Bank holding company Regions Financial Corp. said in a regulatory filing this week that it could face legal losses amounting to as much as $300 million in addition to a hefty settlement with regulators it agreed to pay in June.
In its quarterly filing with the Securities and Exchange Commission on Thursday, Regions Financial said it is “reasonably possible” that it could reach an estimated $300 million in legal losses related to potential litigation and claims. The estimate, as of June 30, is not definite and the firm said it's also possible that it could have no legal losses at all.
A Regions Financial spokesperson declined to comment on the regulatory filing.
Regions Financial did not disclose exactly how the size of the potential legal loss was calculated. Legal issues that have affected the firm include the handling of certain Morgan Keegan funds and auction rate securities, as well as its loan loss reporting procedures dating back to 2009.
Birmingham, Ala.-based Regions Financial reported its third consecutive quarterly profit with its second quarter results in July. The firm’s net income rose to $109 million for the second quarter ending June 30, up from $69 million in the first quarter and a $277 million net loss for the second quarter in 2010.
Regions Financial agreed to pay a $210 million regulatory settlement in June in connection to investment losses related to a group of Regions Morgan Keegan Select Funds. The settlement included the SEC, Financial Industry Regulatory Authority and certain state securities regulators. The fine included $200 million for the establishment of two fair funds to reimburse investors. In addition, Regions Financial will pay up to $10 million in penalties to states.
Exactly which investors will see reimbursement from the fair funds and how ongoing arbitration cases against Morgan Keegan will fare remains to be seen.
Regions Financial also put Morgan Keegan, excluding its Morgan Asset Management and Regions Morgan Keegan Trust units, up for sale in June. Regions Financial reaffirmed plans to sell that business when it released its second quarter earnings in July, but declined to provide a book value for the business.