NEW YORK, NY--(Marketwire - Mar 1, 2013) - The Federal Reserve has pledged to keep interest rates at record low level for a considerable period. While low interest rate environment will help drive economic growth, for regional banks it means further pressure on net interest margin. However, regional banks such as Regions Financial Corporation (NYSE: [ RF ]) and First Horizon National Corporation (NYSE: [ FHN ]) are benefiting from loan growth, which is driven by record low interest rates. Regional banks are also benefiting from improving credit quality.

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Regional banks will continue to face net interest margin pressure as the Fed is committed to keeping interest rates at record low levels until there is a sustained economic recovery in the U.S. However, banks have adapted to the low interest rate environment and are looking to capitalize on loan growth. The low interest rate environment, meanwhile, has boosted loan growth in the U.S. The biggest gains have been seen in commercial loans. Mortgage lending is also seeing a rebound due to record low mortgage rates. Regional banks are also seeing an improvement in credit quality. This coupled with stronger balance sheets means that regional banks are positioned for growth in 2013.

Grayson Hall, President and CEO of Regions Financial, last month said that although challenging economic headwinds persist, the bank has maintained an intense focus on meeting the needs of its customers. Hall said that he is pleased with the progress the bank made in 2012 and is encouraged that its efforts are building a strong foundation for sustainable growth in 2013 and beyond.

For the fourth quarter of 2012, Regions Financial reported net income of $261 million, or $0.18 per share. Net income from continuing operations for the quarter was $273 million, or $0.19 per share. Adjusted net income for the quarter was $311 million, or $0.22 per share.

In the fourth quarter of 2012, the bank experienced continued growth in commercial and industrial loans. The bank also saw strong growth in indirect auto loan production. Asset quality also continued to improve in the fourth quarter. Total net charge-offs for the quarter fell 31% to $180 million.

First Horizon National, last month, also reported an improvement in its asset quality. The bank's non-performing assets were down 20% and net charge-offs fell 43% from 2011 to 2012. The bank's capital ratios also remained strong and above well-capitalized levels.

The bank reported earnings of $0.17 per share for the fourth quarter.

Bryan Jordan, Chairman and CEO of First Horizon National, last month, said that the bank finished 2012 with strong momentum, and its employees remain focused on giving customers exceptional service, being easy to do business with, and using the bank's "bonefish" model to create value for shareholders. Jordan noted that the bank executed some tough actions in 2012 to position itself for long-term success.

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