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$KEY said it plans to start moving dividend payout to around 40- 50% 'return to shareholders.' Over the next few years, KeyCorp expects to increase the annual originations in its real estate business by $5Bil. In future, investment Banking Debt Placement Fees and cards & payments revenues are seen as strong growth areas for the company.
$KEY plans to reach its target of $300MM in run rate revenue synergy, from the addition of First Niagara, by the end of 2019. Going forward, the US tax reform is expected to result in a lower income tax rate for the company. KeyCorp expects purchase accounting accretion to decline 10% per quarter in 2018, from the fourth quarter levels.
$KEY said it achieved $400MM of cost savings from the acquisition of First Niagara in 2017, and expects to realize $50MM more early this year. The company sees significant growth opportunities in the coming years from the recent acquisition of Cain Brothers. The focus on credit quality has resulted in strong credit metrics in the current year.
Key Community Bank, the main division of $KEY, registered a 7% gain in 4Q17 revenues to $969MM. Meanwhile, revenues of Key Corporate Bank decreased 4% to $603MM. Revenues of the other segments totaled $35MM, down 8% compared to the year-ago quarter.
Financial services provider $KEY reported a 13% drop in 4Q17 profit, owing to merger-related charges and impact of the tax reform. Earnings per share declined to $0.17 from $0.20 in 4Q16. Adjusted for special items, earnings advanced to $0.36 per share. Revenues, meanwhile, rose 3% to $1.6BIl, with net interest income rising modestly to $952MM.
$KEY said that Bill Hartmann, Chief Risk Officer, has decided to retire in 2018. The company also added that Mark Midkiff will join the company as Chief Risk Officer on Jan. 22, 2018. Hartmann and Midkiff will work together in 1H18 to ensure a smooth transition.
KeyBanc Capital Markets Inc., the investment banking unit of $KEY, has closed its acquisition of Cain Brothers, a healthcare focused investment banking firm. The acquisition agreement was announced on Aug 15, 2017, and the transaction became effective on Oct 2, 2017.
$KEY declared dividends of $312.50 on its outstanding Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Stock, Series D, and $15.3125 on its Preferred Stock Series E. Both dividends are payable on September 15, 2017 to holders of record as of August 31, 2017.
The Federal Reserve indicated it had no objection to the $KEY's plan, which includes an increase in the quarterly dividend to $0.105 per share in 4Q17, an additional potential increase in the dividend, up to $.120 per share in 2Q18., and a common share repurchase program of up to $800MM.