Morgan Keegan may yet fetch $1B: Sources

Morgan Keegan may yet fetch $1B: Sources
Sweepstakes for brokerage said to be down to two P/E firms; parent Regions reportedly offering to help finance the deal
JUL 14, 2011
By  John Goff
Regions Financial Corp., the 10th- largest U.S. bank by deposits, reported third-quarter profit that beat analysts' estimates as net charge-offs and loan-loss provisions declined. Meanwhile, sources indicated that the sale of Regions brokerage unit, Morgan Keegan, could be completed within the next few weeks. Net income for the parent company was $155 million, or 12 cents a share, compared with a net loss of $155 million, or 13 cents, a year earlier, the Birmingham, Alabama-based bank said today in a statement. The average estimate of 26 analysts surveyed by Bloomberg was 4 cents. Regions has posted four consecutive quarters of profit. Regions, led by Chief Executive Officer Grayson Hall, 54, is among banks facing investor concern that a stagnant economy and low interest rates will hurt loan growth and net interest margins. One of Regions' biggest holders, Fairholme Capital Management LLC, sold more than half its stock in the bank as shares fell 46 percent in the quarter. “The pace of economic recovery of the markets we're operating in is going to drive the recovery of our customers,” Hall said today on a conference call after results were announced, citing Georgia and Florida. “We would love to see a faster pace and are taking actions to accelerate that on our own balance sheet, but in the absence of real economic recovery, this is going slower than we had anticipated.” Headcount Decreases Regions' headcount, which totaled 27,829 as of Dec. 31, is down 1,000 year-to-date and there will be more reductions by the end of the year, Hall said on the call. Regions hasn't repaid $3.5 billion it received under the Troubled Asset Relief Program. The bank hasn't changed its strategy of being “patient and prudent” on repaying the bailout funds, Hall said today on the conference call. Morgan Keegan Talks As part of a plan to boost capital and pay back the bailout, Regions is in talks with two competing groups of private-equity firms seeking to buy its Morgan Keegan brokerage, said people with knowledge of the matter, who spoke on condition of anonymity because the talks are private. A deal valued at more than $1 billion may be reached within weeks, the people said. Regions is offering $200 million to help finance the sale of Memphis, Tennessee-based Morgan Keegan, the people said. Evelyn Mitchell, a spokeswoman for Regions, declined to comment. Morgan Keegan posted profit of $26 million, up from $22 million in the third quarter last year and a decrease from $60 million in the second quarter. --Bloomberg News--

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