This excerpt taken from the RF 8-K filed Oct 27, 2008.
Regions Selected to Participate in U.S. Treasury Capital Purchase Program
BIRMINGHAM, Ala. (BUSINESS WIRE) Oct. 24, 2008 Regions Financial Corporation (NYSE:RF) announced today that it has received preliminary approval from the U.S. Treasury Department, subject to standard closing conditions, for the investment of $3.5 billion in the company as part of the governments effort to restore confidence in our nations financial system, increase the flow of credit to consumers and businesses, and to provide additional assistance to distressed homeowners facing foreclosure. This will increase Regions Tier 1 capital to approximately 10.5 percent.
The Treasurys plan to invest $3.5 billion in preferred stock and warrants in Regions is part of its program to provide capital to the healthy financial institutions that are the core of the nations economy. Treasury originally announced the infusion of $125 billion into nine large banks, and encouraged other strong financial institutions to also participate.
Regions believes this government program is important to restoring the flow of funds to consumers and businesses, both large and small, who are at the core of our economy, said Dowd Ritter, Regions chairman, president and chief executive officer. These funds, while still strengthening our capital base, will enable us to expand lending and step up acquisitions.
Regions will pay the government a 5 percent dividend, or $175 million annually, for each of the first five years of the investment, and 9 percent thereafter unless Regions redeems the shares. The government will also receive 10-year warrants for common stock, which will give the Treasury the opportunity to benefit from an increase in the common stock price of the company.