Earnings Results to Track: KeyCorp (NYSE: KEY)

Charles Barnes

I am Charles Barnes and I focus on breaking news stories and ensuring we (“Import Tourism”) offer timely reporting on some of the most recent stories released through market wires about “Financial” sector.

I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for Import Tourism specializing in quicker moving active shares with a short term view on investment opportunities and trends.

Address: 3819 Sun Valley Road, George, WA 98824, USA
Phone: (+1) 509-785-0774
Email: charlesbarnes@importtourism.com
Charles Barnes

CLEVELAND, June 27, 2019 – Shares of KeyCorp (NYSE: KEY) inclined 0.82% to $17.17. The stock traded total volume of 9.130M shares lower than the average volume of 10.60M shares.

KeyCorp (KEY) recently declared net income from continuing operations attributable to Key common shareholders of $386.0M, or $.38 per common share for the first quarter of 2019, contrast to $459.0M, or $.45 per common share, for the fourth quarter of 2018 and $402.0M, or $.38 per common share, for the first quarter of 2018. Key’s first quarter of 2019 results included a net impact of $.02 per common share regarding efficiency program expenses. Notable items resulting in a net impact of $.03 per common share were reported in the fourth quarter of 2018, and no notable items were reported in the first quarter of 2018.

INCOME STATEMENT HIGHLIGHTS:

Revenue:

Taxable-equivalent net interest income was $985.0M for the first quarter of 2019, contrast to taxable-equivalent net interest income of $952.0M for the first quarter of 2018. The increase in net interest income reflects the benefit from higher interest rates and higher earning asset balances, partially offset by a decline in purchase accounting accretion and lower loan fees. First quarter 2019 net interest income included $22.0M of purchase accounting accretion, a decline of $11.0M from the first quarter of 2018.

Contrast to the fourth quarter of 2018, taxable-equivalent net interest income reduced by $23.0M. The decline was driven by two fewer days in the first quarter of 2019 and a decline in loan fees.

Noninterest Income:

Key’s noninterest income was $536.0M for the first quarter of 2019, contrast to $601.0M for the year-ago quarter. The decline was mostly because of lower investment banking and debt placement fees of $33.0M, reflecting market disruption from the government shutdown early in the quarter, as well as the timing of closing certain transactions. Trust and investment services income declined, mainly related to the sale of Key Insurance and Benefits Services in May of 2018, which contributed $15.0M in the first quarter of 2018. Partially offsetting these declines were increases in cards and payments income and operating lease income and other leasing gains.

Contrast to the fourth quarter of 2018, noninterest income reduced by $109.0M, mostly because of expected seasonality, as well as the timing of closing certain transactions. Both of these factors mainly influenced investment banking and debt placement fees, which declined $76.0M from the prior quarter. Other income reduced $23.0M, mainly related to market-related gains in the prior period, contrast to market-related losses in the current quarter. Seasonal factors drove declines in corporate-owned life insurance and cards and payments income. Partially offsetting these declines was a boost of $9.0M in operating lease income and other leasing gains.

Noninterest Expense:

Key’s noninterest expense was $963.0M for the first quarter of 2019, contrast to $1.00B in the year-ago quarter. The decline was mostly the result of Key’s efficiency program efforts across the franchise. Personnel expense declined $31.0M contrast to the year-ago period, driven by lower salaries expense, incentive compensation, and employee benefits costs, and was partially offset by higher severance expense related to efficiency program actions taken during the quarter. Nonpersonnel expense declined, mostly related to lower FDIC assessment expense, which reflected the elimination of the FDIC quarterly surcharge.

Contrast to the fourth quarter of 2018, noninterest expense reduced by $49.0M. Lower personnel expense reflected declines in salaries expense and incentive compensation, partially offset by a seasonal increase in employee benefits expense. Lower nonpersonnel expense was driven by a $13.0M decline in other expense, as well as lower operating lease expense and seasonally lower marketing costs. Both reporting periods included notable items impacting noninterest expense. The fourth quarter of 2018 included efficiency program expenses of $24.0M and a $17.0M pension settlement charge (reported in other expense), while notable items for the first quarter of 2019 included $26.0M of efficiency program expenses.

Balance Sheet Highlights:

Average loans were $89.60B for the first quarter of 2019, a boost of $2.70B contrast to the first quarter of 2018, reflecting broad-based growth in commercial and industrial loans and growth in indirect auto lending; partially offset by continued paydowns in home equity lines of credit.

Contrast to the fourth quarter of 2018, average loans increased by $361.0M, driven by growth in commercial and industrial loans, partly offset by declines in commercial mortgage and construction loans.  Consumer loans were relatively stable from the prior quarter, as growth in auto lending offset the decline in home equity lines of credit.

Average Deposits:

Average deposits totaled $107.60B for the first quarter of 2019, a boost of $5.0B contrast to the year-ago quarter, reflecting growth in higher-yielding deposit products, as well as strength in Key’s retail banking franchise and growth from commercial relationships.

Contrast to the fourth quarter of 2018, average deposits reduced by $376.0M, mainly driven by short-term and seasonal deposit outflows, which more than offset growth from the penetration of existing retail and commercial relationships.

ASSET QUALITY:

Key’s provision for credit losses was $62.0M for the first quarter of 2019, contrast to $61.0M for the first quarter of 2018 and $59.0M for the fourth quarter of 2018. Key’s allowance for loan and lease losses was $883.0M, or .98% of total period-end loans at March 31, 2019, contrast to 1.00% at March 31, 2018, and .99% at December 31, 2018.

Net loan charge-offs for the first quarter of 2019 totaled $64.0M, or .29% of average total loans. These results compare to $54.0M, or .25%, for the first quarter of 2018, and $60.0M, or .27%, for the fourth quarter of 2018.

At March 31, 2019, Key’s nonperforming loans totaled $548.0M, which represented .61% of period-end portfolio loans. These results compare to .61% at March 31, 2018, and .61% at December 31, 2018. Nonperforming assets at March 31, 2019, totaled $597.0M, and represented .66% of period-end portfolio loans and OREO and other nonperforming assets. These results compare to .65% at March 31, 2018, and .64% at December 31, 2018.

KEY has the market capitalization of $17.29B and its EPS growth ratio for the past five years was 12.90%. The return on assets ratio of the Company was 1.30% while its return on investment ratio stands at 11.90%. Price to sales ratio was 3.43 while 82.60% of the stock was owned by institutional investors.

Charles Barnes

Charles Barnes

I am Charles Barnes and I focus on breaking news stories and ensuring we (“Import Tourism”) offer timely reporting on some of the most recent stories released through market wires about “Financial” sector. I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for Import Tourism specializing in quicker moving active shares with a short term view on investment opportunities and trends. Address: 3819 Sun Valley Road, George, WA 98824, USA Phone: (+1) 509-785-0774 Email: charlesbarnes@importtourism.com