Good morning. Welcome to the Regions Financial Corporation 2021 Annual Meeting of Stockholders. I would now like to turn the conference over to Charles McCreery. Please go ahead.
Hello. I'm Dana Nolan, Head of Investor Relations. At this point, we will move to the Q and A portion of today's call. In terms of our process for investor questions this morning, please note that we will prioritize questions based on the broadest applicability to all shareholders and will combine similar or related questions to provide answers as efficiently as possible. We may not repeat questions submitted today that have already been addressed.
Also, we may not be able to provide answers to every question submitted. For those questions not answered, either directly or as part of a bundled question, we will seek to respond directly to the submitting shareholder as appropriate. Please note our forward looking statement disclaimer, which is available on our website and covers today's presentation, prepared comments and Q and A. John?
Okay. Thank you, Dana. The first question is, will it be possible to increase dividends to shareholders in 2021? In response to the continuing COVID-nineteen pandemic, the Federal Reserve recently extended earnings based restrictions on distributions into the Q2 of 2021. Under these restrictions, banks are not allowed to increase their common stock dividends, but we are allowed to pay dividends and repurchase common shares so long as the aggregate amount of those distributions does not exceed average quarterly net income over the preceding 4 quarters.
The Federal Reserve has indicated that these restrictions are likely to be lifted in the Q3 and that assumes that banks participating in the ongoing supervisory stress test evaluation maintain capital levels in excess of required minimums. And we are participating in that process. As I said earlier, generally, we expect dividends to grow as earnings grow. We want to pay a consistent and sustainable dividend and dividends should range between 35% 45% of earnings. Next question is, has there been any interest from big money center banks to take over regions?
And what are your expectations for bank M and A over the next year? Well, the largest banks in the country are actually prohibited from participating in bank M and A if the combined entity would hold more than 10% of the country's deposits and the largest banks already do that. So they're not active in bank acquisitions. But that rule doesn't apply to inorganic growth. And so because we're in some of the best markets in the country, large competitors are opening new branches in our footprint on a routine basis.
As a result, we're actively competing against those biggest banks and it's important that we focus on what differentiates Regions as a regional bank from those competitors. We think our go to market strategy built around local bankers working as a team with other regions bankers enabled with really great technology and focused on meeting customer needs does exactly that. Increasingly, customers want to bank with us in different ways across multiple channels. They want more self-service options, but they still expect the same trusted personalized advice, guidance and solutions that they've come to rely on. So we're simultaneously making investments in technology and people to ensure that we remain competitive.
With respect to the question about bank M and A and Regions specifically, our point of view hasn't changed. We'll continue to pursue smaller non bank bolt on acquisitions to extend our capabilities and help us meet broader customer needs. We're not actively interested in bank M and A. We believe we have a really solid strategic plan and we want to continue to execute that plan. In our view, M and A is difficult, it's disruptive.
Oftentimes, it's not successful. Want to continue to execute our plan and we believe if we do that and do it well that we'll see the benefits of our good execution through an improving stock price and a stronger currency. Over time, we'll be better positioned to potentially participate in M and A. Regarding the broader question, we have seen acceleration in bank consolidation over recent months. This is occurring amongst regional banks and smaller community banks.
There are a number of factors contributing to this activity, rapid adoption of mobile and digital channels and the resulting cost of investing in technology. The impact of lower rates on net interest income and margins competition from outside the industry and the slow economy make it difficult. So as a result, we think that consolidation is likely to continue in the near term. We'll continue to follow the activity does not represent it. Currently, we're operating in 15 states across the Southeast, Midwest and Texas.
We're in some of the most attractive markets in the country. Made any policy changes or taken other actions in response to the January 6, 2021, riots at the capital. Following the events of January 6, we temporarily suspended all federal level contributions from our PAC, which by the way is a voluntary employee funded political action committee. Over the last now couple of months as we have paused giving, we've gathered feedback from employees who donate to the PAC. The feedback we've received will guide future bipartisan contributions from the PAC and contributions will be evaluated on an individual basis and will be made with the continued goal of helping the banking industry consistently meet the financial needs of the people, businesses and communities we serve.
Our focus is on advocating for the industry and things that are good for our constituents, our shareholders. Additional information on lobbying activities and political contributions that Regions makes can be found in our semiannual Governmental Affairs report, which is available on our website. We received a couple of questions on the recent voter legislation passed in Georgia and those questions were focused on what is the bank's position. Regions believes that voting is one of our most fundamental rights and our country is strongest when everyone's voice is heard. At Regions, we believe elections should be open and accessible, and we encourage our associates to vote.
We make accommodations to ensure they have time to do so during the workday if needed, and we'll continue to make sure our associates have information, resources and time to vote and participate in very important electoral process. We received some questions about our DE and I policies asking for clarification. Specifically, questions were, do you have diversity targets for the Board and executive management levels? And what measures do you take to ensure you have a diverse pipeline for internal promotions? Diversity, Equity and Inclusion is fundamental to our corporate strategy and we value and recognize benefits from diversity of our Board of Directors and our workforce.
Our commitment to DE and I starts at the top of our organization with oversight of our strategies from our Board's Compensation and Human Resources Committee. Board appointments are given careful consideration, including professional backgrounds and experience, levels of expertise in particular areas of competency, personal reputation and integrity. Our Board is currently 42% overall diverse and half of our standing committee chairs are women. So we think we're proud of the diversity of our Board and the contribution that they make to our company. With respect to our broader workforce, Regions is committed to hiring candidates with diverse backgrounds and experience.
