Post Earnings Coverage as KeyCorp's Revenue Surged 43%
ACCESS Newswire
Upcoming AWS Coverage on Fifth Third Bancorp Post-Earnings Results
LONDON, UK / ACCESSWIRE / January 23, 2017 / Active Wall St. announces its post-earnings coverage on KeyCorp (NYSE: KEY). The Company posted its fourth quarter and fiscal 2016 results on January 19, 2017. The regional bank surpassed top- and bottom-line expectations. In July 2016, KeyCorp had completed the $4.1 billion acquisition of First Niagara. Register with us now for your free membership at:
One of KeyCorp's competitors within the Regional - Midwest Banks space, Fifth Third Bancorp (NASDAQ: FITB), announced on December 22, 2016, that it will release its fourth quarter 2016 financial results on January 24, 2017. The Company will host a conference call at 9:00 AM ET to discuss results on the same day. AWS will be initiating a research report on Fifth Third Bancorp in the coming days.
Today, AWS is promoting its earnings coverage on KEY; touching on FITB. Get our free coverage by signing up to:
For the three months ended on December 31, 2016, KeyCorp reported net income from continuing operations attributable to its common shareholders of $213 million, or $.20 per common share, compared to $224 million, or $.27 per common share, for Q4 2015. During the reported quarter, KeyCorp incurred merger-related charges totaling $198 million, or $0.11 per common share. Excluding merger-related charges, earnings per common share were $0.31 for Q4 2016. The Company's revenue rose 43% to $1.57 billion. Analysts were expecting earnings of $0.29 per share on $1.45 billion in revenue.
During Q4 2016, Key's Taxable-equivalent net interest income was $948 million, and the net interest margin was 3.12% compared to taxable-equivalent net interest income of $610 million and a net interest margin of 2.87% for Q4 2015. KeyCorp's noninterest income was $618 million for Q4 2016 compared to $485 million for the year ago same quarter. The increase was driven by the acquisition of First Niagara as well as continued positive momentum in KeyCorp's core businesses. For Q4 2016, KeyCorp's noninterest expense totaled $1.2 billion which included $207 million of merger-related charges as well as a pension settlement charge of $18 million.
Segment Results
KeyCorp Community Bank
During Q4 2016, KeyCorp's Community Bank recorded net income attributed to KeyCorp of $115 million compared to $70 million for the year-ago comparable quarter. The bank's taxable-equivalent net interest income increased by $240 million, or 61.9%, from Q4 2015. Average loans and leases increased $16.1 billion, or 52.1%, largely driven by a $4.9 billion, or 38.6% increase in commercial, financial, and agricultural loans. Additionally, average deposits increased $27.1 billion, or 52% from Q4 2015. Key Community Bank's noninterest income increased $73 million, or 36.5%, from the year-ago quarter, with positive trends in cards and payments income and service charges on deposit accounts.
KeyCorp Corporate Bank
During Q4 2016, KeyCorp's Corporate Bank recorded net income attributed to KeyCorp of $221 million compared to $142 million for the same period one year ago. The bank's taxable-equivalent net interest income had increased by $108 million, or 48.2%, compared to Q4 2015. Average loan and lease balances increased $9.8 billion, or 36.3%, from the year-ago same quarter, primarily driven by the First Niagara's acquisition as well as growth in commercial, financial, and agricultural loans. Average deposit balances increased $4.1 billion, or 21.5%, from the year ago corresponding quarter. KeyCorp's Corporate Bank's noninterest income increased $43 million, or 16.9%, compared to the prior year.
Other Segments
During Q4 2016, KeyCorp's Other Segments which consists of Corporate Treasury, KeyCorp's Principal Investing unit, and various exit portfolios generated net income attributed to KeyCorp of $29 million compared to $25 million for the same period last year, largely due to higher net gains from principal investing.
Cash Flow & Balance Sheet
In Q4 2016, KeyCorp had average assets of $136 billion compared to $96.1 billion in Q4 2015. Average securities available-for-sale and held-to-maturity securities totaled $29.3 billion in the reported quarter compared to $19.1 billion in Q4 2015.
KeyCorp's average loans were $85.4 billion for Q4 2016, an increase of $25.8 billion compared to Q4 2015. The Company's average deposits, excluding deposits in foreign office, totaled $104.7 billion for Q4 2016, an increase of $33.2 billion compared to the year-ago same quarter, primarily reflecting the acquisition of First Niagara and higher interest-bearing deposits resulting from core deposit growth in KeyCorp's retail banking franchise and growth in escrow deposits from the commercial mortgage servicing business.
KeyCorp's provision for credit losses was $66 million for Q4 2016 compared to $45 million for Q4 2015. The Company's allowance for loan and lease losses was $858 million, or 1.00% of total period-end loans, at December 31, 2016, compared to 1.33% at December 31, 2015.
For Q4 2016, KeyCorp's net loan charge-offs totaled $72 million, or 0.34% of average total loans, reflecting regulatory guidance on consumer bankruptcies and conforming First Niagara charge-off policies to KeyCorp. These results compared to $37 million, or 0.25%, for Q4 2015. At December 31, 2016, KeyCorp's nonperforming loans totaled $625 million, which represented 0.73% of period-end portfolio loans. These results compared to 0.65% at December 31, 2015. The Company's nonperforming assets at December 31, 2016, totaled $676 million, and represented 0.79% of period-end portfolio loans compared to 0.67% at December 31, 2015.
As of December 31, 2016, KeyCorp's estimated Common Equity Tier 1 and Tier 1 risk-based capital ratios stood at 9.59% and 10.95%, respectively. In addition, the tangible common equity ratio was 8.09% at December 31, 2016. KeyCorp's estimated Common Equity Tier 1 ratio as calculated under the fully phased-in Regulatory Capital Rules was 9.47% at December 31, 2016. This estimate exceeds the fully phased-in required minimum Common Equity Tier 1 and Capital Conservation Buffer of 7.00%.
During Q4 2016, KeyCorp completed $68 million of common share repurchases, including repurchases to offset issuances of common shares under our employee compensation plans, in accordance with its 2016 Capital Plan.
Stock Performance
At the closing bell, last Friday, January 20, 2017, KeyCorp's stock closed the trading session at $17.86, marginally rising 0.11% from its previous closing price of $17.84. A total volume of 12.98 million shares have exchanged hands. KeyCorp's stock price advanced 38.91% in the last three months, 54.79% in the past six months, and 64.08% in the previous twelve months. The Company's shares are trading at a PE ratio of 20.25 and have a dividend yield of 1.90%.
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