Jan 22 - Standard & Poor's Ratings Services today said its ratings and outlook on Regions Financial Corp. (BBB-/Stable/A-3) are not affected by the company's fourth-quarter results, which we view as good and consistent with our expectations. Regions reported income of $273 million from continuing operations, compared with $312 million in the third quarter. Adjusted pretax, preprovision income rose materially from the third quarter, aided by lower adjusted noninterest expenses and a slightly higher net interest margin (NIM). Specifically, the NIM rose by 2 basis points from the third quarter to 3.10%--bucking the declines that some other large regional banks experienced. We expect the NIM to be relatively stable in 2013, aided by an expected continued decline in deposit costs. Loan loss provisions were very low, and reserve releases were again substantial, but we expect loan loss provisions to rebound toward a more normal level in 2013. Credit quality improved further, in our view. Nonaccrual loans, accruing restructured loans, and Business Services criticized loans declined sequentially. Inflows of nonperforming loans also declined, by about $113 million, and net charge-offs as a percentage of average loans dropped to less than 1% on an annualized basis. Our assessment of Regions' risk position remains "moderate" given its still high level of nonperforming assets, which includes a large amount of restructured loans in our calculations. We expect improvement in credit quality in 2013, but we think it could be gradual given the bank's concentration of loan exposures in the southeast. Loan balances declined again from the third quarter, largely because of further declines in investor commercial real estate (CRE) loan balances, a trend we expect to continue. Capital ratios improved again in the quarter because of earnings retention and a further contraction in earning assets. Our assessment of the company's capital and earnings is "adequate," largely based on our projected risk-adjusted capital (RAC) ratio for the company. We expect the ratio to approach nearly 10% by the end of 2013. The outlook is stable because we expect financial performance to improve only gradually in 2013 and 2014.