As new reports surface that both Stifel Financial and Raymond James could be in the running to buy Regions Financial’s brokerage firm, industry analysts are eyeing exactly how a possible deal could shape up.

The Wall Street Journal reported on Friday night that both Stifel and Raymond James are in advanced talks to buy Morgan Keegan for $900 million to $1 billion, citing unnamed sources. Those terms would include another $250 million dividend payment from Morgan Keegan to Regions before the deal closed, the story said.

Both Regions and Raymond James declined to comment for this story. Stifel did not respond to a request for comment by press time.

That latest report comes as Bloomberg reported earlier on Dec. 31 that Regions had ended its talks with Stifel for Morgan Keegan’s sale, citing unnamed sources. Regions’ efforts have reportedly been through multiple phases since it first put Morgan Keegan up for sale in June, including failed attempts to solicit private equity investors.

“What I think is happening right now is it’s Stifel and it’s Raymond James, and it’s basically jockeying for price,” analyst Marty Mosby, a managing director at Guggenheim Securities, said in an interview on Monday.

For Regions to get a deal under the best terms, look out for that $1 billion number, Mosby said, which would match the revenue of the parts of Morgan Keegan that would probably be sold.

That includes Morgan Keegan’s private wealth management group, fixed income business, investment bank and equity sales. Regions will likely hold onto the trust department, which traditionally falls under the banking side, according to Mosby. Morgan Keegan’s funds that led to ongoing litigation and to a $210 million settlement with regulators are also unlikely to be included in the deal, Mosby said.

“If they can get close to that [$1 billion] number, I think that would be a win for Regions,” Mosby said. “The closer it gets to $750 [million], it kind of gets to be a break even, and if it drops significantly below $750 [million], then that’s where it gets to be more of a strain.”

Both Stifel and Raymond James have capacity and support systems in place already, which can pull some of the expenses of the deal out, Mosby said, allowing them to pay more on a revenue basis. A deal with either Stifel or Raymond James will likely mean more changes, according to Mosby, unlike a private equity buyer that could have kept back office operations and staff in place.

“Either way you go, it’s going to be a different operation,” Mosby said. “If you go with either one of these strategic partners, you change your name, you change your letterhead, you don’t have that support, so you need to transition to new platforms.”

Rochdale Securities Analyst Dick Bove said he sees a possible deal to either firm for $1 billion as a positive outcome for Regions.

That is because the deal would allow Regions to reduce its risk weighted assets and increase its capital ratio. Once the firm’s ratios are increased, Bove said, Regions could then cut a deal with the Treasury to redeem their Troubled Asset Relief Program preferred stock. Regions still owes $3.5 billion it received from TARP.

“The Morgan Keegan transaction is a very important one, and if they’re able to do it in the fashion that I mentioned, it would be a big benefit to them,” Bove said.

But following more than six months of efforts to sell Morgan Keegan, some industry observers like Ron Edde, a senior executive recruiter at Carlsbad, Calif.-based Armstrong Financial Group are reluctant to believe any reports that a deal could actually be consummated.

“They know they’re about to lose a bunch of people, because they promised, ‘Hey, we’re going to have this and it’s going to be by Labor Day. Then it was going to be by Halloween, then it’s Thanksgiving, now it’s Christmas,” Edde said. “Soon there won’t be anything left to sell.”

Edde continued that he does not believe a deal is coming this week, and that Morgan Keegan’s ongoing litigation with its bond funds would likely drag its price down.

“It will be nowhere near a billion dollars, not even remotely in the same ballpark,” Edde said.

Lorie Konish writes for On Wall Street.