Earnings Preview: KeyCorp (NYSE: KEY) Third Quarter 2010
Monday, October 11, 2010 10:53 AM

KeyCorp (NYSE: KEY) is scheduled to release its third quarter earnings before the opening bell on Friday, October 22, 2010. Analysts, on average, expect the company to report earnings of 3 cents per share on revenue of $1.09 billion. In the year ago period, the company reported a loss of 52 cents per share on revenue of $981 million.

KeyCorp operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company operates in Community Banking and National Banking divisions.

In the preceding second quarter, the Cleveland, Ohio-based company's net income was $29 million, or 3 cents per share, compared to a net loss of $390 million, or 68 cents per share, in the year-earlier quarter. Total revenue, on a taxable equivalent basis, dropped to $1.12 billion from $1.28 billion in the same quarter last year. Analysts, on average, expected the company to report a loss of 11 cents on revenue of $1.08 billion. The second quarter results were boosted by lower provision for loan losses, higher fee income, and well-controlled expenses.

At June 30, 2010, KeyCorp's estimated Tier 1 common equity ratio was 8.01% compared to 7.51% at March 31, 2010, and estimated Tier 1 risk-based capital ratio was 13.55% up from 12.92% one quarter ago.

The company has benefited from the continued improvement in credit quality. KeyCorp has also experienced good growth in Private Banking and Key Investment Services, its branch-based investment group.  At its last earnings call, the company said that it expects to continue to experience elevated but lower levels of net charge-offs in coming quarters. Along with anticipated lower levels of nonperforming loans, it may also continue to see further reductions in the level of the loan loss reserve for the balance of the year. Also, KeyCorp said that it continues to experience an improvement in the mix of deposits by reducing the level of higher costing certificates of deposit and increasing lower costing transaction accounts.  The company expects this change in funding mix to continue through the second half of 2010 as certificates of deposit mature and re-price to lower current market rates.

Key opened 18 new branches during the first six months and expects to open an additional 22 new branches during the remainder of 2010, increasing its market presence in selected markets of its 14-state branch network.
In terms of stock performance, KeyCorp shares have gained more than 41 percent since the beginning of the year.
Disclosure: Author doesn't own any of the stocks discussed here.


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