Oct. 21--Regions Financial Corp. plans to close one Montgomery location among the 121 branches it's closing as part of a large-scale consolidation plan. The bank made the announcement Tuesday after telling stockholders of a $437 million third-quarter loss.

Regions will close the 2906 Atlanta Highway branch in the first quarter of 2010, according to spokesman Dick Morris.

But he said the closing should not result in any job losses. Employees at that location, which offers only drive-through banking, will be transferred to other branches in Montgomery, he said.

Regions, which made the announcement during its quarterly earnings conference call on Tuesday, said it will close the 121 branches and take a $41 million charge against its earnings. The bank expects to save $21 million yearly after the branches are closed.

The branches are being closed either because they are too close to other branches or because they are not performing up to the bank's hopes, according to a Regions statement.

Morris said traffic at the Atlanta Highway location fell after Regions and AmSouth merged three years ago.

Regions cited bad loans as the major cause for the $437 million loss in the third quarter. The bank set aside more than $1 billion to cover its bad loans in the quarter ending Sept 30. It reported that 4.4 percent of its loan portfolio is classified as non-performing.

Regions insisted its retail banking operations are strong. The bank reported it increased low-cost deposits -- generally those in checking accounts -- by $1.3 billion in the quarter. It also reported opening 270,000 new checking accounts in the quarter.

Dowd Ritter, CEO and chairman, said an improving economy should help the bank in coming quarters.

"The operating environment remains challenged and credit-related costs continue to be elevated," he said in the earnings release.

"However, the economy appears to have bottomed and that bodes well for customers and for us. Regions will continue to aggressively recognize credit problems (while) preparing for the economic recovery."

Ritter said income-producing commercial real estate -- shopping centers and apartment complexes -- make up a substantial portion of the bank's non-performing assets, and he expressed hope they could be returned to current status.

If the asset has cash flow, the bank can reorganize the loan to allow the borrower to bring it current, he said. When that happens, the bank can recoup some of its reported losses.

Ritter also said the bank is containing costs by closing unneeded branches. The company also reduced its work force by 1,700 employees in the last year.

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