Regions Bank today reported a 2009 fourth quarter loss of $606 million, or 51 cents per fully diluted share.

Officials said the loss "was driven by increased loan loss provisioning and the loss on the sale of primarily non-agency investment securities, reflective of the company's aggressive efforts to further improve the risk profile of its balance sheet.

"Despite the significant credit-related costs, the fourth quarter and year end results indicate continued solid core business performance as the net interest margin steadied, customers opened new accounts at a record level and low-cost deposit growth remained strong."

Dowd Ritter, chairman and chief executive officer, said, "Regions, along with the financial services industry, still faces some near-term credit and economic challenges. We are obviously not pleased with the fourth quarter loss but believe that we have taken the appropriate steps to reserve for credit-related problems, proactively improve operating efficiency, bolster our net interest margin, and strengthen customer service and relationships. As a result, Regions enters 2010 with a stronger foundation and a more effective, competitive business."

Regions officials also said, "Average low-cost deposits grew over 3 percent linked quarter and were up nearly $8 billion, or 14 percent year-over-year. As supported by mid-year 2009 FDIC deposit data, the company has gained market share in virtually all its major markets, with increased share in 15 of the 16 states where it operates.

"Deposit additions reflect the company's success in improving customer service, deepening customer loyalty, and attracting new customers. The company previously announced that it had exceeded its goal of opening one million new retail and business deposit checking accounts in 2009, up 27 percent versus last year, with 246,000 new accounts opened in the fourth quarter alone.

"Throughout the strained economic climate in 2009, Regions remained an active lender to businesses and consumers. Regions made new or renewed loan commitments totaling $65.0 billion during 2009, primarily driven by residential first mortgage production and lending to small businesses.

"Nevertheless, the economic backdrop remains difficult and the lack of loan demand reflects the current environment. While commitment levels remain high, commercial line utilization rates have declined as compared to a normal environment. As a result, fourth quarter loan balances declined, especially commercial and real estate construction, which dropped by 2 percent and 15 percent, respectively.

"A steady net interest margin, combined with a higher level of investment securities, produced fourth quarter net interest income of $850 million.

"Solid low-cost deposit growth and an improving funding mix continue to positively impact the net interest margin. These benefits were largely offset in the fourth quarter by the impact of maturing interest rate swaps and higher nonperforming assets. Looking forward into 2010, the Company expects the net interest margin to gradually improve throughout the year. Organic momentum, in the form of certificate of deposit repricing and continuous loan spread improvement, will be the main driver.

"Strong brokerage performance supports non-interest income

Non-interest revenues were 7 percent lower than third quarter; however, these were impacted by a $96 million loss on sale of primarily non-agency investment securities, as well as a $71 million leveraged lease termination gain which was more than offset in income taxes. Excluding their effect, non-interest income was 3 percent lower than the third quarter, as higher brokerage income was more than offset by lower mortgage revenues.

"Morgan Keegan finished the year strong, recording revenues of $337 million in the quarter, bringing annual revenues to just under $1.3 billion. Fixed income continued its record-setting pace, assisted by institutional customers' demand for government, mortgage-backed and municipal securities. Both trust and private client revenues were essentially level compared to the previous quarter. Customer and trust assets increased by 1 percent and 2 percent, respectively. Morgan Keegan opened 15,600 new customer accounts in the fourth quarter, bringing full-year 2009 additions to 80,100.

"The mortgage interest rate environment trended lower during the quarter, driving up origination volume to $2.0 billion compared to third quarter's $1.8 billion. Refinance activity represented 56 percent of originations, up from third quarter's level of 54 percent.

"Total service fee revenues were essentially level third-to-fourth quarter. However, in October the company announced that it will be modifying its dollar limit and daily occurrence caps related to existing NSF/OD policies during 2010. These modifications are expected to impact Regions in 2010.

"Non-interest expenses were 2 percent lower than third quarter; however excluding branch consolidation and valuation write-down costs from each quarter, non-interest expenses were relatively unchanged linked quarter. Improved personnel efficiency was a catalyst to the $12 million or 2 percent drop in salaries and benefits cost. For the full year 2009, the Company reduced staffing by 9 percent, while at the same time improving customer satisfaction. In addition, through consolidating vendor relationships, negotiating better contracts, and further fine tuning of staffing models, the company continues to control discretionary spending.

"In the near term, benefits of these efforts will be somewhat obscured by elevated costs such as other real estate owned and other credit-related expenses, along with higher FDIC expenses. As the economic and credit environment improves, however, Regions expects normalization of credit-related costs and efficiency initiatives to contribute substantially to improved earnings power.

"For the fourth quarter, net charge-offs stabilized at an annualized 2.99 percent of average loans compared to third quarter's 2.86 percent, with the increase driven by higher residential-related consumer losses. A $1.2 billion loan loss provision exceeded net charge-offs by $487 million, and led to a 60 basis point increase in the ratio of period-end allowance for loan losses to loans.

"Non-performing assets, excluding loans held for sale, increased $376 million or 10 percent, linked quarter, compared to the third quarter's $662 million increase and was the lowest quarterly increase in 2009. A contributing factor, gross inflows of non-performing assets continued a downward trend, totaling $1.4 billion during the fourth quarter. Sales of problem assets also benefited overall non-performing asset levels.

"Tier 1 Capital stands at an estimated 11.6 percent, while the estimated Tier 1 Common ratio is 7.2 percent.