Story updated to include a correction of the consideration Regions Financial will receive upon its sale of Morgan Keegan, and with market close information.



) -- While

Regions Financial

(RF) - Get Report

posted fourth-quarter operating earnings ahead of analysts' expectations, investors have many better choices among bank stocks that are trading at similar multiples to forward earnings but with much less risk.

Regions Financial 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 deal to sell the company's

Morgan Keegan

brokerage subsidiary to

Raymond James Financial

(RJF) - Get Report

"for total consideration of $1.18 billion."

The shares rose over 6% to close at $5.23.

The company said that excluding the goodwill impairment, its fourth-quarter income from continuing operations would have been nine cents a share, beating the consensus estimate of six cents a share, among analysts polled by FactSet.

In comparison, Regions reported earnings to common shareholders of $101 million, or eight cents a share, in the third quarter, and $36 million, or three cents a share, in the fourth quarter of 2010.

The company stands out among the biggest U.S. banks, as the largest publicly traded bank holding company still owing federal bailout funds received through the Troubled Assets Relief Program, or TARP. The government holds $3.5 billion in Regions preferred stock.

Regions saw its tangible common equity ratio increase to 6.57% as of Dec. 31, from 6.48% the previous quarter and 6.04% a year earlier, and is likely to see a significant further boost in capital during the first quarter, following the completion of the Morgan Keegan deal.

On the revenue side, there were some bright spots. Net interest income was "stable," at $849 million in the fourth quarter, compared to $850 million the previous quarter and $863 million a year earlier, and the net interest margin -- the difference between a bank's average yield on loans and investments and its average cost of funds -- improved to 3.08% during the fourth quarter, from 3.04% in the third quarter and 3.01% in the fourth quarter of 2010.

Total loans were up only slightly quarter-over-quarter, to $77.6 billion as of Dec. 31, and were down 6% from a year earlier, and were down in all categories, except for commercial and industrial loans, which grew 1% sequentially and 9% year-over-year, to $24.5 billion, and indirect auto loans, which grew 4% during the fourth quarter and 16% year-over-year, to $1.8 billion.

Following the industry trend, Regions benefitted from a continually improving deposit mix, as "deposit costs declined to 40 basis points down 6 basis points from third quarter and for the full year declined 29 basis points," but growth in interest-free checking accounts slowed during the fourth quarter. These coveted deposit balances totaled $28.3 billion as of Dec. 31, down slightly from the previous quarter, but up 10% year-over-year.

With credit quality continuing to improve, the provision for loan losses declined to $295 million in the fourth quarter, from $355 million the previous quarter and $682 million a year earlier. The company's bottom line was directly boosted by a $219 million release of loan loss reserves.

Regions said that "non-interest revenue was $507 million

for the fourth quarter, down 1 percent on a linked quarter basis reflecting lower service charges and mortgage income," but that "service charges income was relatively stable in 2011 compared to 2010, despite the impact of Regulation E and the Durbin Amendment."

Fourth-quarter service charges on deposit accounts totaled $263 million, declining from $310 million the previous quarter and $290 million a year earlier, mainly because the Durbin Amendment's limitation on debit card interchange fees charged to merchants was implemented by the Federal Reserve on Oct. 1.

So what can investors make of Regions Financial's fourth-quarter results? The goodwill impairment is meaningless, since it is a non-cash charge and doesn't eat into regulatory capital. TARP still drags on the shares, and some dilution from a public offering of common shares expected by most analysts, when the company finally decides to repay TARP.

While Regions has posted signficiant C&I and indirect auto loan growth over the past year, other regional banks, including Fifth Third, SunTrust, and Comerica,

as discussed here

, achieved significant overall loan growth, as did

Huntington Bancshares

(HBAN) - Get Report



(BBT) - Get Report

, which

reported their fourth-quarter results last Thursday


The shares have risen 22% year-to-date, after sliding 38% during 2011.

The shares trade for 0.8 times the company's reported Dec. 31 tangible book value of $6.37, and for 12 times the consensus 2012 EPS estimate of 45 cents.

With the TARP overhang and other regionals -- Huntington being a good example -- posting continued strong growth in interest-free deposits and many competitors growing total loans at a decent pace, it is not surprising that 16 out of 21 analysts covering Regions Financial have neutral ratings. Three analysts rate the shares a buy and two analysts recommend selling the shares.

Many other regional players, including


(PNC) - Get Report


Capital One

(COF) - Get Report


Fifth Third

(FITB) - Get Report

, the stellar

U.S. Bancorp

(USB) - Get Report

, the "big four" of

JPMorgan Chase



Bank of America

(BAC) - Get Report


Wells Fargo

(WFC) - Get Report



(C) - Get Report

, also trade at lower multiples to forward earnings estimates than Regions Financial, and most expect to significantly increase their returns of capital to investors, through dividend increases and share buybacks, after the Federal Reserve announces

stress test

results in March..

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

this stock


In contrast to Regions Financial's slight profitability over the past five quarters, U.S. Bancorp has achieved strong returns on average assets (ROA) improving steadily from 130% to 1.61%, over the past five quarters.

While USB's shares trade for a much higher 2.6 times tangible book value, according to SNL, the shares match Regions, in trading for 11 times the consensus 2012 EPS estimate of $2.67.

U.S. Bancorp also appears to be the much safer play. Although the shares are up "only" 5% year-to-date, during a strong industry rally, the shares had a positive return of 2% during 2011, when most bank stocks were down significantly.

Out of 26 analysts covering USB, 16 rate the shares a buy, eight have neutral ratings, and two analysts recommend selling the shares.

Interested in more on U.S. Bancorp? See TheStreet Ratings' report card for

this stock


For investors willing to consider a member of the "big four," despite the regulatory uncertainty over the expected $25 billion mortgage industry settlement with federal regulators and the states' attorneys general, and the continued flurry of new regulations, Wells Fargo looks like a winner, clearly outperforming its 'big four" rivals.

The company has achieved an ROA ranging from 1.13% to 1.30% over the past five quarters, and has avoided any major surprises.

Wells Fargo's shares were up 12% year-to-date through Monday's close at $30.92, after a 10% decline last year.

The shares traded for 9.5 times the consensus 2012 EPS estimate of $3.20.

Out of 24 analysts covering Wells Fargo, 20 rate the shares a buy, three have neutral ratings, and one recommends selling the share.

Interested in more on Wells Fargo? See TheStreet Ratings' report card for

this stock



Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here:

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 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.