Magazine article American Banker

KeyCorp Tops Estimates; Fee Income Rises 17%

Magazine article American Banker

KeyCorp Tops Estimates; Fee Income Rises 17%

Article excerpt

KeyCorp credited a healthy rise in revenue for better-than-expected fourth-quarter earnings.

The Cleveland company, which announced results Friday, beat analyst estimates by a nickel. It said margin expansion and increases in fees and deposits helped push revenue higher than expenses.

It was a different story at South Financial Group Inc. of Greenville, S.C., which reported much higher expenses and a sharp drop in revenue. (See story on page 9.)

Key's net interest margin was 3.71%, up 4 basis points from the start of the quarter. The $93.1 billion-asset company said fee income rose 5.6% from the third quarter and 17.1% from a year earlier. Average core deposits were $43.2 billion, 8% more than a year earlier.

"The growth into core funding and specifically noninterest-bearing deposits in a rising rate environment helped our net interest margin," said Jeff Weeden, Key's chief financial officer, in a conference call Friday.

Key's fourth-quarter earnings rose 39% from a year earlier and 6.5% from the third quarter, to $296 million. It reported diluted per-share earnings of 72 cents.

Expenses were $834 million, up 6.8% from the third quarter and 2% from a year earlier. Revenue grew 4.1% quarter to quarter and 7.2% year over year, to $1.3 billion.

Anthony R. Davis, an analyst with Ryan Beck & Co., said Friday in a research note, "This was the first linked-quarter increase in top-line revenues" since the first quarter of 2005 at Key. …

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