200 Million Regulatory Charge Puts Morgan Keegan In The Red In 2Q

A $200 million charge from regulatory proceedings put Morgan Keegan & Co. in the red for the second quarter, and judging by past results, it will take the brokerage and investment-banking business some time to make up that loss.

Thanks to the charge, stemming from a Securities and Exchange probe into accounting practices, Morgan Keegan posted a net loss of $180 million in the second quarter, its parent, Birmingham, Ala.-based lender Regions Financial Corp. (RF), reported Tuesday.

Excluding the charge, Morgan Keegan would have posted a $20 million gain, in line with its $25 million gain in the first quarter and $30 million gain in the second quarter a year ago.

The company hasn't reached a settlement with regulators, but recorded the $200 million charge as an "estimate of probable loss," Regions Financial Chief Executive O.B. Grayson Hall Jr. said on a call to discuss the lender's results.

Morgan Keegan reported $55 million in gross income from commissions in the quarter, up 14.6% from the same quarter a year ago, and gross income of $36 million from its investment advisory business, an increase of 12.5%.

Overall, Regions Financial, the nation's 12th-largest bank by assets, has reduced its payroll count by nearly 2000, or 6.5%, in the last year, and by about 300 since the end of the last quarter, the company said on the call. It didn't break those cuts down among its divisions.

-By Daisy Maxey, Dow Jones Newswires; 212 416 2237; daisy.maxey@dowjones.com

Regions Financial (NYSE:RF)
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