UPDATE 1-LaBranche lowers Q4 reported profit by $1.8 mln

* Lowers Q4 EPS to $0.02 from $0.05

* Sees to lose $3 mln investment in a mortgage brokerage

* Says set up reserve for entire amount as of Dec. 31

Feb 24 (Reuters) - LaBranche & Co Inc (LAB.N), one of the largest specialist firms on the New York Stock Exchange, lowered its reported fourth-quarter earnings by $1.8 million due to the proposed liquidation of a mortgage brokerage entity in which it has a minority stake.

LaBranche's equity interest of about $3 million in the mortgage brokerage is expected to lose all of its economic value, the company said in a regulatory filing.

The company revised its fourth-quarter profit to $1.2 million, or 2 cents a share, from $3.0 million, or 5 cents a share, reported earlier.

Quarterly earnings, excluding items, was lowered to 38 cents a share from 41 cents a share.

The company said it assumed the equity investment as part of a merger transaction in 2001 and it was a passive investor in the entity.

LaBranche does not expect to recover any of the value of this equity investment and has set up a reserve for the entire amount of the investment as of Dec. 31, 2008. (Reporting by Supantha Mukherjee in Bangalore; Editing by Himani Sarkar)