This Day On The Street
Continue to site
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

Region's Morgan Keegan Sale to Impact 4Q Earnings

NEW YORK ( TheStreet) -- Regions Financials' (RF - Get Report) sale of its Morgan Keegan brokerage unit for $930 million to Raymond James Financial (RJF - Get Report) 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 - Get Report) 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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SF $31.28 -1.32%
RF $9.04 0.00%
RJF $51.01 -0.06%
AAPL $93.24 -0.41%
FB $117.81 -0.21%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs