v2.4.0.6
Discontinued Operations
 6 Months Ended
Jun. 30, 2012
Discontinued Operations

NOTE 2—Discontinued Operations

On January 11, 2012, Regions entered into a stock purchase agreement to sell Morgan Keegan and related affiliates to Raymond James Financial, Inc. (“Raymond James”). The transaction closed on April 2, 2012. Regions Investment Management, Inc. (formerly known as Morgan Asset Management, Inc.) and Regions Trust were not included in the sale. The total purchase price received by the Company was $1.2 billion. An estimated $15 million pre-tax gain on sale, which includes a $256 million adjustment of liabilities to record the legal indemnification at fair value as discussed in the next paragraph, was recorded in the second quarter of 2012 as a component of discontinued operations. In order to estimate the gain on sale, Regions made assumptions regarding the finalization of elections for income tax purposes to be made by Raymond James and Regions. Any adjustment to the gain, if needed, will be presented within discontinued operations on the consolidated statements of income and would have no impact on results from continuing operations. Regions does not expect any adjustment to the gain on sale to have a material impact on the Company’s financial position or regulatory capital.

In connection with the closing of the sale, Regions agreed to indemnify Raymond James for all litigation matters related to pre-closing activities. See Note 15 for related disclosure. Losses under the indemnification include legal and other expenses, such as costs for defense, judgments, settlements and awards associated with the resolution of litigation related to pre-closing activities. Regions increased existing liabilities on the consolidated balance sheet by approximately $256 million, such that the resulting amount of $385 million reflected the fair value of the indemnification at the close of the transaction.

The following table represents the condensed results of operations for discontinued operations for the three and six months ended June 30:

 

     Three Months Ended
June 30		     Six Months Ended
June 30		  
         2012              2011             2012             2011      
     (In millions, except per share data)  

Interest income

    $ —         $ 10      $ 8      $ 20   

Interest expense

      —           2        1        4   
  

 

 

     

 

 

    

 

 

    

 

 

  

Net interest income

      —           8        7        16   

Non-interest income:

          

Brokerage, investment banking and capital markets

      —           229        233        465   

Gain on sale

      15         —          15        —     

Other

      —           9        7        36   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total non-interest income

      15         238        255        501   

Non-interest expense:

          

Salaries and employee benefits

      —           160        171        326   

Net occupancy expense

      —           9        9        18   

Furniture and equipment expense

      —           7        8        14   

Professional and legal expenses

      10         23        106        48   

Other

      1         43        29        71   
  

 

 

     

 

 

    

 

 

    

 

 

  

Total non-interest expense

      11         242        323        477   
  

 

 

     

 

 

    

 

 

    

 

 

  

Income (loss) from discontinued operations before income taxes

      4         4        (61 )      40   

Income tax benefit

      —           (26 )      (25 )      (9 ) 
  

 

 

     

 

 

    

 

 

    

 

 

  

Income (loss) from discontinued operations, net of tax

    $ 4       $ 30      $ (36 )    $ 49   
  

 

 

     

 

 

    

 

 

    

 

 

  

Earnings (loss) per common share from discontinued operations:

          

Basic

    $ 0.00       $ 0.02      $ (0.03 )    $ 0.04   

Diluted

    $ 0.00       $ 0.02      $ (0.03 )    $ 0.04