Regions net income falls 54%

Regions Financial Corp.'s net income fell 54 percent in the second quarter as the company set aside more capital for loan losses.

The Birmingham, Ala.-based bank holding company (NYSE: RF) posted net income of $206.4 million on $1.72 billion in revenue, compared with net income of $453.3 million on $1.70 billion in revenue in the second quarter of 2007. Earnings per share dropped to 30 cents a share, compared with earnings of 63 cents a share a year ago.

Analysts had anticipated earnings of 42 cents per share on revenue of $1.77 billion. The estimates typically exclude one-time charges.

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The quarter included $101.1 million in merger-related expenses. Excluding those expenses, earnings from continuing operations would have been 39 cents per share.

In an effort to preserve capital, the company said it was reducing its quarterly dividend from 38 cents per share to 10 cents per share, payable Oct. 1.

Regions increased its provision for loan losses to $309 million, up from $181 million in the first quarter and $60 million in the year-ago quarter.

Morgan Keegan & Co. Inc., the investment banking and securities brokerage arm based in Memphis, posted net income of $38.2 million on total revenue of $339.29 million, in the quarter. That compared to net income of $50.1 million on revenue of $328.8 million a year ago. Total client assets dropped to $73.5 billion from $81.3 billion a year ago.

Regions said it had a $13.4 million write down in two Morgan Keegan mutual funds. That brings the total loss in those funds to $76.4 million since the fourth quarter of 2007.

Regions Financial Corp. is the parent of Regions Bank, the second-largest bank in Memphis based on deposits of $3.4 billion. It operates 55 retail bank branches in the Memphis market.

Shares were down 3.8 percent, or 40 cents, to $10.80 in mid-day trading.