Oddly enough, Bank of Ireland's (NYSE: IRE) annual loss is going to be a relief to most of its investors. Amid the anarchy that the Irish banking system has been exposed to, Bank of Ireland has managed to better its past year's performance by posting a net loss of $883.2 million -- an improvement of 66% on a year-on-year basis. Unlike Allied Irish Banks (NYSE: AIB), which reported a record $14.7 billion annual loss for 2010, Bank of Ireland has been able to taper its losses somewhat. So does that put the Irish bank back on track?

The numbers
Taking a closer look at the numbers from the past year, we can see that the bank's net interest income reduced to $3.2 billion in 2010 from $4.2 billion in the prior year, as it was, and still is, being affected by high deposit pricing, higher costs of wholesale funding, and cost of the Eligible Liabilities Guarantee (ELG) scheme. That may not mean a whole lot to most of us, but it did result in a 16% decline in the total income of the company as compared to 2009, which we certainly do care about. Considering the state of the larger economy in Ireland, however, I'm fairly impressed by this.

Customer deposits for the bank fell by 23% in 2010, which was an obvious result of a record low interest rate situation. And although the impairment charges on loans and advances to customers decreased to $2.7 billion in 2010, from $3.4 billion in the preceding year, the larger credit quality of the bank's loan portfolio still remains a huge worry. Suffice it to say, that despite steps in the right direction, Bank of Ireland certainly isn't out of the woods yet.

Last man standing
Bank of Ireland, Ireland's last privately owned bank, is one of two pillars the Irish government wants to uphold its entire banking system, which has been falling apart at the seams over the past few months. Relatively speaking, the bank still looks much stronger than AIB, the other pillar, in which the government already has a 92% stake.

Foolish bottom line
As I mentioned in a prior article, the bank is under pressure to raise $7.3 billion of its own to avoid a majority government stake. The bank also foresees some inevitable challenges this year due to higher funding costs. However, the key question is: Will the bank's desperate measures be enough to help retain its independence in the long run? At the moment, I wouldn't risk my money on this uncertain stock unless I were a total risk lover.

Fool contributor Zeeshan Siddique does not own any of the stocks mentioned in the article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.