We make a concentrated effort to attract, develop, retain diverse talent through various recruiting initiatives and collaborative efforts. Our talent acquisition team partners closely with our diversity inclusion center of expertise to execute our strategies to attract and retain, and as I say, develop diverse talent in a variety of ways. And again, I think we're making very good progress. How will Regions evaluate its retail space amidst an increase in fintech and the use of digital? Currently, the pandemic has changed the way in which we interact and communicate with customers and each other.
That being said, we believe the banking business is fundamentally a people business. And we think we're at our best when we're physically together as a team. The majority of our associates are customer facing and will continue working from our branches and our offices. There will be some roles that will shift to fully remote and others will adopt some sort of hybrid or flexible work model. As a result, I'm sure we'll have some impact on real estate and we'll recognize some efficiencies over time, But I don't expect those to be dramatic.
As it relates to our retail network, we continue to optimize and consolidate branches. We're building new branches in growth markets and from time to time consolidating branches in other markets, creating opportunities for additional efficiencies and I think those will continue to exist. Got a question about CECL and how CECL will impact regions in 2021 2022. CECL or the current expected credit loss model is a significant accounting methodology change that the industry was required to adopt at the beginning of 2020. The change requires that banks set aside reserves as loans are booked to cover potential losses that might arise over the life of the loan.
This new accounting standard, coupled with the timing of the adoption, which happened to coincide essentially with the start of COVID, created a tremendous amount of volatility and credit provisioning across the industry. While this change in methodology impacted our provision, actual credit losses remained in line with pre pandemic expectations. As a result, the very nature of CECL resulted in us increasing rapidly building reserves as a result of what we thought were going to be significant losses. But because of extraordinary stimulus measures and the implementation of vaccine and other things and improving economy. Many banks, including regions, experienced credit provisions beginning in the Q4 of last year and that trend is continuing across the industry into the Q1.
Future levels of provisioning and the allowance will depend on the timing of charge offs and greater certainty with respect to the path of the economic recovery. We have a question on how do lower rates affect the bank and are very low rates good or bad for banks. Because the economy is cyclical, it's important that we position ourselves to perform consistently throughout economic cycles and in any interest rate environment. A low rate environment is typically a signal for lower economic growth. And while rates are low, that's very positive for borrowers by way of lower borrowing cost, is challenging for savers, so clearly have winners and losers in this environment.
For the most part, lower interest rates are not positive for banks like Regions because we derive most of our revenue from spread revenue. Fortunately, we initiated a hedging program back in 2018, whereby we're using synthetic instruments or derivatives to protect us from lower rates. As a result, in 2020, these hedging strategies contributed $260,000,000 to revenue and they will have a meaningful positive impact for the next several years. Additionally and fortunately, we've made investments in a couple of areas that benefit in lower rates, our lower rate environment, mortgage and capital markets. And we've done really well and are are proud of these investments and believe that they are paying off.
We have another question. How does the bank evaluate areas of risk and compliance? And during this evaluation, do the metrics change? We are always, I guess, go back 10 years or so, think about the evolution of the risk culture here at Regions. We have been investing and strengthening and building a sound and strong risk management culture.
And that implies that everybody is responsible for risk management all the time, Annually in conjunction with the approval of our strategic plan, our Board establishes our risk appetite metrics, but we're constantly evaluating risk in our business. We're evaluating compliance with regulations and laws in our business. And as we see changes or trends beginning, we're required and we do react to those things. And so as a result from time to time may see some changes in the metrics that we use to help guide our business. It is a very active process.
You also had a question about PPP and the deposit growth that we've seen as a result of PPP. How do we feel about that? Is that temporary? Is it longer term? We clearly have benefited from PPP.
I think our small business customers have benefited from PPP. As of this week, we've made over 75,000 loans to small businesses, supporting almost a 1,000,000 jobs across our footprint, awfully proud of that and the role that the banking industry has played in supporting the PPP program. We've seen about a 25% increase in deposits since the pandemic began across both our consumer and commercial platforms. The question is, is that will we benefit from that deposit growth over time or will customers begin to use those deposits? And the answer is, yes, we think they will, but we don't know to what extent and won't know for some time to what extent customer behavior has or will change.
And so while I believe we'll see those deposits back in the economy in the form of spending, inventory buildup, capital expenditures on the part of businesses. I do think there's some level of deposits that and deposit growth as a result of stimulus that will remain in the banking industry for some time to come. Let's see. How will Regions approach share buybacks going forward? Share buybacks are an important tool we use to help us manage capital and returns to shareholders.
1st and foremost, we want to support we use the capital to support organic growth of our business. 2nd, we want to pay a consistent and sustainable dividend. 3rd, to the extent we have opportunities to make acquisitions, we want to use our capital for that purpose. And if we don't have those any options with respect to the first three uses of capital, then we will continue to buy back shares and that is part of our plan going forward. Where do we see interest rates going forward?
We currently expect some continued improvement, if you will, in longer term rates, modest changes in short term rates, but not until the latter part of 2022 or early 2023. So essentially, we expect to operate and are positioned to operate in a low rate environment for the next 2 to 2.5 years. Is the bank seeing an increase in consumer borrowing and debt? We're not. What we are seeing, obviously a good bit of mortgage activity, lot of refinance activity, which has been very good for our business.
Consumers have been very careful and cautious, I'd say, over the last 14 months. Credit card debt is down modestly. We are beginning to see an increase in debit card spending. Consumers are spending again, but spending what they have in their account, not relying on credit. And we think that's a very positive thing and bodes well for the economy.
So that's all the questions that we've received. I appreciate everybody's interest in our company and thank you for your support. Hope you have a great day. That concludes our meeting.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.