Ogre's Club
 

I recently got this item as a quest reward and I found out on the net that it's morale decreases by 2 each fight and never increases. Is it still like that in Crossworlds even if you have Ogres, Giants or Trolls in your army? Sadly, I don't have access to those units yet, because it's still early in the game.

Correct - it's morale will decrease with each battle. Once at zero, you'll have to suppress the item, at which point its morale is reset to 50. What troops you have in your army makes no difference in the morale decrease.