Regions Financial Corp. swung to a loss for the fourth quarter and ended 2011 with a loss for the full year.

The Birmingham, Ala.-based banking company, one of the largest players in the Memphis market, reported a $602 million loss for Q4 before the stock market opened Tuesday, Jan. 24. That loss was driven largely by a write-down related to Regions’ deal announced earlier this month to sell its Memphis-based investment banking unit to Raymond James Financial Inc.

Excluding the Morgan Keegan & Co. Inc.-related write-down, Regions earned a profit of 9 cents per share from continuing operations in the last three months of the year.

For the full year, Regions – which has the second largest chunk of deposits in the Memphis banking market, according to the Federal Deposit Insurance Corp. – reported a loss of $429 million.

Regions is addressing its current challenges in several ways. The company trimmed its employee headcount by about 1,000 positions, or about 4 percent, in 2011. Its workforce is down 6 percent over the last two years.

Also still to come is a closing of the deal to sell Morgan Keegan, which Regions executives explained their rationale for during a conference call with analysts Tuesday to discuss the company’s latest quarterly results.

In short, the deal will help the company a little in its efforts to repay $3.5 billion in Troubled Asset Relief Program money to the federal government. It also will improve the firm’s risk profile, as well as its liquidity.

Regions CEO Grayson Hall does not anticipate significant improvement in the economy in the short-term, which dictates what 2012 will look like for Regions.

“We do believe the economy remains challenged by housing and unemployment, and the pace of economic recovery does appear to be incremental,” Hall said.

That said, Hall told analysts Regions expects to remain disciplined in its focus on fundamentals, and that it’s building a stronger and more consistent banking model.

In other highlights, Regions’ total loan production for the year increased to $60 billion. Commercial loan production and renewals totaled $51 billion, of which $15 billion was new loan production.

Total commercial and industrial loan commitments grew $1.2 billion, and consumer loan production totaled $9 billion in 2011.

Growth on the consumer loan side reflected strength in mortgages, indirect auto lending and the company’s purchased credit card portfolio, according to Regions.

Like most banks, Regions is searching for new revenue streams. And to that end, Regions recently launched a new suite of banking products that offers prepaid reloadable cards, expanded check cashing, money transfers and expedited bill payment services.

To date, Regions has executed about 40,000 transactions on behalf of its customers with a total transaction value of about $25 million through that new suite of products and services.