NEW YORK (

TheStreet

) --

Regions Financial

(RF) - Get Report

was the winner among major U.S. financial names on Friday, with shares rising 3% to close at $5.31.

The broad indexes were mixed after Fitch Ratings downgraded Italy, Spain, Slovenia, Belgium and Cyprus while maintaining Ireland's rating. Italy's rating was cut to notches to A-, and Spain's rating was cut two notches, to AA-.

The Bureau of Economic Analysis reported early Friday that the total output of goods and services in the U.S. expanded 2.8% during the fourth quarter.

The

The KBW Bank Index

(I:BKX)

rose 1% to close at 42.87, with 19 of the 24 index components showing gains to round out the week.

Regions Financial's shares were up 8% for the week, and have now returned 23% year-to-date, after falling 38% last year.

The Birmingham, Ala., lender has been one of the most volatile names among the largest U.S. banks, in part because it still owes $3.5 billion in federal bailout funds received through the troubled assets relief program, or TARP, but also because of uncertainty leading to its Jan. 11 agreement to sell its Morgan Keegan subsidiary to

Raymond James Financial

(RJF) - Get Report

, for "total consideration of $1.18 billion."

After Regions on Tuesday reported a fourth-quarter net loss to common shareholders of $602 million, or 48 cents a share, mainly driven by a non-cash goodwill impairment charge of $731 million, springing from the Morgan Keegan deal, Deutsche Bank analyst Matt O'Connor reiterated his "Buy" rating for Regions, with a $5 price target, saying that "there were no big surprises in underlying trends or other large gains/losses."

Regions estimated that its Tier 1 common equity ratio increased to 8.5% as of Dec. 31, from 8.2% the previous quarter, and O'Connor estimated that the company's Tier 1 common ratio would "exceed 9% by the end of 2012."

When the Morgan Keegan deal was announced, O'Connor said his earnings estimates included "the impact of $1b common issuance to repay TARP. The analyst estimates that Regions will earn 44 cents a year in 2012.

The shares trade for 0.9 times tangible book value, according to HighlineFI, and for 11 times the consensus 2012 EPS estimate of 46 cents, among analysts polled by Thomson Reuters.

Interested in more on Regions Financial? See TheStreet Ratings' report card for this stock.

Shares of

Morgan Stanley

(MS) - Get Report

rose over 2% to close at $18.56, despite a downgrade by Atlantic Equities analyst Richard Staite, to an "Underweight" rating, with a price target of $18, saying that "given it has higher funding cost and a relatively fixed

expense base, we forecast

return on tangible equity at only 6% in 2012."

Staite also said that "given recent share price moves we now see Morgan Stanley as being the least attractive in the sector."

The analyst lowered his 2012 EPS estimate to $1.77 from $1.81 and his 2012 estimate to $2.24 from $2.26.

Morgan Stanley's shares have now risen 23% year-to-date. The shares trade for just 0.6 times the company's reported Dec. 31 tangible book value of $31.42, and 10 times the consensus 2012 EPS estimate of 91 cents.

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--

Written by Philip van Doorn in Jupiter, Fla.

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Philip van Doorn

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.