This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Region's Morgan Keegan Sale to Impact 4Q Earnings

Stocks in this article: RJF RF SF

NEW YORK ( TheStreet) -- Regions Financials' (RF) sale of its Morgan Keegan brokerage unit for $930 million to Raymond James Financial (RJF) achieves two goals: getting the bank closer to repaying billions in bailout funds and ensuring that the disappointing sale price remains a 2011 story.

Regions plans to record an impairment in a range of $575 million to $745 million in its fourth quarter of 2011 that is tied to the "goodwill" of Morgan Keegan even though the sale was announced Wednesday. Regions will report earnings on Jan. 24, and expects to lose as much as $633 million -- or up to 50 cents a share -- in the fourth quarter of 2011 because of the goodwill charge, according to a company statement.

Regions will now start its 2012 with a clean slate because of the accounting method. Proceeds from the sale can be used to pay back the Troubled Asset Relief Program (TARP) and the loss of Morgan Keegan will not show up in its 2012 earnings.

"I am very pleased that we were able to reach an agreement that benefits our shareholders and helps us focus on our core banking business while also allowing us to continue providing a full range of products and services seamlessly to our customers," said Regions CEO Grayson Hall in a statement announcing the deal.

With the purchase of Memphis, Tn., -based Morgan Keegan, Raymond James will take on an investment banking and brokerage business with 1,200 financial advisers to add to its existing 5,400 brokers, creating a big presence in the southeast and one of the biggest non-Wall Street domiciled wealth management and investment banking businesses.

"While our preference is generally organic growth, we have used strategic mergers to grow throughout our history when the timing and pricing are right and, most importantly, when there is a strong cultural fit and clear path for integration," said Raymond James CEO Paul C. Reilly in a statement. The Morgan Keegan purchase is Raymond James's biggest ever acquisition, according to Bloomberg data. In the third quarter, Morgan Keegan earned $26 million in profit.

While the sale helps the Alabama -based bank build capital, it falls short of previous bid reports.

Previously, Stifel Financial (SF) and private equity firm's The Blackstone Group (BX), Apollo Global Management (APO), The Carlyle Group and TPG Capital had been reported as interested bidding up to $1.5 billion for the brokerage.

For more on Regions Financial, see 10 regional bank stocks to watch in 2012 .

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs