vest within three years after the grant date. Regions issues new shares from authorized reserves upon exercise.

As a company that deals with large volumes of sensitive customer information and financial transactions, Regions treats cybersecurity risk as a key operational risk, and the oversight of cybersecurity risk is integrated into Regions' enterprise-wide risk management framework. As part of this framework, Regions utilizes the "Three Lines of Defense" concept to clearly designate risk management activities within the Company, and this concept is applicable to cybersecurity risk (see the “Risk Management” section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K). To manage cybersecurity risk, the Company has designed and implemented an IS Program that is led by our CISO. The IS Program includes information security policies, procedures, and controls designed to prevent, detect, limit and respond to cyber-attacks or other similar incidents which might impact Regions' technologies, systems, and networks. Regions' IS Program is designed and implemented to substantially align with standards promulgated by the NIST. Regions' Information Security Policy establishes technical, administrative, and physical control directives that are implemented to protect informational assets from reasonably foreseeable risks and threats. The IS Program is supplemented by cybersecurity operations that protect the integrity and availability of information systems. As discussed above, Regions' TPRM function also conducts due diligence and ongoing oversight of the Company’s third-party vendors. The Company maintains a Cyber Incident Response Plan, which is part of broader business continuity planning and the Crisis Management Program, to help the Company respond to a possible data breach. The Company engages with external experts and advisors, as needed, to review, enhance, and support our IS Program. For example, third parties may be used to assist in the event of a breach or to mitigate certain threats to Regions' environment. Internally, the Company provides associates with cybersecurity training and education at least annually. To bolster these practices, Regions maintains cybersecurity insurance, which is reviewed annually, to cover potential financial losses from cyber events. In addition, Regions participates in information sharing organizations to gather and share information with peer banks and other financial institutions to better prepare and protect its information systems from attack.

LOANSThe following table presents the distribution of Regions' loan portfolio by segment and class, net of unearned income as of December 31:20252024 (In millions)Commercial and industrial$48,790 $49,671 Commercial real estate mortgage—owner-occupied4,845 4,841 Commercial real estate construction—owner-occupied263 333 Total commercial53,898 54,845 Commercial investor real estate mortgage7,172 6,567 Commercial investor real estate construction1,934 2,143 Total investor real estate9,106 8,710 Residential first mortgage19,765 20,094 Home equity lines3,232 3,150 Home equity loans2,324 2,390 Consumer credit card1,519 1,445 Other consumer (1)5,793 6,093 Total consumer32,633 33,172 Total loans, net of unearned income (2)$95,637 $96,727 ______(1)Starting in 2025, other consumer loans also includes exit portfolios, which were previously presented separately. The portfolio consists primarily of indirect auto loans, and presentation of prior periods has been conformed accordingly.(2)Loans are presented net of unearned income, unamortized discounts and premiums and deferred loan fees and costs of $930 million and $981 million at December 31, 2025 and December 31, 2024. See Note 13 for details regarding Regions’ investment in sales-type, direct financing, and leveraged leases included within the commercial and industrial loan portfolio.

NOTE 10.